BILL ANALYSIS
AB 980
Page 1
Date of Hearing: April 29, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
AB 980 (Swanson) - As Amended: April 22, 2009
Policy Committee: Education
Vote:6-2
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill requires a charter school located within the
geographic boundaries of a school district that is repaying an
emergency loan to pay a prorated amount of the annual payment
made by the district on the loan. Specifically, this bill:
1)Requires the prorated amount for each charter school to be
determined by dividing the annual payment made by the district
on the loan by the sum of the total number of pupils enrolled
in the school district and all of the pupils who reside within
the jurisdiction of the school district and who are enrolled
in charter schools that are located within the geographic
boundaries of the district. Once the previous calculation is
completed, this bill requires that this number be multiplied
by the number of pupils who reside within the jurisdiction of
the school district and who are enrolled in the charter
school.
2)Requires the Superintendent of Public Instruction (SPI) to
deduct the prorated amount determined by each charter school
from the amount of revenue limit funding (i.e., general
purpose) and apply the amount deducted to the outstanding
balance of the applicable emergency loan.
FISCAL EFFECT
1)No direct state fiscal effect. Whether charter schools
contribute to the annual loan payment made by school districts
that have an emergency apportionment does not impact the
district's obligation to make annual payments to repay the
loan. This bill would require charter schools to pay
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approximately $122 per pupil based on 2007-08 data. This
measure would lessen the financial burden on school districts
with an emergency loan, which may result in their ability to
redirect more general purpose money to direct services for
pupils.
2)According to the Fiscal Crisis Management Team (FCMAT), there
are five school districts with outstanding emergency loan
balances, totaling $170.6 million GF. The state receives a
total of approximately $10.6 million in annual payments.
Statute authorizes the state Infrastructure Bank (I-Bank) to
issue bonds for the purpose of reimbursing the state for the
cost of the GF emergency loan it makes to a school district.
The district's annual payment pays the debt service on the
bonds issued by the I-Bank.
COMMENTS
1)Purpose . Due to school districts becoming financially
insolvent, the state developed a process (AB 1200, Chapter
1213, Statutes of 1991) that outlined the duties and
responsibilities of both the state and school districts when
emergency loans need to be granted to districts. The process
provides that if the state makes a loan to a school district
the SPI shall assume all legal rights, duties, and powers of
the governing board of the school district. The SPI may
appoint an administrator to act on his or her behalf in
exercising specified authority over the district and may, on a
short-term basis, assign any staff necessary to assist the
administrator.
Approximately 510 out of 975 (52%) school districts in
California are experiencing a decline in enrollment. If
school districts are experiencing declining enrollment, they
are losing revenue limit funding (general purpose) because the
amount they received is based on the number of students they
serve. Therefore, a district declining in enrollment receives
less funding from the state.
The author argues that the establishment of charter schools
within school districts that have an emergency loan
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exacerbates declining enrollment, which leads to less revenue
limit funding earned by the district. School districts with
an emergency loan are required to make annual loan payments
that are calculated per ADA and the source of these payments
is the district's revenue limit funding. Loan payments are
generally fixed over a designated period of time. Therefore,
if a school district with an emergency apportionment earns
less revenue limit funding, the loan payment assumes a larger
portion of the school district budget.
Likewise, charter schools are not required to contribute to
the repayment of an emergency loan. The author contends that
this forces pupils attending district schools to have a
disproportionate share of the annual loan payment. In 2008,
the Select Committee on School Financial Takeovers, chaired by
the author, convened a hearing to discuss the effectiveness of
the state receivership system. One issue that local
stakeholders in different districts repeated was the impact
that charter school growth has on school district finances.
This bill requires charter schools located within the
geographic boundaries of a school district that is repaying an
emergency loan to pay a prorated amount of the annual payment
made by the district on the loan.
2)Current school districts affected by this measure . According
to the Fiscal Crisis Management Team (FCMAT), there are five
school districts with outstanding emergency apportionments in
the state (see table below). This bill would apply to all
school districts that have an outstanding emergency loan.
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aAmounts in millions-source FCMAT
b2007-08 State Department of Education (SDE) data
According to Oakland Unified School District (OUSD), eight
charter schools currently pay a debt service fee that is
applied toward the district's $6 million annual loan payment.
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This fee is either assessed per pupil or per square foot,
depending on a facility agreement between OUSD and the charter
school. The per pupil fee is calculated by dividing the total
enrollment of the district by the total enrollment in charter
schools located within the OUSD. The per square foot fee is
calculated utilizing the annual cost of the loan payment
divided by the total square footage of all school district
facilities. Under the current arrangement with OUSD, the
eight charter schools paid approximately $511,200 toward the
district's annual loan payment in 2007-08.
3)Current law authorizes the establishment of charter schools,
established by a group of teachers, parents, community leaders
or community-based organization. Charter schools are usually
sponsored by an existing public school board, county board of
education, or in rare cases the State Board of Education.
According to the SDE, there were 666 charter schools enrolling
254,810 pupils (4% of the total K-12 enrollment) in 2007-08.
Specific goals and operating procedures for the charter school
are detailed in an agreement (or "charter") between the
sponsoring board and charter organizers. A charter school is
generally exempt from most laws governing school districts,
except where specifically noted in the law.
4)Previous related legislation . AB 2008 (Swanson) prohibited a
chartering authority from approving a charter school that
operates within the boundaries of OUSD, if the district had an
outstanding balance on the emergency apportionment it received
in 2003 when the school district entered into receivership.
This measure was held on this committee's suspense file in
2008.
Analysis Prepared by : Kimberly Rodriguez / APPR. / (916)
319-2081