BILL ANALYSIS
AB 980
Page 1
ASSEMBLY THIRD READING
AB 980 (Swanson)
As Amended April 22, 2009
Majority vote
EDUCATION 6-2 APPROPRIATIONS 10-5
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|Ayes:|Brownley, Ammiano, |Ayes:|De Leon, Ammiano, Charles |
| |Buchanan, Carter, Eng, | |Calderon, Krekorian, |
| |Torlakson | |Fuentes, Monning, |
| | | |John A. Perez, Price, |
| | | |Skinner, Torlakson |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Nestande, Miller |Nays:|Nielsen, Duvall, Harkey, |
| | | |Miller, Audra Strickland |
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SUMMARY : Requires charter schools located within the boundaries
of a school district that is repaying an emergency apportionment
to pay a prorated amount of the annual payment made by the
district on the apportionment. Specifically, this bill :
1)Specifies that the prorated amount for each charter school
shall be determined by dividing the annual payment made by the
school district on the apportionment by the sum of the total
number of pupils enrolled in the school district and the total
number of 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 school
district, and multiplying that quotient by the number of
pupils who reside within the jurisdiction of the school
district and who are enrolled in the charter school.
2)Directs the Superintendent to deduct the prorated amount
determined for each charter school pursuant to this section
from the amount of general purpose entitlement funding
calculated for the charter school pursuant to Section 47633
and apply the amount deducted to the outstanding balance of
the applicable emergency apportionment.
3)Makes findings and declarations that charter schools do not
contribute to the repayment of school district emergency
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apportionments and that this creates an inequality in the
distribution of public resources between school districts and
charter schools.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, 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
approximately $122 per pupil based on 2007-08 data.
COMMENTS : Oakland Unified School District (OUSD) has been in
State receivership since 2003, having at that time been
authorized a $100 million emergency loan with a repayment period
of 20 years. According to California Department of Education,
the outstanding balance on the apportionment is $82,859,465 as
of July 2008. A State Administrator was appointed by
Superintendent Jack O'Connell and empowered to assume total
control of all aspects of OUSD's governing board. In 2003, as a
result of being in receivership, the governing board of OUSD had
all of its rights, duties and powers removed. In 2007, the
following areas of responsibility were returned to the governing
board of OUSD: Community Relations and Governance, Personnel
Management and Facilities Management. The State Administrator
still retains responsibility of the following areas: Pupil
Achievement and Financial Management.
According to the author, OUSD's recovery has been complicated by
a precipitous drop in pupil enrollment from 54,000 to 38,700
students in approximately seven years. Since that time, the
number of charter schools has grown significantly, and now house
approximately 7,000 students. This creates a large fiscal
impact on the district, as Average Daily Attendance (ADA)
funding is attached to individual students, and declines as
those students transfer to charter schools. The district is
unable to scale its budget accordingly, due to the rigidity of
human resources and physical infrastructure costs. Charter
schools are currently not required to contribute to the
repayment of the state loan, forcing students in district
schools to shoulder a disproportionate burden of the debt.
In 2008, the Select Committee on State School Financial
takeovers convened a hearing to discuss the effectiveness of the
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State receivership system. One issue that local stakeholders in
different districts repeated was the impact that charter school
growth had on their finances. Loan repayments are generally a
fixed amount over a designated period of time. Thus, as
district revenues decline, the loan payment assumes a larger
percentage of the district budget, leaving a shrinking
percentage that can be devoted to educational programs. One
district noted that in the course of its receivership, charter
school enrollment nearly tripled, composing approximately 20% of
remaining public school enrollment. The result was that
students in the traditional public schools were each shouldering
a larger burden of the debt than before.
What do Charter Schools Currently Contribute? According to
OUSD, eight out of the 32 charter schools authorized by the
district pay a debt service fee to the district to pay their
share of the district's emergency loan repayment. The debt
service fee's paid by the charter schools are accessed either as
a "per student fee" or a "per square foot fee." When accessed
per student, charters paid $180 per student in 2007-08. When
accessed per square foot, charters paid $1.50 per square foot in
2007-08. The "per student" rate is calculated by the district
using the total annual cost of the debt service divided by the
total enrollment of district and charter school students. The
"per square foot" rate is calculated by the district using the
total annual cost of the debt service divided by the total
square footage of all district facilities. Under this bill, all
charter schools located within the boundaries of OUSD would be
required to pay approximately $130 per student annually toward
the debt obligation, based on current enrollment in the district
of 38,634 and current enrollment in charter schools of 7,492.
This means the charter schools located within the boundaries of
the OUSD would contribute $973,960 annually toward the districts
$6 million annual payment toward the emergency loan. The eight
charter schools that currently pay toward the debt service,
contributed $511,200 in 2008-09. Under this bill, the existing
charter schools would pay less in per student debt service than
they currently pay since the bill would require each school to
contribute approximately $130 per student instead of the $180
per student they currently pay.
The California Teachers Association supports the bill and argues
charter schools should be "revenue neutral" to the districts in
which they operate and should not inadvertently or unduly impact
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the resources available to students remaining in traditional
district schools. ADA that moves from traditional schools to
charter schools in the district will have the consequence of
increasing the burden of repayment of the state loan to a
shrinking foundation of revenue derived from District
non-charter ADA. AB 980 strikes an appropriate balance to
remedy this situation in requiring charter schools to pay a
pro-rated 'fair share' of the outstanding balance of a state
emergency loan. Not to strike this balance may create a
financial 'death spiral' from which a district already in
distress may never recover.
The California Charter Schools Association opposes the bill and
argues, "The bill is intended to compel charter schools in the
Oakland Unified School District to help pay off the emergency
apportionment OUSD is seeking to retire. The massive debt that
led to the emergency apportionment was incurred before many OUSD
charter schools were approved. Moreover, the charter schools
are separately funded and operated and, hence, are not part of
the causes or solutions to OUSD's financial problems."
Previous legislation: AB 2008 (Swanson) from 2008, would have
prohibited any chartering authority from approving a petition to
establish a charter school within the geographic boundaries of
the OUSD while the State Administrator continues to exercise any
powers or the district has an outstanding balance on the
emergency apportionment. The bill was held on the Assembly
Appropriations suspense file.
Analysis Prepared by : Chelsea Kelley / ED. / (916) 319-2087
FN: 0000509