BILL ANALYSIS
AB 2272
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Date of Hearing: May 12, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 2272 (Block) - As Amended: April 28, 2010
Policy Committee: Education
Vote:6-3
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill, for the 2010-11 and 2011-12 fiscal years (FYs),
modifies the K-3 Class Size Reduction (K-3 CSR) program
flexibility enacted in SB 4 X3 (Ducheny), Chapter 12, Statutes
of 2009 (part of the February 2009 budget deal). Specifically,
this bill modifies program funding penalties as follows:
1)No penalty if the annual average enrollment for the class is
greater than or equal to 20.5 but less than or equal to 24.0.
2)A 30% reduction if the annual average enrollment for the class
is greater than 24 but less than 30.
3)A 100% reduction if the annual average enrollment is greater
than or equal to 30.
FISCAL EFFECT
Potential GF/98 loss of savings, likely between $100 million and
$250 million, to reduce the penalties for the K-3 CSR program,
as specified. The State Department of Education (SDE) reports
there is between $35 and $45 million GF/98 CSR program savings
from the 2008-09 FY. SDE does not have a savings estimates for
the 2009-10 FY.
The 2009 Budget Act allocated $1.5 billion GF/98 at a rate of
$1,071 per pupil for the K-3 CSR program. The governor's
January proposed budget provides $1.3 billion GF/98 at a rate of
$1,067 per pupil for this program, including a negative
cost-of-living adjustment of 0.38%.
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COMMENTS
1)Purpose . SB 1777 (O'Connell), Chapter 163, Statutes of 1996,
established the K-3 CSR program, which provides $1,071 per
pupil to school districts to reduce class sizes in these
grades to an average of 20 pupils per certificated teacher.
School districts receive graduated funding penalties for
classes sized above this level. Prior to SB 311 (Sher),
Chapter 910, Statues of 2004, (see below) school districts
participating in the K-3 CSR program were penalized 100% of
their funding if they did not maintain a 20:1 pupil to teacher
ratio per class.
As part of the February 2009 budget agreement, SB 4 X3
(Ducheny), Chapter 12, Statutes of 2009, provided funding
flexibility to this program as follows:
(a) 5% penalty if average class size greater or equal to 20.5
but less than 21.5;
(b) 10% penalty if average class size greater or equal to 21.5
but less than 22.5;
(c) 15% penalty if average class size greater or equal to 22.5
but less than 23.0;
(d) 20% penalty if average class size greater or equal to 23.0
but less than 25.0;
(e) 30% penalty if average class size greater than 25.0.
Essentially, school districts are authorized to increase K-3
sizes to an average of 25 students or more per certificated
employee and retain up to 70% of their funds. These program
changes are in effect for a four year period beginning in the
2008-09 FY through the 2011-12 FY.
According to the author, "The state currently has school
districts in a Catch-22 situation. On the one hand, state
budget cuts put overwhelming pressure on districts to
increase class sizes in order to save money. On the other
hand, the state hits districts with steep penalties when they
do increase class sizes. For example, the San Diego Unified
School District (SDUSD) is losing $20.25 million in class
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size penalties this year after increasing K-3 class sizes to
24 students. This money could have been used to keep classes
at 22 students. Across the state, the result is similar:
many school districts are leaving scarce state resources on
the table, and as funding cuts continue, only the very
wealthiest school districts will be able to keep their
classes from severe overcrowding."
2)SB 311 (Sher), Chapter 910, Statues of 2004 , reduced the
penalties under the K-3 CSR program for each class from 100%
to the following:
(a)A 20% reduction, if the annual average enrollment for the
class is greater than or equal to 20.5 but less than 21;
(b)A 40% reduction if the annual average enrollment for the
class is greater than or equal to 21 but less than 21.5;
and
(c)An 80% reduction if the annual average enrollment for the
class is greater than or equal to 21.5 but less than 21.9.
Chapter 910 was in effect until July 1, 2009 and SB 1112
(Scott), Chapter 515, Statutes of 2008, extended this
authorization until July 1, 2014.
1)Governor's January budget proposal and Legislative Analyst
Office (LAO) recommendation for the K-3 CSR program . The
governor's proposal assumes more school districts will either
increase class sizes and incur penalties or opt out of the
program altogether. As a result, the proposal assumes savings
of $340 million GF/98 in 2009-10 and $550 million GF/98 in
2010-11.
The LAO argues the savings assumed by the governor is
optimistic. Instead, the LAO recommends the K-3 CSR program
be placed in the categorical budget flexibility item and
reduced by approximately 20%, which is consistent with other
flexible programs established by SB 4 X3 (Ducheny).
SB 4 X3 (Ducheny) authorizes any local education agency (LEA)
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that received funding for specified categorical programs in
the 2008-09 FY to use this funding for any other educational
purpose until the 2012-13 FY. The LEA may choose to continue
operating the categorical program that it received funding for
or redirect it for any other educational purpose it deems
appropriate.
According to the May 2010 LAO report entitled Year-One Survey:
Update on School District Finance and Flexibility, more than
70% of the school districts respondents "desired much more
flexibility to operate the K-3 CSR program." Specifically,
the LAO argues under the program flexibility provided by SB 4
X3 (Ducheny) school districts are allowed to increase
kindergarten classes up to a statutory maximum of 33 students
and grade 1-3 classes up to 32 students and still receive 70%
of full program funding (as long as their average is 25 per
class). The LAO states "Given these changes, the K-3 CSR
program is now only very tenuously linked to its original
intention of providing fiscal incentives for schools to
decrease particular K-3 classes to no more than 20 students."
Analysis Prepared by : Kimberly Rodriguez / APPR. / (916)
319-2081