BILL ANALYSIS
AB 2366
Page 1
REPLACE - 06/02/2010 Technical change (Member name)
ASSEMBLY THIRD READING
AB 2366 (Brownley)
As Amended April 27, 2010
Majority vote
EDUCATION 6-3 APPROPRIATIONS 12-5
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|Ayes:|Brownley, Ammiano, |Ayes:|Fuentes, Ammiano, |
| |Arambula, Carter, Eng, | |Bradford, |
| |Torlakson | |Charles Calderon, Coto, |
| | | |Davis, |
| | | |Monning, Ruskin, Skinner, |
| | | |Solorio, |
| | | |Torlakson, Torrico |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Nestande, Miller, Norby |Nays:|Conway, Harkey, Miller, |
| | | |Nielsen, Norby |
| | | | |
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SUMMARY : Mitigates unintended consequences created by the
interaction between the current economic recession and changes
to revenue limit calculations that are required to be
implemented commencing in fiscal year (FY) 2010-11.
Specifically, this bill :
1)Defers implementation of a school district revenue limit
adjustment related to the Meals for Needy Pupils (MNP) program
from FY 2010-11 to FY 2013-14.
2)Extends authorization for the MNP program until July 1, 2013.
3)Makes a technical correction in the calculation that applies a
cost-of-living adjustment to the revenue limit add-on
adjustments for beginning teacher's salaries and the MNP
program to be implemented in FY 2011-12 and FY 2013-14,
respectively.
EXISTING LAW :
AB 2366
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1)Provides for revenue limit funding for school districts that
is based on a per pupil base revenue limit multiplied by
average daily attendance (ADA).
2)Defines base revenue limit for any school district to be equal
to the prior year amount adjusted to account for
cost-of-living increases and any other adjustment specified by
statute (e.g., adjustment implementing revenue limit
equalization).
3)Adjusts revenue limit funding further by making adjustments,
as specified in statute, for individual programs or district
characteristics; these adjustments are collectively referred
to as revenue limit add-ons.
4)Requires the Superintendent of Public Instruction (SPI) to
compute an amount for each school district equal to the sum of
funding received in FY 2007-08 for the MNP program [Education
Code (EC) Section 42241.2], and incentives to increase
beginning teachers salaries [EC Section 45023.4], all divided
by the district's ADA; also applies an annual cost-of-living
adjustment (COLA) to this amount.
5)Requires the SPI to compute an amount for each school district
equal to the sum of funding received in FY 2007-08 for Orange
County bankruptcy proceedings [EC Section 42238.21], and
inter-district transfers [EC Section 42238.22], all divided by
the district's ADA.
6)Computes total revenue limit funding for each school district,
commencing in the 2010-11 fiscal year, by multiplying the sum
of the base revenue limit and the amounts calculated in 5) and
6) above by ADA.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, General Fund (GF) Proposition 98 loss of savings, of
approximately $16 million in revenue limit funding, to school
districts due to the provisions of AB 851 related to the MNP
program.
COMMENTS : According to the author, this bill is intended to
relieve the effects of an unintended consequence of AB 851
(Brownley), Chapter 374, Statutes of 2009, that was created by
the current economic recession; the bill accomplishes this by
AB 2366
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deferring the implementation of one of the provisions of AB 851
until FY 2013-14.
In order to conform to the court's decision in Serrano v.
Priest, the state created the current school district revenue
limit system that combines local property tax revenues with
state GF aid and allows the state to control the two revenue
sources on a per pupil basis. Each district's base revenue
limit has been determined by a series of historical actions
based on statute. Each year a district's base revenue limit is
calculated to be its prior year base revenue limit adjusted in
that year to account for cost-of-living increases and other
adjustments such as equalization. This base revenue limit is
then multiplied by ADA to convert the per pupil base to a total
level of funding. Further adjustments are made to total revenue
limit funding in the form of revenue limit "add-ons." These
adjustments initially were categorical funding programs, but
have become simply additions to discretionary funding without
any spending restrictions. Many of these add-ons provide a
proportionally equal amount of funding to all or nearly all
districts each year, and/or provide an amount that does not vary
over time to some subset of districts.
AB 851 incorporates, commencing in FY 2010-11, two of these
revenue limit add-ons (MNP program and incentives to increase
beginning teachers' salaries), into a single, fixed adjustment
based on 2007-08 funding levels, and consolidates two additional
revenue limit add-ons (adjustments for Orange County bankruptcy
proceedings, and specified inter-district transfers) into a
separate, fixed adjustment; both adjustments are included in the
calculation of each district's total revenue limit funding, but
not in the base revenue limit. The slightly different treatment
given to the two sets of add-ons resulted from the fact that the
first group of add-ons has historically had the annual revenue
limit COLA applied, while the second group has not; thus the two
adjustments are treated separately, and the revenue limit COLA
is applied to the first adjustment in a manner consistent with
historical practice. AB 851 simplifies and provides additional
transparency for the state's education finance system, in a
manner consistent with the Getting Down to Facts studies
released in 2007. The intent of AB 851 was to accomplish this
in a cost neutral manner; the bill was analyzed at the time by
the appropriations committees in both houses and by the
Department of Finance to be cost neutral. The bill also had no
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opposition during its progress through the Legislature.
Incorporation and consolidation of revenue limit add-ons makes
sense in that often the funding has lost all historical
connection to the program as it initially existed, the add-ons
merely add revenue limit funding in a complicated fashion even
though that revenue may be used for any discretionary purpose,
the amounts received vary little from year to year, or the
annual process for calculating funding levels is complicated and
cumbersome. The Legislative Analyst's Office (LAO) has often
recommended to the Legislature that a number of revenue limit
add-ons, including those specified in this bill, be rolled into
revenue limit funding.
The MNP program was one of those add-ons addressed by AB 851.
This program provides funding to districts that enacted property
tax levies to support free or reduced-price meals prior to
Proposition 13 and subsequently lost that funding with the
passage of Proposition 13. Despite the name of the program, the
districts receiving these funds have complete freedom over the
use of the funds and are not obligated to use the revenues to
pay for subsidized meals. Districts currently receive other
state and federal categorical funding that must be used only for
subsidized meals. Historically funding levels, based on the
number of meals provided to eligible pupils, were relatively
stable over time. However, the current recession has
dramatically increased the number of families in poverty, and
thus the number of pupils eligible for subsidized meals. The
larger number of meals would qualify school districts for
greater levels of funding during this recession, however, the
implementation of the AB 851 changes, commencing in 2010-11,
will prevent this and hold funding fixed at 2007-08 levels.
According to a draft analysis compiled by School Services of
California, this effect will potentially impact funding for more
than 300 districts by a total of more than $16 million, in terms
of funding that would be received below what the districts would
have received without the provisions of AB 851.
This bill reduces the impact of the interaction between the
implementation of the provisions of AB 851 that deal with the
MNP program and the current economic downturn by deferring the
implementation of those provisions until FY 2013-14. A three
year delay will allow economic circumstances, the number of
pupils eligible for subsidized meals, and the number of meals
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(on which this funding stream is based) to return to stable
pre-recession levels. This bill also changes the repeal date
for the MNP program to July 1, 2013, so as to conform to the
delay in implementing the funding adjustment. In addition, the
bill makes a technical correction to the calculation of the COLA
applied to the revenue limit add-on for the MNP program and
beginning teacher's salary incentives.
Analysis Prepared by : Gerald Shelton / ED. / (916) 319-2087
FN: 0004565