BILL ANALYSIS
SENATE COMMITTEE ON EDUCATION
Gloria Romero, Chair
2009-2010 Regular Session
BILL NO: AB 2366
AUTHOR: Brownley
AMENDED: April 27, 2010
FISCAL COMM: Yes HEARING DATE: June 30, 2010
URGENCY: No CONSULTANT:Daniel Alvarez
SUBJECT : Meals for Needy Pupils: Revenue Limit Adjustment.
KEY POLICY ISSUE
Should the Legislature delay the implementation of a
specified revenue limit adjustment since it is no longer
revenue neutral to school districts?
SUMMARY
This bill delays the implementation of a school district
revenue limit adjustment related to the Meals for Needy
Pupils (MNP) program from 2010-11 to the 2013-14 fiscal year.
BACKGROUND
Current law provides that revenue limit funding for K-12
School Districts is based on a per pupil base revenue limit
multiplied by Average Daily Attendance (ADA). The base
revenue limit for school districts is then calculated by
taking the prior year amount and adjusting it to take into
account cost of living increases and any other adjustments,
such as an adjustment implementing revenue limit
equalization. Existing law also provides that K-12 revenue
limit funding be further adjusted as specified in statute for
individual programs or district characteristics. These
adjustments are collectively referred to as revenue limit
add-ons.
AB 851 (Brownley, Chapter 374, Statutes of 2009) commencing
in 2010-11, provided for the consolidation of two current
revenue limit add-ons - Meals for Needy Pupils (MNP) and
Beginning Teacher Salary Incentive - in the K-12 revenue
limit calculation into one consolidated adjustment, and would
add other adjustments (Unemployment Insurance and separate
one-time and ongoing adjustments for specific school
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districts) to the base revenue limit on an ongoing basis.
Chapter 374 would also repeal all statutes that created these
add-ons, effective with the 2010-11 fiscal year. (Education
Code 42238, 42238.21, 42238.22, 42238.485, 42241.2,
45023.1, and 45023.4)
ANALYSIS
This bill delays the implementation of a school district
revenue limit adjustment related to the Meals for Needy
Pupils (MNP) program from 2010-11 to the 2013-14 fiscal year.
In addition, the bill extends the authorization for the MNP
program from July 1, 2010 to July 1, 2013.
STAFF COMMENTS
1) According to the author , this bill is intended to
relieve the effects of an unintended consequence of
Chapter 374 (Brownley) that was created by the current
economic recession; by delaying the implementation of
one of the provisions related to MNP until 2013-14.
Chapter 374 requires as of the 2010-11 existing school
district revenue limit adjustments for the MNP program
and minimum teacher salaries to be rolled into the base
revenue limit per unit of average daily attendance for
each district.
Since the state has experienced a severe economic
downturn, the number of pupils eligible for subsidized
meals has dramatically increased. The increase in the
number of subsidized meals normally leads to the revenue
limit adjustment for the MNP program increasing, which
means more funding to affected school districts.
However, Chapter 374 prevents districts from receiving
this funding increase because this measure calculates a
fixed adjustment based on 2007-08 levels.
2) Consolidation of revenue limit add-ons makes sense since
the funding has long ago lost all connection to the
program that initially existed. These add-ons are
neither restricted in purpose nor related to current
program costs and may be used for any discretionary
purpose just like all other revenue limit funding. In
the past, the Legislative Analyst's Office has
recommended that a number of revenue limit add-ons, be
rolled into revenue limits.
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3) School district revenue limits were created in 1972 in
response to the Serrano v. Priest lawsuit that was then
pending in the courts. The Serrano case determined that
the state's then existent property tax based system of
school funding was unconstitutional and the state was
ordered to equalize per pupil revenues that had no
rational basis to be different. The Serrano courts
excluded categorical funding from equalization order
because the need to compensate districts for
differential needs provided a rational basis for unequal
distribution.
Over the years the state has provided school districts
with various general aid allocations that, arguably, had
a rational basis for not being equalized. These
"revenue limit add-ons" were allocated to districts with
their revenue limit funding but not included in
equalization calculations and thus always kept separate
from the districts' "base revenue limits." Some of
these "add-ons," such as the "meals for needy pupils"
were allocations to districts to allow them to maintain
local initiatives that had been funded from "voted
overrides" of local property tax rates. All such
property tax increments were eliminated by Proposition
13 in 1978 and local districts had appealed to the state
to maintain what had been locally funded programs with
"add-on" funding.
In addition to preserving local initiatives, revenue
limit add-ons were created by statute to address costs
that varied among districts, and therefore did not make
sense to equalize, but still were basic funding needs
that didn't need to be restricted under a categorical
program. The minimum beginning teacher salary incentive
was such an add-on.
4) According to Assembly Appropriations . The bill would
result in a General Fund (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. Absent this measure,
implementation of AB 851 would lead to the state
allocating less revenue limit funding to school
districts because the calculation for the fixed
adjustment for the MNP program is based on 2007-08
funding levels.
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5) Prior and related legislation .
AB 599 (Mullin) of 2008 was substantially similar to AB
851 (Chapter 374, Statutes of 2009), except that it also
included 1983 instructional time incentive in the
adjustment that is created out of the Meals for Needy
Pupils and Beginning Teacher Salary Incentive add-ons.
AB 599 was vetoed with the following message:
While this bill attempts to simplify an overly complex
education finance system, this bill has several
technical concerns in the way it was drafted. I am
concerned that the consolidated "add-on" may not be
revenue neutral, as the author intended, since various
factors could result in unanticipated General Fund costs
or savings in future years. Furthermore, the bill as
crafted may diminish the incentives for districts to
offer longer instructional time.
SUPPORT
California School Boards Association
California Teachers Association
Elk Grove Unified School District
Los Angeles County Office of Education
Riverside County Schools Advocacy Association
OPPOSITION
None received.