BILL ANALYSIS
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UNFINISHED BUSINESS
Bill No: SB 84
Author: Steinberg (D),et al
Amended: 9/10/09
Vote: 21
SENATE VOTES NOT RELEVANT
ASSEMBLY FLOOR : Not available
SUBJECT : Local Government Finances
SOURCE : Author
DIGEST : Assembly Amendments delete the Senate version of
the bill expressing the intent of the Legislature to enact
statutory changes relating to the Budget Act of 2009. This
bill now requires the revenue limit reduction (enacted as
part of the July 2009 budget) associated with capturing
General Fund savings under the Quality Education and
Investment Act program to occur only when an equivalent
amount of additional federal or state funds are available
to school districts or charter schools, as specified.
ANALYSIS :
This bill:
1. Requires the Superintendent of Public Instruction (SPI)
and the Director of Finance (DOF) to make the
determination that additional federal or state funds are
CONTINUED
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available before enacting the revenue limit reduction,
as specified. This bill also expresses Legislative
intent that first priority for restoring the revenue
limit reduction be federal funds.
2. Authorizes the additional state and federal funds
specified in this bill to be used by school districts
and charter schools as general purposes funds, as
specified.
3. Requires the SPI and DOF to report to the Legislature,
by march 1, 2010, the amount of the revenue limit
reduction (reference above) that will not be eligible
for restoration using available federal funds.
4. Requires the Department of Education (DOE) to use $64.9
million in one-time carryover provided under the federal
Title I set-aside grant (funds for poor and need
pupils), as allocated in the budget Act enacted in July
2009, to be used for the Quality Education and
Investment Act (QEIA) program as specified.
Background
The QEIA program authorizes local education agencies (LEAs)
to apply for funding to allocate to elementary, secondary
and charter schools that are ranked in either decile one or
two of the Academic Performance Index (as determined in
2005). A total of $402 million is allocated to implement
this program, which involves reducing class size,
implementing staff development, and reducing the student to
school counselor ratio at schoolsites. According to the
DOE, 487 schools receive QEIA funding.
AB 2 X4 (Evans), Chapter 2, Statutes of 2009, swept the
QEIA program funding, along with payments for community
colleges, for a total of $450 million General Fund (GF)
savings in the 2009-10 fiscal year (FY). In order to
realize the ongoing GF savings, Chapter 2 reduced each
LEA's revenue limit funding (general purpose) by the
equivalent amount of QEIA program funding it receives.
This reduction is in addition to the overall $2.4 billion
revenue limit cut that all LEAs received in July 2009.
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Furthermore, AB 2 X4 authorized LEAs participating in QEIA
to apply, on behalf of their schoolsites, to DOE for
federal Title I set-aside funds and federal School
Improvement Grant (SIG) funds (see comment #2 below).
Chapter 2 also requires SDE to award grants to schoolsites
in the 2009-10 FY pursuant to the requirements of these
federal funds.
Since July 2009, LEAs who receive QEIA program funds have
expressed strong objection to receiving the additional
revenue limit reduction without certain assurances that
federal funds would be available as specified in AB 2 X4.
Also, LEAs have objected to reducing general purpose
funding (revenue limit) and replacing it with restricted
funds (federal dollars).
LEAs have asked the Legislature to ensure: (a) the revenue
limit reduction does not occur until additional federal or
state funds are available and (b) the additional state or
federal funding provided to them is equivalent to revenue
limit funding.
This bill prohibits the revenue limit reduction associated
with the QEIA program from occurring until the SPI and DOF
determine there is additional state or federal funds
available to LEAs, as specified. It also authorizes LEAs
to use the additional funds for general purposes.
Federal SIG and Title I set-aside funds . California
receives approximately $1.6 billion annually in federal
Title I basic grant funds. These funds are provided on a
formula basis to LEAs for their poor and needy pupils.
States can spend up to a certain percentage of their total
grant on intervention activities related to the
accountability provisions of federal law. California is
able to utilize up to four percent (approximately $64
million annually) of its total grant for these activities.
This bill proposes to utilize these funds, including
carryover funds, for the purposes of the QEIA program.
In February 2009, the federal government passed the
American Recovery and Reinvestment Act (ARRA), which
allocated approximately $100 billion nationwide for
education programs with the purpose of stimulating the
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economy. According to SDE, California is expected to
receive approximately $1.1 billion in one-time funds for
Title I pupils (i.e., poor and needs students), based on
the existing federal formula. Of this funding,
approximately $46 million is reserved for PI school
improvement activities required under NCLB.
ARRA also allocated $383.3 million for the existing School
Improvement Grants (SIG) program. The federal government
established the SIG program, a competitive grant available
to states in 2008, to provide technical assistance for
Title I schools in PI under NCLB. Federal law establishes
grant amounts between $50,000 and $500,000 per Title I PI
school. ARRA SIG program funding is expected to be
available in the fall of 2009. AB 2 X4 authorized LEAs who
participate in the QEIA program to apply for SIG program
funds.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
According to the Assembly Appropriations Committee,
potential GF/98 cost pressure of approximately $384.7
million to provide additional state funds to local
education agencies (LEAs) who participate in the QEIA
program in order to offset the revenue limit reduction
enacted in AB 2 X4 (Evans), Chapter 2, Statutes of 2009, as
specified.
This bill expresses Legislative intent that first priority
for the restoration of the revenue limit reduction be
federal funds. To the extent that additional federal funds
are identified for this purpose, this cost may be
significantly reduced. For example, the budget revision
enacted in July 2009 identifies approximately $347 million
in federal funds for this purpose. Of this amount, $165
million are federal Title I set-aside funds (annual and
carryover) and approximately $182 million are federal
School Improvement Grant funds. As a result, if all
federal funds were able to be used, the GF/98 costs would
be approximately $37.7 million.
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DLW:do 9/11/09 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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