BILL ANALYSIS
------------------------------------------------------------
|SENATE RULES COMMITTEE | SB 84|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
------------------------------------------------------------
UNFINISHED BUSINESS
Bill No: SB 84
Author: Steinberg (D),et al
Amended: 9/10/09
Vote: 21
SENATE VOTES NOT RELEVANT
ASSEMBLY FLOOR : 54-22, 9/11/09 - See last page for vote
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
SB 84
Page
2
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.
SB 84
Page
3
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
SB 84
Page
4
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
The Senate Appropriations Committee staff states, by
potentially prohibiting K-12 funding reductions approved as
part of the revision of the 2009 Budget Act, this bill
creates a cost pressure of up to $402 million. The maximum
cost pressure is tied to actual allocations for the
purposes of QEIA, which have been approximately $385
million annually, according to most recent data, though
$402 million has been appropriated for the 2009-10 fiscal
year. To the extent that federal funds can be identified
to backfill the reductions, this cost pressure would be
mitigated. The July budget revision identified a total of
$347 million in federal funds to backfill the reductions (a
combination of Title 1 set aside funds and School
Improvement Grants). However, it is not clear that any or
all of these federal funds may be used as general purpose
funding equivalent to revenue limits, as this bill would
suggest. Further, any increase in Proposition 98 costs in
the 2009-10 fiscal year may trigger ongoing increases in
the minimum guarantee for future years.
They noted that subdivision (e) in the most recent version
of the bill appears to be subject to varying
SB 84
Page
5
interpretations. While the language is intended to specify
that $64.9 million in Title 1 carryover will be used to
backfill reductions, it may otherwise be interpreted by
some to simply appropriate additional federal funds to QEIA
participants.
ASSEMBLY FLOOR :
AYES: Ammiano, Arambula, Beall, Bill Berryhill, Block,
Blumenfield, Bradford, Brownley, Buchanan, Caballero,
Charles Calderon, Carter, Chesbro, Conway, Coto, Davis,
De La Torre, De Leon, Eng, Evans, Feuer, Fong, Fuentes,
Furutani, Galgiani, Gilmore, Hall, Hayashi, Hernandez,
Hill, Huber, Huffman, Jones, Krekorian, Lieu, Bonnie
Lowenthal, Ma, Mendoza, Monning, Nava, John A. Perez, V.
Manuel Perez, Portantino, Ruskin, Salas, Saldana,
Skinner, Solorio, Swanson, Torlakson, Torres, Torrico,
Yamada, Bass
NOES: Adams, Anderson, Tom Berryhill, Blakeslee, Cook,
DeVore, Emmerson, Fletcher, Fuller, Gaines, Hagman,
Knight, Logue, Miller, Nestande, Niello, Nielsen, Silva,
Smyth, Audra Strickland, Tran, Villines
NO VOTE RECORDED: Garrick, Harkey, Jeffries, Vacancy
DLW:do 9/14/09 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
**** END ****