BILL ANALYSIS
SB 680
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Date of Hearing: July 15, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
SB 680 (Romero) - As Amended: June 24, 2009
Policy Committee: Education
Vote:6-1
Urgency: Yes State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill extends the School District of Choice (SDC) program
from July 1, 2009 until July 1, 2016. Specifically, this bill:
1)Requires communications to parents or guardians by districts
participating in the SDC program to provide factually accurate
information and not target individual parents or guardians or
residential neighborhoods on the basis of a child's perceived
academic or athletic performance, as specified.
2)Prohibits a SDC from rejecting the transfer of a special needs
and English learner pupils into their district, as specified.
3)Authorizes a school district that has a negative fiscal status
related to its budget (as determined by the county office of
education) in any fiscal year (FY) to limit the number of
pupils who transfer out of the district in that FY.
4)Requires districts participating in the SDC program to keep
specified information on participating pupils, including race,
ethnicity, and gender.
5)Repeals the requirement that prohibits new districts from
participating in the SDC program, thereby allowing an
indefinite number of districts to participate in the program.
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6)Specifies legislative intent to request the Legislative
Analyst to conduct a comprehensive evaluation of the SDC
program, as specified.
FISCAL EFFECT
1)Potential loss of GF/98 savings, of approximately $2.6
million, to the 19 SDE identified school districts of choice
that are basic aid. A basic aid district is defined as a
district whose revenue limit funding (general purpose) is met
entirely with local property tax funds; therefore, the state
does not contribute revenue limit funding to these districts
to serve their pupils. However, under the SDC program,
statute requires the Superintendent of Public Instruction to
calculate revenue limit funding for basic aid school districts
of choice in an amount equivalent to 70% of revenue limit
funding that the school district of residence would have
received if the pupil attended school in that district.
2)Potential GF/98 costs, likely between $400,000 and $795,000,
for increased costs related to the declining enrollment
adjustment. This measure uncaps the SDC program, which allows
any school district in the state to participate in the SDC
program. As stated below, 52% of school districts in the
state are experiencing declining enrollment. Existing law
provides school districts with a one- year hold harmless
adjustment if their enrollment is declining. For the 2007-08
fiscal year, the state provided $318 million GF/98 for the
declining enrollment adjustment.
3)This bill is an urgency measure due to the current statute
that sunsets the SDC program on July 1, 2009. The author has
provided a March 2009 Legislative Counsel Opinion to this
committee that states if the SDC program becomes inoperative
on July 1, 2009 pupils who are enrolled under this program
will not be allowed to remain in a school district choice. As
such, the author contends that if these school districts are
in declining enrollment, the state will be required to pay an
increased declining enrollment adjustment in addition to the
revenue limit funding for the pupils returning to their school
district of residence, resulting in millions of dollars in
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GF/98 costs to the state.
a) The contention assumes a number of variables associated
with it. First, it assumes that all pupils participating
in the SDC program would not continue to enroll in these
districts. As referenced below, existing law establishes
an interdistrict transfer program, which is an avenue these
pupils can pursue to remain in the district of choice.
Second, as referenced above in #1, 19 of the 25 districts
identified as currently participating in the SDC program
are basic aid school districts. Therefore, the state does
not pay a declining enrollment adjustment to them because
it does not provide revenue limit funding to a basic aid
district. However, the state would be required to pay the
full revenue limit cost of the pupil who returns to his or
her district of residence.
Of the six school districts of choice that are not basic
aid, the state may be required to pay a declining
enrollment adjustment, if the school district is in
decline. However, if these pupils return to their school
district of residence and these districts receive a
declining enrollment adjustment from the state, the amount
of this adjustment would be slightly reduced due to the
pupils return to the district.
b) If the SDC program were to sunset and the pupils
attending basic aid school districts of choice were
required to return to their district of residence, the
state would pay increased GF/98 revenue limit
apportionments, likely in the hundreds of thousands to low
millions (assuming the districts of residence are not basic
aid). These costs would be incurred due the state paying
full revenue limit funding for the returning pupils.
However, as noted above, these costs may be offset by a
potential decrease in the state's declining enrollment
adjustment paid to the district of residence.
COMMENTS
1)Background . AB 19 (Quackenbush), Chapter 160, Statutes of
1993, authorized the governing board of a school district to
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declare itself a school district of choice (willing to accept
a specified number of inter-district transfers). A school
district of choice is not required to accept pupils, however,
for those pupils it does accept, the district is required to
select them through a random process that is not based on
academic or athletic talent.
Unlike other school inter-district transfer statute (see
below), AB 19 does not require agreement between the two
affected school districts in order to admit transfer pupils.
If a district of pupil residence has 50,000 or less pupil
attendance, it can refuse to transfer more than one percent of
its attendance and limit the maximum number of transfers to
10% of its overall attendance for the duration of the program.
For a school district with more than 50,000 in attendance, it
can refuse to transfer more than 3% of its attendance.
Furthermore, transfer priority is given to siblings of
students already attending school in a "school district of
choice."
SB 80 (Committee on Budget and Fiscal Review), Statutes of
2007, extended the SDC program until July 1, 2009 and required
the SDE, on or before November 1, 2008, to submit a report to
the Legislature evaluating interdistrict transfer options
within the state with an emphasis on the SDC program. SB 80
required the report to contain specific elements, including
the academic achievement of pupils within school districts of
choice, the number of pupils who transferred, and the fiscal
health of school districts involved in the SDC program. In an
April 2009 supplemental report of the SDC program, submitted
to the Assembly Education Committee, SDE reports identified 25
districts currently participating in the SDC program. This
bill extends the sunset of the SDC program until 2016 and
authorizes an unlimited number of districts to participate in
this program, as specified.
2)Committee amendments : The committee recommends the following
amendments to this measure:
a) Reporting requirement: SB 80 required SDE to conduct a
report on the SDC program (see comment #4 below). This
report is incomplete in terms of its information and
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analysis of the program. As such, the committee recommends
that the Legislative Analyst conduct a comprehensive report
and that school districts of choice be required to report
additional information annually.
b) Local fiscal impact of SDC program: The Assembly
Education Committee amendments authorize a school district
of residence that currently has a negative fiscal status
(as determined by the county superintendent of schools
through the existing local budget process) to limit the
number of pupils that transfer under this program. In
order to ensure that this same authority is provided to
school districts of residence that are not currently
classified as negative, the committee recommends amendments
to achieve this. As noted below, over 50% of school
districts in the state are experiencing declining
enrollment, which results in the loss of revenue limit
funding (general purpose). These amendments provide school
districts of residence, through the existing local school
budgeting process, the authority to determine the SDC's
program's impact on its fiscal health.
3)Non-fiscal bill . This bill is keyed non-fiscal, however, this
committee requested this bill in order to assess the financial
implications of extending the SDC program. This committee
heard a similar measure, AB 1407 (Huffman), in May of this
year. AB 1407 was held on this committee's suspense file.
4)Existing law also authorizes two school districts to enter
into an agreement that allows pupils to transfer between the
two districts, as specified. This agreement allows the
pupil's parent or guardian requesting the inter-district
transfer to appeal to the county board of education in the
event that either district refuses the requested transfer.
The transfer agreement also allows districts to consider child
care as a factor in approving or denying transfer requests, as
specified.
Under the No Child Left Behind Act of 2001, a school is
identified for program improvement (PI) when it fails to meet
academic targets for two consecutive years. NCLB requires PI
schools that are Title I (i.e., primarily serve poor pupils)
and in year one of PI to notify parents they can transfer
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their pupil to another school within the district that is not
PI.
5)SDE 2008 Report of the SDC program . SB 80 required the SDE to
conduct a report on the SDC program, including school
districts of choice and the original districts of residence of
the pupil.
SDE surveyed 100 school districts receiving the most students
through the interdistrict transfer programs in 2006-07. The
survey data revealed that the reciprocal interdistrict
transfer option (i.e., where both districts have an agreement)
is the most prevalent form of transfers in the state.
Furthermore, the SDE states that "only 3.9% of the responding
districts actively participate in the SDC program."
Many argue the SDE report is incomplete with respect to the
number of school districts surveyed, and therefore, the data
reported does not represent a clear picture of the SDC
program. In response to a request by the Assembly Education
Committee for more data related to the SDC program, SDE
submitted a supplemental report in April 2009. This report
provided various demographic and accountability data (see
below). However, SDE states it "still does not have
definitive information about which California school districts
currently participate in the SDC program."
This bill expresses the intent of the Legislature to request
that the Legislative Analyst Office (LAO) to conduct a
comprehensive evaluation of the interdistrict transfer
program, including the SDC program, as specified.
6)April and June 2009 supplemental SDE reports of the SDC
program . SB 80 required school districts participating in the
SDC program to annually collect pupil data on this program.
SDE states that "the Legislature provided no funding to
support this requirement and data-gathering procedures were
never implemented." However, SDE made a good faith effort via
the June 2009 report to provide additional data to the
Legislature.
According to SDE, they identified 25 school districts that
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currently participate in the SDC program. Of these 25
districts, 16 responded to SDE's data inquiry. In 2007-08,
the 16 respondents reported that a total of 403 students
requested enrollment in their district as a school district of
choice. Of these 403 students, 102 pupils (25%) were denied;
5 pupils were withdrawn by parents; and 252 (63%) pupils were
enrolled in these districts.
In 2008-09, the 16 school districts reported that 437 pupils
requested enrollment in their district as a school district of
choice. Of these 437 pupils, 141 (32%) were denied; 2 pupils
were withdrawn by parents; and 251 (57%) were enrolled in
these districts.
The April 2009 report also provided data that identified 25
school districts as "probably" participating in the SDC
program. According to SDE, these districts "have a higher
aggregate achievement (+56.5 Academic Performance Index (API)
points), lower poverty (-17.7%), fewer English learner
pupils (-9.6%), and a higher parent education average (+0.43;
+15.6%) that the state as a whole."
The April 2009 report also identified 60 "probable" feeder
school districts (i.e., districts where SDC pupils originate
from). These feeder districts "have lower aggregate
achievement (-2.9 API points) and a lower parent education
average (-0.11; 4.1%) that the state as a whole.
SDE states "when the probable school districts of choice are
directly compared to the probable districts of residence, it
is apparent that there are educationally significant
differences between the two samples. For example, the 59.4
API points that separate the two samples averages is a
magnitude that is 4.25 times greater than the overall
statewide growth from the 2007 API Base to the 2008 API
Growth. Whether such educationally significant differences
exist in the larger body of school districts of choice and
districts of residence is not known."
7)Potential fiscal implications of the SDC program . Information
provided to this committee suggests that more urban districts
have become school districts of choice in recent years. As
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more districts become school districts of choice, there are
financial implications for the district of residence due to a
statewide decline in enrollment.
According to the LAO, 510 of 975 school districts (52%) are
experiencing declining enrollment. If school districts are
experiencing declining enrollment, they are losing revenue
limit funding (general purpose) because the amount they
received is based on the number of students they serve. The
LAO further estimates that over the next 10 years, K-12
enrollment growth will decline, beginning in 2008-09. This
contrasts with the high enrollment growth in recent years,
which averaged 2.2% annually in the 1990s.
As pupils transfer out of school districts under the school
district of choice program, the school districts that they
reside in lose revenue limit funding for those students.
Since half of the state's districts are already experiencing a
loss of revenue due declining enrollment, a school district
losing pupils under this program argues that pupil transfers
only exacerbate the problem. Furthermore, opponents of this
program argue that the SDC program is gaining revenue limit
funding at the expense of another neighboring district. When
a school district loses revenue, it impacts their ability to
provide education programs to the remaining students because
they have less overall funding.
The relationship between declining enrollment and the SDC
program is difficult to quantify on a statewide level.
Analysis Prepared by : Kimberly Rodriguez / APPR. / (916)
319-2081