BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
1136 (Cox)
Hearing Date: 05/27/2010 Amended: 04/19/2010
Consultant: Dan Troy Policy Vote: ED 8-0
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BILL SUMMARY: SB 1136, an urgency measure, would prohibit the
deferral of a school district's revenue limit apportionment from
exceeding the district's required reserve for economic
uncertainties if the district average daily attendance (ADA) is
equal to or less than 500.
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Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
Interest Loss Approximately $150 to $200,
depending General
on the applicable interest rate
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STAFF COMMENTS: SUSPENSE FILE. AS PROPOSED TO BE AMENDED.
Current law specifies that local education agencies (LEAs) shall
have up to a total of $2.5 billion in statewide apportionment
funding deferred during the 2010-11 school year with a maximum
of three deferrals during the fiscal year. The first possible
deferral is scheduled for July 2010. However, the latest any
funding deferral can take place would be March 2011; in this
instance the deferral would be paid by April 29, 2011.
Current law also specifies that various state payments to local
governments may be deferred up to three times during 2010-11,
with no more than $1 billion being deferred at any point in
time. In addition, current law exempts counties with a
population less than 50,000 or a city within a county with a
population less 50,000 from any deferral of funding.
The intent of the bill is to ease the cash and administrative
burdens of the deferrals on small districts that may not have
the necessary economies of scale to manage the deferrals.
By restricting the deferral of funds from the over 300 districts
with fewer than 500 ADA, the General Fund absorbs a loss of
interest for up to 6 months. Assuming interest at 3 percent for
this time period, costs to the state would be at least $200,000.
However, the Department of Education suggests that the bill
would not be implementable in its current form, as district
reserve figures are not stable and are not reported to them.
Also, current statute regarding deferrals refers to "principal
apportionments" as opposed to revenue limit apportionments,
further complicating the workload required to meet the bill's
specifications. The Department has suggested several changes to
make the bill implementable, which staff understands the author
has taken under consideration.
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SB 1136 (Cox)
Author's proposed amendments would limit deferrals to $225 per
ADA and restrict application to intra-year deferrals.