BILL ANALYSIS �
AB 1448
Page 1
Date of Hearing: May 2, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 1448 (Furutani) - As Amended: March 19, 2012
Policy Committee: Education
Vote:11-0
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill, commencing with the 2012-13 fiscal year (FY) and each
FY thereafter, requires the Legislature to not reduce funding
for the home-to-school transportation (HTST) program below the
amount established in the 2011 Budget Act. Specifically, this
bill:
Declares legislative intent to fund the HTST program at the
level approved in the 2011 Budget Act.
FISCAL EFFECT
This bill removes legislative discretion in making annual budget
decisions related to K-14 Education (Proposition 98). Whether
to fully fund, eliminate, or reduce funding for programs is
fundamental to the annual budget process. Given the complexity
and scope of the state's fiscal problem, lawmakers may wish to
retain the right to establish priorities without additional
limitations.
COMMENTS
1)Background . The HTST program provides funding for
transportation costs for approximately 963,000 students. The
formula used to calculate each school district's apportionment
is based on the requirement that its current year funding
cannot exceed its prior year cost. State funding for special
education transportation averages slightly more than 50% of
district-approved costs, and state funding for regular
transportation averages 43% of school district costs.
Variations in reimbursement levels range from lows of less
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than 10% of costs to full state funding of approved costs.
As part of the February 2009 budget package, SB 4 X3
(Ducheny), Third Extraordinary Session, Chapter 12, Statutes
of 2009, provided LEAs with unprecedented fiscal and policy
flexibility related to over 40 categorical programs, including
the HTST program, between the 2008-09 fiscal year (FY) to the
2012-13 FY. Specifically, any LEA that received funding for
specified categorical programs (i.e., HTST program) in the
2008-09 FY is authorized to use this funding for any other
educational purpose until the 2012-13 FY. The LEA may choose
to continue operating the categorical program that it received
funding for or redirect it for any other educational purpose
it deems appropriate. SB 70 (Committee on Budget and Fiscal
Review), Chapter 7, Statutes of 2011, extended this
flexibility until the 2014-15 FY.
The State Auditor (SA) released a report in March 2007, HTST
Program: The Funding Formula Should Be Modified to Be More
Equitable. The SA documents that school districts provided
transportation to more than 91,000 special education students
(at a total cost of $438 million) and more than 830,000
regular education students (at a total cost of $777 million)
during the 2004-05 fiscal year (FY). Furthermore, it states:
"The fiscal data that school districts provided to the State
Department of Education for the FY 2004-05 show approximately
$500 million of the $1.2 billion school districts spent on
student transportation were financed by HTST program funds.
The remaining $700 million came from other state or local
sources. In comparison with rural school districts, urban
school districts received less overall HTST program payments
per student transported ($559 versus $609) and paid for more
overall costs per student transported from other state or
local sources ($828 versus $298). On the other hand, all
school districts typically incurred higher costs to transport
a special education student, but such costs were higher in
rural school districts ($5,315) than in urban school districts
($4,728)."
2)Purpose . The 2011 Budget Act allocated a total of $496
million GF/98 for the HTST program. AB 121 (Assembly Budget
Committee), Chapter 41, Statutes of 2011, authorized
additional reductions of up to $1 billion to the 2011 Budget
Act allocations for specified programs, including the HTST
program, if state revenues revenue estimates fall below
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specified levels (i.e, the "trigger"). Specifically, the HTST
program was required to be reduced by $248 million GF/98, if
the Department of Finance (DOF) determined GF revenue
estimates fell below $86.5 billion. In December 2011, DOF
applied the trigger cut to the HTST Program, which resulted in
the elimination of the remaining half year of funding ($248
million GF/98) for the program in the 2011-12 FY.
SB 81 (Committee on Budget and Fiscal Review), Chapter 2,
Statutes of 2012, reversed the $248 million GF/98 HTST program
trigger cut; therefore, restoring program funding to the level
allocated in the 2011 Budget Act. In order to achieve the
GF/98 savings, the HTST program reduction was replaced with a
comparable reduction to school district, county office of
education, and charter school revenue limit funding (general
purpose). Basic aid school districts also were reduced to
ensure all school districts were sharing in the state
reductions.
According to the author, "With the loss of home-to-school
transportation, students are faced with the daily challenges
of getting to and from school safely. Young students are
forced to cross through major industrial zones, heavily
trafficked areas which contain freeway onramps and off-ramps,
and neighborhoods with high crime rates. Other students who
reside in rural areas will be faced with difficult challenges,
such as traveling long distances and sharing two-way roads
with agriculture vehicles. This bill protects home-to-school
transportation from future funding uncertainty, which helps
ensure students' right to education, remove barriers to
accessing education and protect students from dangers that
students encounter in traveling to and from school. "
3)Governor's 2012-13 budget proposal for the HTST program. When
the K-12 Education budget proposal was released in January
2012, the governor proposed to eliminate HTST program funding
($496 million GF/98). At the same time, the proposal included
a complete overhaul of the K-12 school funding system via the
establishment of a weighted pupil formula. Beginning in the
2012-13 FY, this formula consolidates approximately $39
billion in revenue limit apportionments (general purpose) and
approximately $7 billion, which represents funding for 40
state categorical programs, into a weighted pupil formula for
school districts and charter schools.
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When the governor initially proposed the weighted funding
formula in January 2012, school districts and charter schools
were not held harmless for any loss of funds due to
redistribution. Likewise, the HTST program funding was not
included in the initial weighted formula proposal because the
governor proposed to eliminate all funding for this program in
the 2012-13 FY.
In February 2012, DOF presented an updated weighted pupil
formula proposal that included holding districts and charter
schools harmless only in the 2012-13 FY for any loss of
funding from the prior year. In order to accomplish this, the
governor proposes to redirect $586 million GF/98 in K-12
funding proposed for other purposes in January's budget
proposal. As a part of this redirection of funds, the governor
restores $496 million GF/98 to be used in the weighted pupil
formula allocation. This amount is equal to what would have
been provided if the HTST program were funded in 2012-13 FY;
school districts and charter schools, however are not required
to spend the money on school transportation. Essentially,
the governor is utilizing the HTST program funding to hold
districts and charter schools harmless for one year as part of
his K-12 weighted pupil formula proposal.
Beginning in the 2013-14 FY, school districts would no longer
be held harmless and an amount equal to HTST program funding
will not be provided.
4)Should the HTST program receive funding protection over all
other K-12 Education programs ? The governor's January 2012-13
Budget proposal assumes the state receives $6.9 billion in
additional tax revenues. Of this amount, approximately $2
billion is earmarked for K-14 education (Proposition 98). In
the event the 2012 tax initiative does not pass, the proposal
includes an alternative Proposition 98 (P98) budget plan for
the 2012-13 FY. Under the alternative plan, approximately $4.8
billion GF/98 reductions would be "triggered" mid-year for
K-14 education. These reductions reflect a $2.4 billion drop
in the P98 minimum guarantee from lower revenues. In addition,
the governor proposes to shift K-14 general obligation bond
debt service payments into the lower minimum guarantee,
accompanied by $2.4 billion GF/98 reductions to accommodate
this shift.
In order to achieve the $4.8 billion GF/98 reductions in the
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2012-13 FY, the governor proposes to: (a) eliminate the
restoration of $1.8 billion GF/98 in inter-year deferral
payments currently proposed ($1.6 billion for K-12); and (b)
implement an additional $3.1 billion GF/98 ($2.8 billion for
K-12) in unspecified, proportional programmatic reductions for
K-14 education.
The state is facing uncertainty in establishing the 2012
Budget Act. Also, the above proposal does not reflect any
revised revenue estimates expected in May, which may further
exacerbate the need for additional P98 trigger reductions
beyond the $4.8 billion. Given all of these moving parts,
should the state declare protection of the HTST program over
all other K-12 programs, including K-3 Class Size Reduction,
Economic Impact Aid program (serves poor/needy and English
learner children), adult education, or school counseling?
Analysis Prepared by : Kimberly Rodriguez / APPR. / (916)
319-2081