BILL ANALYSIS �
SENATE COMMITTEE ON EDUCATION
Alan Lowenthal, Chair
2011-12 Regular Session
BILL NO: AB 1811
AUTHOR: Bonilla
AMENDED: June 12, 2012
FISCAL COMM: Yes HEARING DATE: June 20, 2012
URGENCY: No CONSULTANT:Beth Graybill
SUBJECT : Charter schools: Funding.
SUMMARY
This bill changes the method for computing the general
purpose entitlement funding for a charter high school that
was under the jurisdiction of a unified school district
before the school converted to charter status.
BACKGROUND
School district revenue limits are comprised of state general
aid and local general purpose property tax revenues. For
purposes of revenue limit equalization, current law
classifies school districts as elementary districts, high
school districts, or unified school districts. The revenue
limits of unified districts are typically less per pupil than
high school districts, but more per pupil than elementary
school districts, reflecting the fact that unified districts
serve all grades.
Existing law provides for a general purpose entitlement for
charter schools. The general purpose entitlement constitutes
a charter school's base general purpose funding and is based
on statewide averages of school district general purpose
(revenue limit) funding per pupil. Specifically, charter
school funding is calculated as follows:
1) For pupils in grades K-5: The statewide average revenue
limit funding per unit of Average Daily Attendance (ADA)
received by elementary school districts.
2) For pupils in grades 6 through 8: The statewide average
revenue limit funding per unit of ADA received by
unified school districts.
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3) For pupils in grades 9-12: The statewide average
revenue limit funding per unit of ADA received by high
school districts. (Education Code � 47633)
ANALYSIS
This bill :
1) Requires the general purpose entitlement of a charter
school established through the conversion of an existing
public school within a unified school district on or
after January 1, 2013, to be calculated based on the
amount of the actual unrestricted revenues expended per
ADA for that school in the year before its conversion,
and commencing with the 2013-14 fiscal year, adjusted
for inflation, equalization, deficit reduction, and any
other state general purpose increases or decreases, as
specified.
2) Exempts a charter school that is established through the
conversion of an existing public high school within a
unified school district between January 1, 2010, and
December 31, 2012, from the bill's requirements.
Specifies that a charter school and unified school
district are not precluded from agreeing to an
alternative funding formula.
3) Exempts conversion charter high schools within the Los
Angeles Unified School District (LAUSD) from the act.
STAFF COMMENTS
1) Need for the bill. This bill addresses the funding
differential that occurs when an existing high school in
a unified school district that is not a basic aid
district, is converted to a charter high school. The
bill would require a conversion charter high school in a
unified school district to receive a rate that is based
on the revenue the school district received in the year
prior to its conversion. The author maintains that the
current funding model creates significant financial
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issues for unified districts because the charter school
general purpose entitlement per ADA is greater than the
district's revenue limit per ADA. Since the charter
school's general purpose entitlement is funded from the
school district's revenue limit, the unified school
district generally ends up making up the shortfall. For
example, information provided by the author's office
indicates that the revenue limit for the Mt. Diablo
Unified School District is $5,207, but the district must
transfer $6,148 per ADA to a proposed charter school, a
difference of $941 per ADA.
2) Historical perspective . Historically, funding for
charter high schools has been based on statewide
averages for high school districts. At the same time,
funding for unified school districts is lower than it is
for high school districts because the Legislature has
recognized that lower-costing elementary schools in the
district help to offset the district's higher-costing
high schools. Prior to 2005, this cost differential
meant that conversion charter high schools in unified
school districts were entitled to a higher level of
funding per ADA, paid out of district funds, than the
district's revenue limit.
In 2005, SB 319 (Migden, Chapter 355), solved the shortfall
problem by establishing a new basis for funding high
schools converted to charter status in unified school
districts. Under SB 319, a charter school's general
purpose entitlement per ADA was based on the level of
general purpose funding provided to the school by the
district in the year prior to conversion. SB 319 also
required base amounts to be increased for cost of living
adjustments (COLA) and other revenue limit adjustments
received by the district but provided no means for
decreases when the district's revenue limit funding was
reduced. However, the formula established by SB 319
resulted in conversion charter high schools in unified
school districts to be funded at a lower rate than
startup charter high schools.
SB 191 (Wright, Chapter 305, 2009) remedied the inequity in
funding levels between conversion and start up charter
high schools in unified districts by funding conversion
charter high schools established in a unified district
after January 1, 2010, at the statewide average charter
school block grant level. While SB 191 remedied the
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funding disparity between conversions and start-ups, it
reinstated district shortfalls previously removed by SB
319, thus creating a negative impact of approximately
$900 per ADA for the district.
3) Substituting one problem for another ? This bill
provides that general purpose funding for conversion
high school charter schools per ADA in unified school
districts will be equal to the revenue limit per ADA of
the district of which it was a part and provides that
the amount shall increase or decrease consistent with
increase or decreases in revenue limit funding. While
this bill may solve the district shortfall issue, it
could reinstate the inequity that existed under SB 319,
in that start-up high schools in unified districts would
have a higher entitlement than would conversion high
schools in the same unified district. Could this create
a disincentive for the establishment of conversion
charters? Given the differentiated funding model for
the different types of school districts and the need to
adequately fund conversion charter schools, it is
unclear whether the right solution can be found within
the state's existing school finance model. Would it be
more appropriate for the Legislature to address this
issue in any discussions about school finance reform it
may have in the future?
4) Why the carve-out for LAUSD ? The LAUSD argues that
under current law, conversion charter high schools
receive the statewide average high school district
revenue limit. While it means that unified districts
transfer to the conversion charter high school a greater
amount per ADA than the district receives per ADA in its
revenue limit apportionment, LAUSD argues that the
formula ensures that the amount due to the conversion
charter high school is "set" and is not subject to
dispute. The District maintains that the formula
proposed by AB 1811 would be problematic because it
could result in disagreements between the District and
the conversion charters on the appropriate certified
rate, particularly when considering district-wide
expenses and special education encroachment factors.
The district argues that absent an exemption, the
formula proposed by AB 1811 could lead to expensive,
protracted arbitration between the district and various
conversion charter high schools.
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Under the exemption provided by AB 1811, conversion charter
highs schools in LAUSD would continue to be funded as
they are under current law, resulting in LAUSD's
conversion charter high schools funded at one rate while
conversion charter schools in other unified districts
will be funded at another. Is this fair?
Should the Committee wish to pass this bill, staff recommends
amendments to eliminate this exemption.
5) Arguments in opposition . Opponents argue that under the
bill, a conversion charter high school is likely to
receive a rate that is substantially lower than the
statewide charter high school rate that it would
otherwise receive. This differential will disadvantage
conversion charter high schools in these districts
because, unlike the district, the school does not have
elementary and middle schools with which it can offset
its shortage in revenue. Opponents also note that
charter schools have additional expenses that are not
calculated in a blended unified rate. Opponents also
submit that certifying a rate based on the prior year's
revenue directed to that school will be difficult to
verify and implement because school-site accounting is
not currently required of school districts.
SUPPORT
Association of California School Administrators
California School Boards Association
California School Employees Association
Mount Diablo Unified School District Advisory Committee for
Special Education
Individual letters
OPPOSITION
California Association of Charter Schools Advocates