BILL ANALYSIS �
AB 2362
Page 1
Date of Hearing: April 11, 2012
ASSEMBLY COMMITTEE ON EDUCATION
Julia Brownley, Chair
AB 2362 (Conway) - As Introduced: February 24, 2012
SUBJECT : Education finance: necessary small high schools:
average daily attendance
SUMMARY : Changes the Necessary Small School (NSS) funding
formula as it relates to the average daily attendance (ADA) and
instructors in grades 7 and 8. Specifically, this bill : Allows
school districts to include 7th and 8th grade ADA and 7th and
8th grade instructors in the formula for calculating high school
NSS funding, if the district did so in the prior year.
EXISTING LAW provides general purpose funding for school
districts through a revenue limit, which is a dollar amount per
ADA multiplied by the district's ADA. Because revenue limit
funding falls short of the amount needed to operate a necessary
small school, those schools receive their general purpose
funding through an alternative formula, which is based on a
combination of ADA and the number of instructors employed by the
school. The NSS formula provides a higher level of funding than
the revenue limit.
Generally, a necessary small elementary school is defined as a
geographically isolated school with fewer than 101 average daily
attendance (ADA). A necessary small high school is a
geographically isolated school with fewer than 301 ADA. In both
cases, the school must be in a district with fewer than 2,501
ADA. Elementary schools are funded on the basis of ADA in
kindergarten and grades 1 through 8, exclusive of pupils in
grades 7 and 8 who attend a junior high school. High schools are
funded on the basis of ADA in grades 9 through 12.
FISCAL EFFECT : Unknown
COMMENTS : In 2011, the California Department of Education
(CDE) determined that four school districts receiving funding
for necessary small high schools had been misreporting grade 7
and 8 ADA as grade 9 through 12 ADA and receiving funding on
that basis. Existing law does not allow 7th and 8th grade ADA
to be included in the formula for funding necessary small high
schools. Accordingly, the CDE informed those districts that it
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could no longer provide NSS funding for the grade 7 and 8 ADA,
unless those pupils attended a necessary small elementary
school.
This would have resulted in a loss of funding for those schools.
Therefore, a one-time remedy was provided in the current year
by AB 32 x1 (Blumenfield), Chapter 15, Statutes of 2011, a
budget trailer bill. That bill allows the schools to retain
their NSS funding for grades 7 and 8 at the high school rate in
the current year only. The remedy applies only to the current
fiscal year pending a review of and recommendations for revising
NSS funding by the CDE. However, that review has not taken
place.
The four districts are:
Lodge Pole Elementary, Sierra Unified School District
(Fresno County)
Baker Jr. High School, Baker Valley Unified School
District (San Bernardino County)
Butte Valley Middle School, Butte Valley Unified School
District (Siskiyou County)
Scott Valley Jr. High School, Scott Valley Unified
School District (Siskiyou County)
The CDE has subsequently determined that Lodge Pole Elementary
is not at issue, because it is a K-8 school, not a high school.
Therefore it can receive NSS funding for its 7-8 enrollment in
the K-8 school as long as that school continues to meet the NSS
definition.
Baker Jr. High is one of three schools that share the same
school site. The district receives revenue limit funding for
its K-6 elementary school and NSS funding for its 7-8 junior
high school and 9-12 high school. The district has
approximately 28 ADA in grades 7-8. Under existing law, those
ADA will be funded at the elementary school district revenue
limit rate beginning in the 2012-13 fiscal year.
Butte Middle School shares a site with a high school that also
generates NSS funding. The middle school grade 7-8 ADA is 44.
If those ADA were assigned to the district's elementary school,
making it a K-8 school, that school would receive NSS funding at
the elementary rate, unless its enrollment exceeded the
threshold for qualifying as a necessary small school. In that
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case it would be revenue limit funded.
Scott Valley Jr. High is a stand-alone 7-9 school with 104 ADA.
The CDE cannot determine how many of those ADA are in grades 7
and 8. Similar to Butte Middle School, the district could
assign the 7th and 8th grades to an elementary school and
receive either NSS funding (if the school does not exceed
qualifying thresholds) or revenue limit funding.
This bill entitles each of these schools to a higher level of
funding then they would receive as revenue limit funded schools,
beginning in 2012-13. Numbers for all schools are not
available, however Butte Valley Unified reports that its 7-8 ADA
generates $756,876 of NSS funding, or $17,202 per ADA. If they
were funded through the revenue limit, those ADA would generate
$379,113 ($8,616 per ADA), a loss of $377,763 out of a total
budget of $2,399,511, according to the district.
LAO report. In May 2011 the Legislative Analyst's Office (LAO)
released a report on small school districts entitled, "How Small
Is Too Small: An Analysis of School District Consolidation."
While the report is primarily about school districts, it also
includes some findings related to small schools and the NSS
funding formula. Under the heading "Some NSS Are of
Questionable Necessity," the LAO report states:
"Presumably, the goal of the NSS supplement is to
enable exceptionally small schools to operate in
remote areas of the state so that children do not have
to spend excessive time in transit. These funds,
however, also are subsidizing very small schools that
qualify not because they are geographically isolated,
but simply because the local community has chosen to
maintain a small single-school district. Because the
current statutory definition of whether a school is
'necessarily small' does not require looking beyond
district boundaries, single-school districts can
qualify for the additional funding even if there is
another public school just down the street-provided
that school is in another district."
This report prompted the discussions about conducting a broader
review of the NSS funding formula with possible recommendations
for reform. As indicated, however, that review has not taken
place.
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REGISTERED SUPPORT / OPPOSITION :
Support
Baker Valley Unified School District
Butte Valley Unified School District
Small School Districts Association
Opposition
None received
Analysis Prepared by : Rick Pratt / ED. / (916) 319-2087