BILL ANALYSIS �
AB 2362
Page 1
Date of Hearing: May 16, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 2362 (Conway) - As Amended: May 2, 2012
Policy Committee: Education
Vote:10-0
Urgency: Yes State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill modifies the necessary small school funding formula to
allow a school district that claimed instructors and average
daily attendance (ADA) for pupils in grades 7 and 8 in the
2011-12 fiscal year (FY) to continue doing so for these grades
in the 2012-13 FY.
FISCAL EFFECT
Loss of foregone GF/98 savings of approximately $2.5 million in
necessary small school (NSS) funding by allowing three school
districts to continue claiming ADA for pupils in grades 7 and 8,
as specified.
COMMENTS
1)Background . Current law defines a NSS as an elementary school
with an ADA of less than 101 or a high school with an ADA of
no greater than 300 in school districts that enroll a total of
less than 2,501 pupils. NSSs receive specified allowances
based upon the size of the small school as measured by number
of teachers and students and in lieu of revenue limited
funding (general purpose funding) that would usually be
allocated per pupil in attendance.
Statute also specifies necessary small elementary schools be
funded based on their ADA for K-8, excluding pupils who attend
a junior high school for grades 7 and 8. Likewise, a
necessary small high school is funded on the basis of ADA for
grades 9-12.
2)Purpose . In 2011, SDE determined four school districts were
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receiving necessary small high school funding based on ADA for
grades 7 and 8. This violated statute because high schools
are only required to receive funding based on ADA for grades
9-12. As a result, SDE determined these school districts
were not allowed to receive NSS funding for these grades
unless the pupils attended a small elementary school. After
the initial discovery, SDE amended the number of districts in
violation of statute to three. The following chart details
the three districts and the amount of funding they received
based on grades 7 and 8 ADA.
--------------------------------------------------------
| District | County | School | Total NSS |
| | | | Funding |
|--------------+----------+--------------+---------------|
|Baker Valley |San |Baker Jr. |$515,549 |
|Unified |Bernardino|High | |
| | | | |
|--------------+----------+--------------+---------------|
|Butte Valley |Siskiyou |Butte Valley |$759,082 |
|Unified | |Middle | |
|--------------+----------+--------------+---------------|
|Scott Valley |Siskiyou |Scott Valley |$1.24 million |
|Unified | |Junior High | |
--------------------------------------------------------
Source: SDE
AB 32 X1 (Blumenfield), First Extraordinary Session, Chapter
15, Statutes 2001, modified the NSS formula to allow schools
receiving instructor and ADA funding for grades 7 and 8 in the
2010-11 FY continue to do so in the 2011-12 FY. According to
the author, of AB 2362, "AB 32 X1 was a?stopgap measure to
provide middle school funding to necessary small schools.
�This bill] is a follow up measure to this issue and prevents
disruption to pupils in small school districts by funding
grades 7 and 8 in necessary small schools during the 2012-2013
�fiscal] year."
3)Legislative Analyst Office (LAO) report on small school
districts . In May 2011, the LAO released a report entitled:
How Small Is Too Small? An Analysis of School District
Consolidation, which concluded "small districts still tend not
to pursue consolidation. In large part, we find this is
because the state provides both fiscal incentives for
districts to remain small and certain disincentives for
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districts to consolidate. Specifically, the state encourages
districts (and schools) to remain small by providing them
substantial funding advantages. These benefits are especially
evident in very small school districts, which on average
receive more than twice as much funding per pupil compared to
midsize and large districts. "
With respect to NSS funding, the LAO reports: "The base
statutory NSS grant amounts (in lieu of revenue limits)
provide $138,000 for each group of up to 24 elementary
students and $500,000 for high schools with up to 19 students
and three teachers. (In recent years, these amounts have been
deficited commensurately with revenue limit reductions.) Of
the 203 schools generating the NSS supplement, 74 serve fewer
than 20 ADA, with 58 of these schools serving fewer than 15
ADA."
The LAO further 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."
Analysis Prepared by : Kimberly Rodriguez / APPR. / (916)
319-2081