BILL ANALYSIS �
SENATE COMMITTEE ON EDUCATION
Alan Lowenthal, Chair
2011-2012 Regular Session
BILL NO: AB 2362
AUTHOR: Conway
AMENDED: May 2, 2012
FISCAL COMM: Yes HEARING DATE: June 27, 2012
URGENCY: Yes CONSULTANT:Daniel Alvarez
SUBJECT : Education finance: necessary small high schools:
average daily
attendance (ADA).
SUMMARY
This bill, an urgency measure, continues the ability of three
school districts to count pupils in grades 7 and 8 when
calculating their necessary small school (NSS) high school
funding, as specified.
BACKGROUND
Existing 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. (Education Code � 42285)
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.
Current law (AB 32 X1, Blumenfield, First Extraordinary
Session, Chapter 15, Statutes 2011), provided, on a one-time
basis for the 2011-12 fiscal year, the ability of three
school districts to receive NSS funding, at the NSS high
school rate, for pupils in grades 7 and 8. (EC � 42285.5)
ANALYSIS
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This bill, an urgency measure ; continues the ability of three
school districts to count pupils in grades 7 and 8 when
calculating their necessary small school (NSS) high school
funding, as specified, for the 2012-13 fiscal year.
More specifically, 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 to
continue doing so in the 2012-13 fiscal year for purposes of
calculating NSS high school funding. This change would be
good for the 2012-13 fiscal year only.
In addition, this bill specifies legislative intent that the
Superintendent of Public Instruction report to the
Legislature by February 1, 2013, recommending revisions to
the definition of NSS and reforms to the formula for funding
NSSs.
STAFF COMMENTS
1) Need for the bill . According to the author, "AB 32 X1
was a?stopgap measure to provide middle school funding
to necessary small schools. This bill measure is a
follow up to this issue and prevents disruption in the
educational programs to pupils in small school districts
by funding grades 7 and 8 in necessary small schools
during the 2012-13 fiscal year. Further, the change in
interpretation would have led to bankruptcy of these
schools. Baker Valley Unified School District, for
instance, had relied on this funding for more than ten
years."
2) In 2011, State Department of Education (SDE) determined
four school districts, subsequently amended down to
three school districts, receiving funding for necessary
small high schools had been misreporting grade 7 and 8
average daily attendance (ADA) in calculations for grade
9 through 12 ADA and receiving funding on that basis.
Existing law does not permit grade 7 and 8 ADA to be
included in the formula for funding necessary small high
schools. Accordingly, the SDE determined those
districts could no longer be provided NSS funding for
grade 7 and 8 ADA, unless those pupils attended a
necessary small elementary school.
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The three school districts found in violation of the
statute are listed below:
--------------------------------------------------------
| 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 | |
--------------------------------------------------------
3) Legislative Analyst's Office 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."
The LAO report concluded "small districts still tend not
to pursue consolidation. In large part, this is because
the state provides both fiscal incentives for districts
to remain small and certain disincentives for 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. "
Furthermore, the LAO indicates "?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
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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."
4) Without NSS funding these districts may face difficult
financial circumstances . For example, Baker Valley
Unified school district, with a total budget of $2.7
million, has received a qualified certification from the
State Department of Education as of May 21, 2012. A
qualified certification is assigned to a local
educational agency when it is determined that, based
upon current projections, the LEA may not meet its
financial obligations for fiscal year 2011-12, 2012-13,
or 2013-14. However, over 165 school districts of
varying budget size have been identified as qualified
certification.
As school districts teeter on the edge of fiscal
insolvency, it is critical that they pursue all avenues
available to them for obtaining fiscal relief, including
relief from any deferrals that may have a significant
impact on their cash flow and the provision of timely
educational services. However, staff could not
determine whether any of the three school districts that
are seeking exception to current law have pursued relief
from intra-or inter year deferrals. If the committee
wishes to move this measure, staff recommends an
amendment that requires any school district impacted by
this measure to pursue any available funding deferral
exemptions that they may be eligible for.
5) The Assembly Appropriations Committee indicates this
measure would result in loss of foregone General Fund
(Proposition 98) savings of approximately $2.5 million
in NSS funding by allowing three school districts to
continue claiming ADA for pupils in grades 7 and 8, as
specified.
SUPPORT
Baker Valley Unified School District
Butte Valley Unified School District
California Teachers Association
Siskiyou County Office of Education
Small School Districts' Association
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OPPOSITION
None on file.