BILL ANALYSIS �
SB 1016
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SENATE THIRD READING
SB 1016 (Budget and Fiscal Review Committee)
As Amended June 25, 2012
Majority vote. Budget Bill Appropriation Takes Effect
Immediately
SENATE VOTE :Vote not relevant
SUMMARY : Provides the necessary statutory changes in the area
of education in order to enact modifications to the 2011-12 and
2012-13 Budget Acts. Specifically, this bill :
K-12 Provisions
1)Deems $671.8 million paid to schools above the Proposition 98
minimum guarantee for 2011-12 as satisfying payment towards
the California Teachers Association v. Schwarzenegger
settlement.
2)Reduces ongoing Proposition 98 funding for special education
by $220 million in 2011-12 and backfills with one-time
Proposition 98 savings from various programs to cover 2010-11
program adjustments.
3)Provides a revenue limit deficit factor of 22.549% to reflect
a $165 million deficit for county offices of education (COEs).
Provides a revenue limit deficit factor of 22.272% to reflect
a deficit of $9.1 billion for school districts. These
statutory factors are created to establish the state's intent
to repay the K-12 per-pupil reductions in the future,
including foregone cost-of-living adjustments (COLAs).
4)Establishes a zero percent COLA for K-12 programs in 2012-13.
Though the actual COLA of 3.24% is not provided, it is applied
to the deficit factors established in this measure.
5)Makes a trigger reduction of $2.739 billion to school
district, COE and charter school revenue limit funding if the
Governor's November tax initiative fails. To achieve this
reduction, authorizes a school district, COE or charter school
to provide no less than 160 days of instruction, or the
equivalent number of instructional minutes, for the 2012-13
and 2013-14 school years. Current law allows districts to
provide 175 days of instruction. Prior to this flexibility,
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districts were required to provide 180 days of instruction.
This reduction in the school year is tied to the $2.7 billion
trigger reduction.
6)Specifies that if a district reduces the number of days of
instruction, the school year will still constitute a full year
of service credit for California State Teachers' Retirement
System (CalSTRS) members in that district.
7)Includes Early Intervention Services Act funding and
appropriations to service general obligation bond debt on
behalf of schools, COEs, charter schools and community
colleges as moneys applied by the state to support schools for
the purposes of calculating Proposition 98, only if the
Governor's November ballot initiative passes.
8)Ensures a local education agency's July through May payments
of state aid for revenue limit or charter school general
purpose funding is reduced by the amount of funding received
pursuant to the School's and Local Public Safety Protection
Act (estimated to be $6.9 billion). Any differences between
the estimate and actual allocations will be settled-up in the
second principal apportionment payment in June (deferred to
July). As a result, the principal apportionment payments will
be reduced by approximately $350 million in both July and
August, and $620 million each month September through May.
9)Establishes an inter-year (cross-year) deferral schedule for
2012-13 that defers $2.065 billion less from K-12 education if
the Schools and Local Public Safety Protection Act of 2012 is
approved by voters in November 2012. Re-instates the existing
cross-year deferral schedule should the ballot initiative
fail.
10)Makes technical changes to ensure that Redevelopment Agency
(RDA) tax-increment and liquid asset revenues offset the
state's General Fund (GF) requirements for school districts,
COE revenue limits and charter school general purpose funding.
11)Redefines total local property taxes to include RDA tax
increment and liquid asset revenues.
12)Provides additional GF revenues for special education if
revenues associated with the dissolution of redevelopment
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agencies assumed in the budget act do not materialize. This
ensures that school districts are held harmless if these
revenues come in lower than expected.
13)Provides $361 million ($313 million for K-12; $48 million for
California Community Colleges (CCC)) in Proposition 98 funds
for Quality Education Investment Act (QEIA) for 2012-13 and
$266 million ($218 million for K-12; $48 million for
California Community Colleges) for 2013-14. This is in-lieu
of payments that are paid outside of Proposition 98.
14)Repeals existing law that requires the state to rebench for
the "gas tax swap" adopted by the Legislature in 2011. This
reduces the minimum guarantee by roughly $600 million. The
gas tax swap eliminated the sales tax on gasoline (previously
included in the Proposition 98 calculation) and replaced it
with an increase in the excise tax on gasoline (excluded from
the Proposition 98 calculation). Absent a rebenching, the
minimum guarantee would have decreased due to the loss of gas
tax revenues.
15)Repeals language that required rebenching of the Proposition
98 minimum guarantee related to the dissolution of
redevelopment agencies for the 2011-12 fiscal year, but would
have prohibited rebenching in the 2012-13 fiscal year for this
purpose. By deleting this language, the state is able to
rebench for RDA revenues in 2012-13 and achieve roughly $2.7
billion in GF savings.
16)Authorizes the California School Finance Authority to
refinance revenue bonds issued to finance school facilities
working capital and capital improvements, which currently is
not explicitly authorized. This technical change conforms to
current practices.
17)Requires the California Department of Education (CDE) to
monitor the adequacy of the funds in the Charter School
Revolving Loan Fund, and report, as specified, on the need to
transfer funds from the Charter School Security Fund to the
Charter School Revolving Loan Fund.
18)Authorizes the board of supervisors of a county or city and
county to order the auditor and treasurer to pay funds to a
charter school whenever the charter school does not have
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sufficient money to its credit (also known as "dry period
financing"). First call on funds paid to the charter school
shall go to repaying the borrowed funds.
19)Authorizes a county superintendent of schools, with approval
of the county board of education, to make temporary transfers
of funds to charter schools, in the same manner as is
currently authorized for school districts.
20)Establishes a charter school as a local agency for the
purpose of issuing in Tax and Revenue Anticipation Notes
(TRANs).
21)Authorizes a charter school to directly seek an exemption
from the intra-year deferrals and requires the charter
authorizer be notified of the request.
22)Requires the governing board of any school district seeking
to sell or lease any real property designed to provide direct
instruction or instructional support it deems to be surplus
property to first offer that property for sale or lease to any
charter school that has submitted a written request to the
school district to be notified of any surplus property offered
for sale or lease by the district.
23)Establishes a block grant for the majority of K-14 mandates
(continues to suspend K-14 mandates that were suspended in
2011-12). Continues the claiming process but requires school
districts, county offices of education, or community college
districts to choose annually to either claim or utilize the
block grant. Allows charter schools to receive reimbursement
through the block grant. The Budget Act provides a total of
$200 million, allocated on a per pupil/student basis as
follows: i) K-12 districts, $28 per pupil; ii) Community
college districts, $28 per student; iii) Charter schools, $14
per pupil; and, iv) County offices of education, $28 + $1
"extra" per pupil.
24)Clarifies that school districts, COEs, state special schools,
charter schools and nonpublic, nonsectarian schools are
eligible to apply for state Workability I project funds.
25)Makes technical changes related to the Gann Limit as it
relates to categorical flexibility.
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26)Suspends the statutory division of Proposition 98 funding
among K-12 educational agencies, community colleges, and other
state agencies, and instead conform the division of funding
based upon actual budget appropriations in 2012-13.
27)Makes statutory changes conforming to zero funding for the
Emergency Repair Program in 2012-13.
28)Authorizes reductions to basic aid districts' categorical
funding, proportional to the revenue limit reductions applied
to non-basic-aid districts.
29)Scores $12.133 million of 2011-12 Special Education funding
toward satisfaction of the state's 2008-09 federal
'maintenance of effort' requirement.
30)Authorizes a statutory appropriation for the K-3 Class Size
Reduction Program for 2012-13. The statute authorizes the
Superintendent of Public Instruction to certify the funding
needed for the program in 2012-13 to ensure full funding for
the program. This action is consistent with action taken in
the 2010-11 and 2011-12 Budget Acts.
31)Suspends, thru December 31, 2014, provisions of current law
that authorize school districts to levy level 3 developer fees
if the State Allocation Board is no longer approving
apportionments for new construction due to a lack of funds
available for that purpose.
Higher Education
32)Provides that, effective the 2013-14 award year, the maximum
tuition award amounts for Cal Grant A and B awards for new
recipients attending private for-profit postsecondary
educational institutions shall be reduced to $4,000 from
$9,708.
33)Provides that, effective the 2013-14 award year, the maximum
tuition award for Cal Grant A and B awards for new recipients
attending private nonprofit postsecondary educational
institutions shall be reduced to $9,084 from $9,708. New
recipients attending private for-profit postsecondary
educational institutions that are accredited by the Western
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Association of Schools and Colleges, as of July 1, 2012, shall
have the same maximum award amounts as set forth in this
section.
34)Provides that, effective the 2014-15 award year and each
award year thereafter, the maximum tuition award for Cal Grant
A and B awards for new recipients attending private nonprofit
postsecondary educational institutions shall be reduced to
$8,056 from $9,084. New recipients attending private
for-profit postsecondary educational institutions that are
accredited by the Western Association of Schools and Colleges,
as of July 1, 2012, shall have the same maximum award amounts
as set forth in this section.
35)Provides that maximum renewal award level for students at
nonpublic institutions who receive initial awards in 2013-14
or thereafter will be no greater than the maximum award amount
effective in the year the student received an initial award.
36)Requires all institutions of higher education, with more than
40% undergraduate students borrowing federal student loans, to
maintain their federal Three-Year Cohort Default Rate below
15.5%, in order to continue meeting eligibility to participate
in the Cal Grant Program for initial and renewal awards. For
2012-13, renewal maximum Cal Grant awards at institutions with
three-year cohort default rates above 15.5% shall be reduced
by 20%.
37)Requires all institutions of higher education, with more than
40% undergraduate students borrowing federal student loans, to
maintain a 30% minimum six year graduation rate requirement
for four year programs (three year rate for two year
programs), as reported by the United States Department of
Education, in order to continue meeting eligibility to
participate in the Cal Grant Program for initial and renewal
awards. For 2012-13, renewal maximum Cal Grant awards at
institutions with graduation rates below 30% shall be reduced
by 20%.
38)Effective 2013-14, eliminates renewal Cal Grant awards at
ineligible institutions. Recipients are still allowed to
transfer to another eligible institution and continue to
receive their Cal Grant awards.
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39)Requires the California Student Aid Commission to notify
initial and renewal Cal Grant recipients seeking to attend, or
attending, an institution that is ineligible for initial and
renewal Cal Grant awards that the students' Cal Grant award
will be reduced by 20%, or eliminated, as appropriate, if the
student attends the ineligible institution.
40)Clarifies that co-eligible students can switch from Cal Grant
B awards to Cal Grant A awards if they meet all eligibility
requirements for Cal Grant A awards upon renewal.
41)Codifies a requirement that recipients of Cal Grant transfer
entitlement awards must enter a university within one year of
attending a community college. Allows the 2011-12 student
cohort an additional year of award eligibility.
42)Reverts $63.1 million to the GF, funding previously set aside
for the Governor's Scholarship Program. These are unused
funds from scholarship grants provided to high school students
for performance on standardized tests in 2000 through 2002.
The grant program was repealed in 2003; recipients have access
to disbursement through age 30, after which time their funds
revert to the state GF. This provision results in $20 million
remaining in the reserve to assure funding for participants
thereby ensuring the state continues to honor program
obligations for tests taken in 2000-2002.
43)Increases the neighboring state student enrollment fee by
using a multiple of two from the current level of $46 per unit
beginning in the summer of 2012, and uses a multiple of three
of the level of resident fees charged beginning in the summer
of 2013.
44)Authorizes trigger reductions of approximately $550 million
for the community colleges (out of a total of $5.4 billion in
Proposition 98 reductions) in the event that the Schools and
Local Public Safety Protection Act of 2012 is not approved by
voters at the November 6, 2012, general election.
45)Increases by $159.9 million the funding appropriated to the
CCC to pay down existing apportionment deferrals. This
reduces the state's deferred payments to college districts
from $961 million to $801 million in 2012-13; contingent on
the passage of the Schools and Local Public Safety Protection
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Act of 2012.
46)Creates a block grant structure to support all the active
community college mandates. A college district may receive
funds for the performance of mandated activities either
through the block grant process or the current claiming
reimbursement process.
47)Appropriates an augmentation of $516.8 million to the CCC
apportionment, only if the Schools and Local Public Safety
Protection Act of 2012 is not approved by voters.
48)Reduces the GF appropriation for CCC apportionments by $116
million in the current year in anticipation of the receipt of
a like amount of local property tax revenues from recently
dissolved redevelopment agencies (RDAs). Approves a GF
backfill to the extent this level of property tax revenues
fails to materialize in the current fiscal year. The Director
of Finance shall notify the chairperson of the Joint
Legislative Budget Committee of the necessity to release these
funds.
49)Approves a GF backfill to the extent that a total of $341
million in local property tax revenues from recently dissolved
redevelopment agencies do not materialize. The Director of
Finance shall notify the chairperson of the Joint Legislative
Budget Committee of the necessity to release these funds.
50)Allows the Chancellor of the CCC, as approved by the
Department of Finance, to reduce community college district
base workload measures to match available apportionment
funding, only if the Schools and Local Public Safety
Protection Act of 2012 is not approved by voters.
51)Authorizes $50 million to be used for the purposes of
providing growth funding to community college districts,
contingent on the passage of the Schools and Local Public
Safety Protection Act of 2012.
Child Care Developmental Services
52)Aligns state preschool eligibility to new kindergarten cutoff
dates. Specifically, defines that state preschool programs
are designed to facilitate the transition to kindergarten for
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three- and four-year olds children who have their 3rd or 4th
birthday, respectively, on or before November of the 2012-13
fiscal year, October 1 of the 2013-14 fiscal year, and
September 1 of the 2014-15 fiscal year and each fiscal year
thereafter.
53)Clarifies distinction between part-day preschool slots
(funded with Proposition 98) and supplemental wraparound care
for preschool-age children from families who need full-day
care (funded with the GF-supported General Child Care
program).
54)Requires the Superintendent to encourage state preschool
program applicants or contracting agencies to offer full-day
services through a combination of part-day preschool slots and
wraparound general child care and development services.
55)Requires fees to be assessed and collected for families with
children in part-day preschool programs, family receiving
wraparound child care services, or both.
56)Repeals specified components of the Pre-Kindergarten Family
Literacy Program and combines these provisions into the state
preschool program, for preschool classrooms that apply for and
receive a family literacy supplemental grant.
57)Reduces funding for the General Child Care Program, the
Migrant Day Care Program, the Alternative Payment Program, the
California Work Opportunities and Responsibilities to Kids
(CalWORKs) Stage 3 Program, and the Allowances for Handicapped
Program by 8.7%, effective July 1, 2012.
58)Extends authorization for the City and County of San
Francisco to implement an individualized county child care
subsidy plan until July 1, 2014, (currently scheduled to
expire July 2013). Requires the city and county to phase out
the plan and implement the state's requirements for child care
subsidies as of July 1, 2016. A final report shall be
submitted by the city and county on or before June 30, 2014.
59)Codifies in statute that the maximum allowable family income
to receive subsidized child care and development services is
70% of the State Median Income (SMI).
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60)Provides that, effective for fiscal year 2012-13, the family
fee schedule for child care and development services that was
in effect for the 2011-12 fiscal year shall remain in effect,
and continues existing policy that the family fees cannot
exceed 10% of the family's total income.
61)Suspends the cost-of-living adjustment for child care and
development programs for fiscal years 2012-13, 2014-15, and
2014-15.
62)Allows the Department of Education to implement the changes
to child care authorized in this bill through management
bulletins and similar instructions. Specifies that the child
care changes in this bill are not subject to appeal by the
agencies holding child care contracts.
63)Contains an Appropriation allowing this bill to take effect
immediately upon enactment.
Analysis Prepared by : Misty Feusahrens and Sara Bachez /
BUDGET / (916) 319-2099
FN: 0004201