BILL ANALYSIS �
AB 558
Page 1
Date of Hearing: May 8, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 558 (Cooley) - As Amended: April 17, 2013
Policy Committee: Education
Vote:7-0
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill extends the practice of reducing penalty assessments
from FY 2014-15 to FY 2017-18 for a school district that does
not meet a student/teacher ratio of 20:1 under the K-3 Class
Size Reduction (K-3 CSR) program. Specifically, this bill:
Gradually increases the funding penalties assessed on a school
district that does not meet specified K-3 CSR program ratios.
This measure increases the funding penalties over a four year
period with the goal of maximum penalties assessed in FY 2017-18
to a school district that does not meet the student/teacher
ratio of 20:1 required under this program, as specified.
FISCAL EFFECT
Potential GF/98 loss of savings, likely in the tens of millions
of dollars, to extend the reduced penalties for the K-3 CSR
program, as specified. The existing penalties sunset in FY
2014-15. The State Department of Education (SDE) reports there
is approximately $55.6 million GF/98 CSR program savings from FY
2011-12. SDE does not have a savings estimates for FY 2012-13.
The 2012 Budget Act allocated $1.33 billion GF/98 at a rate of
$1,071 per pupil for the K-3 CSR program.
COMMENTS
1)Background . SB 1777 (O'Connell), Chapter 163, Statutes of
1996, established the K-3 CSR program, which provides $1,071
per pupil to school districts to reduce class sizes in these
AB 558
Page 2
grades to an average of 20 pupils per certificated teacher.
School districts receive graduated funding penalties for
classes sized above this level. Prior to SB 311 (Sher),
Chapter 910, Statues of 2004, school districts participating
in the K-3 CSR program were penalized 100% of their funding if
they did not maintain a 20:1 pupil to teacher ratio per class.
As part of the February 2009 budget agreement, SB 4 X3
(Ducheny), Chapter 12, Statutes of 2009, provided funding
flexibility to this program as follows:
a) 5% penalty if average class size greater or equal to
20.5 but less than 21.5.
b) 10% penalty if average class size greater or equal to
21.5 but less than 22.5.
c) 15% penalty if average class size greater or equal to
22.5 but less than 23.0.
d) 20% penalty if average class size greater or equal to
23.0 but less than 25.0.
e) 30% penalty if average class size greater than 25.0.
Essentially, school districts are authorized to increase K-3
class sizes to an average of 25: or more and retain up to 70%
of their funds. These program changes were to be in effect for
a four-year period beginning in the 2008-09 FY through the
2011-12 FY. SB 70 (Committee on Budget and Fiscal Review),
Chapter 7, Statutes of 2011, extended these provisions until
the 2013-14 FY.
2)Purpose . According to the author, "To ease economic hardship
on districts facing lay-offs, 2008 legislation relaxed
classroom size restrictions and the incentive penalties. These
adjusted class size standards expire at the end of 2013-2014
FY. At that point, no incentive would be provided for a class
with more than 20 students. This bill transitions back to
stricter standards over [four] years to acknowledge the
continued fiscal stress on districts."
3)Governor's proposed Local Control Funding Formula (LCFF) and
supplemental funding for class size reduction . The LCFF
proposes to consolidate the majority of the state's
categorical programs, including the K-3 CSR program, with the
existing revenue limit (general purpose funding) structure to
establish a new K-12 student formula phased in over seven
years. The governor's proposed budget provides $1.6 billion
AB 558
Page 3
GF/98 in the 2013-14 FY to begin increasing district rates to
a target base rate and provides supplemental funding for
English learner pupils, low income pupils, and foster youth.
The LCFF establishes a base grant for specified grade levels.
This grant takes the place of a school district's revenue
limit (general purpose funding). The K-3 base grant is $6,342
per unit of average daily attendance (ADA). Since the LCFF
eliminates the K-3 CSR program, the governor proposes to
provide districts with additional funding to reduce class
sizes for grades K-3. Specifically, school districts maintain
would receive an additional 11.2% of the K-3 base grant, which
equals $712 per ADA, to reduce class sizes to a
student/teacher ratio of 24 to 1. This amount will increase
as the K-3 base grant amount increases.
The LCFF requires the district to make progress over a
seven-year period towards the 24:1 ratio. Once the formula is
fully implemented, school districts can no longer receive the
K-3 CSR supplement if they do not maintain a student/teacher
ratio of 24:1 (unless their collective bargaining agreement
establishes a different ratio).
This bill proposes to extend the time period for school
districts return to a student/teacher ratio of 20:1, which
conflicts with the LCFF. The committee may wish to consider
adding language that would specify this bill takes effect only
if a new revised K-12 funding formula is not enacted in the
2013-14 Legislative Session.
4)SB 311 (Sher), Chapter 910, Statues of 2004 , reduced the
penalties under the K-3 CSR program for each class from 100%
to the following:
a) A 20% reduction, if the annual average enrollment for
the class is greater than or equal to 20.5 but less than
21.
b) A 40% reduction if the annual average enrollment for the
class is greater than or equal to 21 but less than 21.5.
c) An 80% reduction if the annual average enrollment for
the class is greater than or equal to 21.5 but less than
21.9.
AB 558
Page 4
Chapter 910 was in effect until July 1, 2009 and SB 1112
(Scott), Chapter 515, Statutes of 2008, extended this
authorization until July 1, 2014.
5)Previous legislation . AB 2272 (Block), for FY 2010-11 and
2011-12, modified the K-3 CSR program flexibility enacted in
SB 4 X3 (Ducheny), Chapter 12, Statutes of 2009 (part of the
February 2009 budget deal). This bill was held on this
committee's Suspense File in May 2010.
6)Related legislation . AB 88 (Buchanan), pending in the
Assembly Education Committee, implements the LCFF, which
establishes a new K-12 funding formula and eliminates all of
the flexed categorical programs.
Analysis Prepared by : Kimberly Rodriguez / APPR. / (916)
319-2081