BILL ANALYSIS �
SENATE COMMITTEE ON BUDGET AND FISCAL REVIEW
Mark Leno, Chair
Bill No: AB 1464
Author: Committee on Budget
As Amended: June 12, 2014
Consultant: Jody Martin, Jennifer Troia
Fiscal: Yes
Hearing Date: June 15, 2014
Subject: Budget Act of 2014: Local Control Funding Formula
(LCFF)
Summary: Provides the statutory changes necessary to enact
education-related provisions of the Budget Act of 2014.
Background: As part of the 2014-15 budget, AB 1464 makes
the statutory changes necessary to implement the Budget
Act. Specifically, this bill would:
1)Appropriate Funds for LCFF: Appropriates $4.8 billion
from the General Fund for allocation through LCFF to
local educational agencies (LEAs) ($4.7 billion for
school districts and charter schools and $25.9 million
for county offices of education (COEs);
2)Revise the Calculation of Unduplicated Pupils: Authorize
schools participating in Provisions 2 or 3 of the
National School Lunch Program (which allow for free meals
to be provided to all enrolled pupils at schools with
very high poverty rates) to establish base-year student
eligibility for free or reduced-price meals no less than
once every four years, provided that they annually update
their counts of eligible students, as specified. Require
the Superintendent of Public Instruction (SPI) to revise
an LEA's three-year rolling average number of
unduplicated students by using 2014-15 student data in
place of 2013-14, if doing so would increase the LEA's
rolling average. Expresses legislative intent to review,
for each school district and COE, the enrollment of
unduplicated pupils for the 2013-14 and 2014-15 fiscal
years, and provides one time funding, if necessary for
those with higher enrollment of unduplicated pupils in
2014-15 compared to 2013-14. Further, refines the
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definition of foster youth for purposes of calculating
unduplicated pupils;
3)Revise Provisions Related to Economic Recovery Targets
(ERTs): Specifies that 2013-14 average daily attendance
calculations are final as of the second principal
apportionment (P-2) for purposes of establishing ERTs.
Additionally, clarifies that the full ERT amount shall be
added on to the LCFF when the LCFF is fully implemented,
and that ERTs shall (rather than may) be subject to
property tax offsets;
4)Clarify the Definition of Homeless Students: Clarifies
the district of residence for homeless students and
associated LCFF funding provided to COEs. Specifically,
the determination would be based on the largest (in terms
of average daily attendance) applicable non-basic aid
district serving the student's grade level;
5)Make Other Changes to LCFF Calculations:
a. Requires the base entitlement for the
transition to the LCFF to be adjusted to reflect the
exclusion of one-time redevelopment agency liquid
asset recovery revenue, as specified;
b. Sets the point-in-time (P-2/Annual) for
specified calculations, including revenue limits,
charter grants, necessary small schools, and charter
school physical locations;
c. Repeals the unique revenue limit funding
adjustment related to an inter-district attendance
agreement between the Fallbrook Union High School
District and the Capistrano Unified School District,
and requires the amount of state apportionments
provided to these districts for the 2012-13 fiscal
year to be included in specified computations
related to the LCFF, consistent with LCFF existing
provisions that ensure no district receives less
funding than it did in 2012-13. These districts will
continue to have a unique inter-district transfer
for the purpose of receiving federal impact aid
funds;
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6)Make Changes Impacting Charter Schools:
a. Requires charter schools to annually report
their physical location to the State Department of
Education no later than November 30 of each fiscal
year, and specifies when the physical location is
considered final for specified purposes;
b. Adds juvenile court students to the list of
students for which a county program charter can
receive a county rate and clarifies LCFF
apportionments for county students attending a
county program charter;
c. Clarifies that all-charter districts can
continue to receive declining enrollment adjustments
under the LCFF; repeal prior language that allowed
all-charter districts to receive declining
enrollment adjustments under the former Charter
School Block Grant; and clarifies that for purposes
of LCFF, all-charter districts are treated as school
districts;
d. Specifies that excess in-lieu payments made to
charter schools would be used to offset state aid;
e. Clarifies the "gap" funding calculation for
countywide charter schools with students from basic
aid districts by utilizing prior year basic aid
status to compute in-lieu payments during the
transition to full LCFF implementation;
f. Authorizes county charter programs to seek
in-lieu payments from the district of residence for
students not funded under the county rate (with the
aim of treating county program charters in the same
manner as county offices of education); and
g. Clarifies that the oversight fee paid by a
charter school to the entity that provides oversight
will be calculated on the charter school's annual
LCFF allocation;
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1)Clarify Supplemental Revenue Augmentation Fund (SRAF)
Transfer: Authorize the Director of Finance to determine
the amount of restricted excess local property tax
revenue available for transfer to SRAF. Clarifies that
COEs should report to the State Controller's Office
(SCO), rather than the county auditor-controller, SRAF
funds that offset General Fund costs of the trial courts,
since SCO implements that offset;
2)Conform Instructional Day/Time Penalties: Makes COE and
four-day school week instructional day and minute-related
requirements and penalties the same as those applicable
to school districts under the LCFF. COEs and four-day
school week programs would continue to be authorized,
through 2014-15, to reduce the minimum required school
year by up to five days of instruction, or the equivalent
number of instructional minutes without incurring
penalties;
3)Clarify Basic Aid Program Adjustments: Clarifies that
basic aid choice, open enrollment, supplemental, and
court-ordered voluntary pupil adjustments are based on
LCFF target base grants, not the necessary small school
funding rates, if the student's district of residence is
funded as a necessary small school;
4)Revise Local Control Accountability Plan (LCAP) Review
Provisions: Specifies that the SPI shall perform the
duties of a county superintendent of schools with respect
to approval of an LCAP if the county superintendent of
schools has jurisdiction over only a single school
district. This change would be consistent with the SPI's
role in reviewing and approving the budgets for such
districts;
5)Make Changes Related to Out-of-State Tuition: Clarifies
that county superintendents and school districts may
continue authorizing students to attend schools in
adjoining states and out-of-state tuition
average-daily-attendance is credited to the school
district of residence;
6)Reimburse LEAs for 2013-14 Out-of-State Tuition Costs:
Reimburses LEAs for out-of-state tuition and
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transportation costs incurred in the 2013-14 fiscal year.
This change is intended to provide a one-time hold
harmless payment of those costs for districts that
entered into out-of-state tuition contracts before last
year's enactment of LCFF-related statutes, which
otherwise would require the county superintendent to pay
for these expenses;
7)Require LCFF Implementation Report: Requires the State
Board of Education, working in collaboration with the
Department of Education, to report to the Legislature, no
later than February 1, 2015, regarding the status of LCFF
implementation;
8)Modify LCAP Template Adoption Process: Allows the State
Board of Education, until January 31, 2018, to adopt the
LCAP template pursuant to the Bagley-Keene Open Meetings
Act process, with specified restrictions, rather than the
Administrative Procedures Act;
9)Repeal COE Funding Restrictions: Repeals restrictions on
COEs funding for special day classes. Authorizes COEs to
spend funds previously deposited as capital outlay
reserves for any purposes specified in its LCAP;
10)Make changes related to Necessary Small Schools (NSS):
Clarifies that the SPI, not a county superintendent of
schools, calculates NSS funding for qualifying districts.
Expand the definition of a necessary small high school
for certain high schools for three years;
11)Revise Maximum Class Size Penalties Methodology: Revises
the methodology for assessing penalties for exceeding
maximum class size limits based upon the new grade-level
funding rates under LCFF;
12)Require Funding Pass-Through in Certain Districts to
Support the Continuation of Beginning Teacher Induction
Services: For the 2013-14 and 2014-15 fiscal years,
require the Alameda County Superintendent of Schools to
withhold a specified amount from the local control
funding formula apportionments of the Newark Unified
School District, and from those withheld funds, to
allocate funding to four other districts that previously
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received such amounts as funds passed through by the
Newark Unified School District (serving as a fiscal
agent) for purposes of beginning teacher induction and
training services;
13)Include Other Provisions: Makes other technical
changes; provides that, if the Commission on State
Mandates determines that the bill contains costs mandated
by the state, reimbursement for those costs shall be made
pursuant to existing law; and declare that it is to take
effect immediately as a bill providing for appropriations
related to the budget bill.
Fiscal Effect: Funds appropriated in this bill would be
applied toward the minimum funding requirements for school
and community college districts imposed by Section 8 of
Article XVI of the California Constitution (Proposition
98).
Support: Unknown
Opposed: Unknown
Comments: As part of the 2013 Budget Act, the LCFF
replaced the state's prior system of distributing funds to
LEAs through revenue limit apportionments (per student
average daily attendance) and approximately 50 state
categorical education programs. These historic changes
were intended to increase local control of K-12 education,
to ensure that student needs drive the allocation of
resources, and to increase transparency in school funding.
The LCFF also included new requirements for local planning
and accountability and a new system of support and
intervention for underperforming school districts that do
not meet their goals for improving student outcomes. The
changes contained in this trailer bill are intended to
refine related statutes and to further these purposes of
the LCFF.
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