BILL ANALYSIS �
SENATE COMMITTEE ON EDUCATION
Carol Liu, Chair
2013-2014 Regular Session
BILL NO: SB 143
AUTHOR: Fuller
INTRODUCED: January 30, 2013
FISCAL COMM: Yes HEARING DATE: April 10, 2013
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
Generally, a necessary small elementary school is defined
as a geographically isolated school. Existing law defines a
NSS as an elementary school with an average daily
attendance (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.
Finally, Chapter 15, Statutes of 2011 (AB 32 X1,
Blumenfield, First Extraordinary Session), provided, on a
one-time basis for the 2011-12 fiscal year, the ability of
the three school districts to receive NSS funding, at the
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NSS high school rate, for pupils in grades 7 and 8. (EC �
42285.5)
ANALYSIS
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 and 2013-14
fiscal years.
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 previous fiscal year to
continue doing so in the 2012-13 and 2013-14 fiscal years
for purposes of calculating NSS high school funding.
Finally, the bill requires a school district applying for
the additional two years of NSS funding to pursue any
funding deferral exemptions that they may be eligible for.
STAFF COMMENTS
1) Need for the bill . According to the author, since
1988, the State Department of Education (SDE)
interpreted necessary small school funding statutes to
allow for funding for small junior high schools. In
2010, SDE reinterpreted the code sections to disallow
the supplemental funding. 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 and 2013-14 fiscal 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 grades 9 through 12 ADA and receiving
funding on that basis. According to SDE, the
misreporting had been occurring since 1988. However,
one of the affected school districts, Butte Valley
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USD, provided documentation noting that the State
Department of Education, as of October 1999, knew of
the grade span reporting of 7th and 8th graders for
state coding purposes, but not necessarily for
reporting for NSS funding.
As previously mentioned, 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.
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) Unclear as to whether these districts are truly in
fiscal jeopardy. On March 4, the Superintendent of
Public Instruction released a list of seven school
districts that have received a "negative
certification" and 117 school districts that have
received "qualified certification" of their budgets.
A negative certification - the most serious of
classifications - is assigned when a school district
will be unable to meet its financial obligations for
the remainder of the current year or for the
subsequent fiscal year. A qualified certification is
assigned to a local educational agency when it is
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determined that, based upon current projections, the
LEA may not meet its financial obligations for fiscal
years 2012-13, 2013-14, or 2014-15. However, it must
be noted that the Superintendent of Public Instruction
report is a snapshot in time, the school districts'
financial status may have changed since the
certifications were collected.
Of the three districts, noted above, that could
receive funding under this measure none were listed as
having either negative or qualified certification
status. The lack of fiscal relief from AB 2362 (see
below) for the current year (2012-13), meant that none
of the three school districts listed above could
budget as though this funding were available - meaning
the districts had to account for lack of funding for
the 2012-13 and 2013-14 fiscal years.
4) Should the committee choose to pass this measure ,
staff recommends a technical amendment to clarify that
it should be 2011-12, rather than "previous" fiscal
year on page 2, line 11.
5) Past legislative attempts . In June 2012, AB 2362
(Conway), which was identical to this measure, was
heard in this Committee, and passed on a 9-0 vote. AB
2362 was ultimately held in Senate Appropriations
Committee.
6) 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. "
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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 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."
7) Governor's Local Control Funding Formula : As part of
the 2013-14 Governor's Budget, the administration
proposes to restructure the existing K-12 finance
system and eliminate over 40 existing programs while
also repealing, what the administration determines are
countless "discretionary" provisions of statute, while
implementing a new formula known as the Local Control
Funding Formula (LCFF). The LCFF would consolidate
the vast majority of state categorical programs and
revenue limit apportionments into a single source of
funding (12 categorical programs, including Special
Education, Child Nutrition, Preschool, and After
School programs, would be excluded). The LCFF
proposal would also eliminate the statutory and
programmatic requirements for almost all existing
categorical programs - the programs would be deemed
"discretionary" and programs in any of these areas
would be dependent on local district discretion. To
the extent that the LCFF or a modified version of it
is adopted as part of the budget, the majority of
currently required categorical activities would be
left to local districts' discretion. Therefore, the
changes proposed by this bill for the Necessary Small
High School funding program could be diluted,
eliminated, rendered obsolete or discretionary at the
local level.
8) The Senate Appropriations Committee , last year in AB
2362, a bill identical to this measure, indicated a
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General Fund (Proposition 98) cost 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
Bear Valley Unified School District
Butte Valley Unified School District
Small School District Association
OPPOSITION
None on file.