BILL ANALYSIS �
SENATE COMMITTEE ON EDUCATION
Carol Liu, Chair
2013-2014 Regular Session
BILL NO: SB 223
AUTHOR: Liu
INTRODUCED: February 11, 2013
FISCAL COMM: Yes HEARING DATE: April 3, 2013
URGENCY: No CONSULTANT:Daniel Alvarez
SUBJECT : Education Finance: Maximum Categorical Funding
Flexibility and
Accountability Program.
SUMMARY
This bill connects fiscal flexibility over categorical
funding with an accountability system. This bill begins to
make the connection between providing school districts
greater fiscal discretion with funds from over 40
categorical programs, while insuring sound accountability
approaches are adhered to, and that any local plan is
developed with input from parents and teachers. School
districts must apply for the "flexibility," the State
Superintendent must ensure local plans meet agreed to
pre-conditions in order for the district to participate in
obtaining maximum flexibility, and a school district that
obtains flexibility must agree to demonstrate various
goals, including but not limited to, significant progress
toward pupil proficiency in the state standards, narrowing
of achievement gaps, fiscal solvency, and improvement in
career technical preparedness.
BACKGROUND
Existing law establishes and funds categorical programs
that focus resources and /or compliance requirements on
specific classes of students or schools, or specific uses
of funds, identified by the Legislature as priorities.
Categorical Funds have been created over the years to
provide school districts funding for specific purposes,
such as improving school safety or improving the academic
achievement of struggling students. Unlike discretionary
funds, categorical funds (also known as "categorical
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programs") are all funded through the annual Budget Act.
They are usually accompanied by regulations that require
that they be spent in specific ways or for specific
purposes.
As part of the February 2009 Budget package, most
categorical programs were placed into three categories or
"Tiers." School districts with categorical programs in
"Tier III" were allowed to use the funding associated with
about 40 categorical programs for any education purpose.
This change essentially made roughly $4.5 billion in
restricted funding discretionary. About 20 state-funded
categorical programs totaling roughly $7.5 billion were
excluded from this flexibility. Categorical flexibility has
been authorized through 2014-15. Due to timing
constraints, no policy debate occurred regarding the need
for academic/fiscal accountability.
ANALYSIS
This bill connects greater flexibility over categorical
funding with an accountability system. The bill begins to
make the connection between providing school districts
greater fiscal discretion with funds from over 40
categorical programs, while insuring sound accountability
approaches are adhered to, and that any local plan is
developed with input from parents and teachers. School
districts must apply for the "flexibility", the State
Superintendent must ensure local plans meet agreed to
pre-conditions in order for the district to participate in
obtaining maximum flexibility, and a school district that
obtains flexibility shall agree to demonstrate various
goals, including but not limited to, significant progress
toward pupil proficiency in the state standards, narrowing
of achievement gaps, fiscal solvency, and improvement in
career technical preparedness. More specifically, this
bill:
1) Repeals current operation of categorical flexibility
"Tier III" as of June 30, 2015.
2) Reconstitutes a new voluntary funding flexibility
program that includes as a condition of obtaining
flexibility to meet preconditions and demonstrate
measurable goals. The categorical programs eligible
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for funding flexibility would mirror those under the
current Tier III approach.
3) Requires school districts to be deemed in compliance
with program and funding requirements of the
categorical programs, only if the State Superintendent
of Public Instruction (SPI) approves a districts'
participation in the Maximum Categorical Funding
Flexibility and Accountability Program and the school
district meets specified preconditions and agrees to
demonstrable goals, as specified.
4) Institutes the new flex and accountability program
beginning in 2015-16 through 2019-20; in order to
participate, a school district must meet all
preconditions, that include, but are not limited to:
a) A school district plan, developed in
conjunction with parents and teachers, to
accelerate pupils' progress toward academic
proficiency. The plan must include measurable
metrics to improve pupil performance, close the
achievement gap, increase college entrance rates,
and increase career readiness.
b) The local governing board has approved
the plan, as specified.
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c) The plan links the local superintendent's
annual performance evaluation to the pupil
performances goals.
d) The district demonstrates a pattern of
stability between management and bargaining
units.
e) There is community support for the plan.
f) Requires the standards-based curriculum
for English language learners at a minimum meets
rigorous specified criteria.
1) Requires the Superintendent of Public Instruction
(SPI) to consider the quality and rigor of the manner
in which school districts meet the preconditions
outlined above. A school district must apply to the
SPI in order to be selected for participation in the
new flex and accountability program.
2) Requires school districts participating in the new
flex and accountability program to agree to
demonstrable goals, including but not limited to:
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a) Significant progress toward accelerating
pupils' progress toward proficiency of the
state's academic standards over a three-year
period;
b) Narrowing of the achievement gaps for the
school district's federally recognized subgroups
as measured by annual assessments, as specified;
c) Fiscal solvency, as specified;
d) Positive growth on the state's Academic
Performance Index; and
e) Improved rates for high school graduation
and college entrance, and increases of pupils who
enter technical school after graduation or who
graduate prepared to enter high-wage, high skill
occupations.
1) Requires the SPI, in addition to reviewing planning
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preconditions, to perform various calculations, as
specified.
2) Permits a participating school district to use funds
it receives for any purpose related to improving pupil
achievement and academic instruction
and accountability program, as specified.
3) Requires a participating school district to implement
an open and transparent process that allows for no
less than two regularly scheduled meetings of the
local school board and prohibits any action on this
matter at the first meeting that the item appears on
an agenda.
4) Requires a participating school district to submit an
evaluative annual report to the State Department of
Education detailing the progress made during the
immediate prior school year toward the required
demonstrable goals, including details of the academic
progress made by pupil subgroups.
5) Requires the Superintendent of Public Instruction
(SPI) to provide guidance to participating school
districts to ensure the reports conform to
requirements.
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6) Requires the SPI to contract for an independent
statewide evaluation by June 1, 2017, as specified.
7) Clarifies that this measure does not relieve a school
district or any other party from obligations under
state or federal law to protect pupil privacy.
8) Sunsets as for July 1, 2020.
STAFF COMMENTS
1) Need for bill . As part of the February 2009 Budget
package, most categorical programs were placed into
three categories or "Tiers." School districts with
categorical programs in "Tier III" were allowed to use
the funding associated with about 40 categorical
programs for any education purpose. This change
essentially made roughly $4.5 billion in restricted
funding discretionary. About 20 state-funded
categorical programs totaling roughly $7.5 billion
were excluded from this flexibility. Categorical
flexibility has been authorized through 2014-15, at
which point it becomes inoperative.
However, because of the overarching discretionary
approach to budgeting, Tier III categorical programs,
little if any, information was collected on how school
districts utilized this discretion - leaving both
parents, program recipients, and the state to wonder
if the comprehensive needs of students were being met.
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This bill addresses the underlying need to:
a) Continue to provide budgetary flexibility
for school districts;
b) Provide for a comprehensive planning and
implementation process that engages parents and
the public in the development of local
educational priorities;
c) Provide the state with a local "blueprint"
from school districts on how they will utilize
future "flexibility" in meeting broader
accountability statewide goals and objectives
within a local priority planning context;
d) School districts not wishing to participate
in obtaining "flexibility" in a more thoughtful
and comprehensive manner would need to maintain
and provide the specific categorical programs and
accompanying requirements currently in statute.
2) 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
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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 could be diluted,
eliminated, rendered obsolete or discretionary at the
local level.
The administration continues to insist on pursuing
LCFF through the budget process rather than the
scrutiny of the policy committee process.
3) Categorical program funding reductions and flexibility
given to assist school districts . SB 4 (Chapter 12,
2009) and extended by SB 70 (Chapter 7, 2011),
authorizes local educational agencies (LEAs) through
the 2014-15 fiscal year, to use funding for
approximately 40 categorical programs (totaling $4.5
billion statewide) for any educational purpose to the
extent permitted by federal laws. These measures also
deem LEAs to be in compliance with program and funding
requirements related to the 40 categorical programs,
and requires LEA governing boards to make flexible
expenditure decisions in a regularly scheduled public
meeting. The flexibility granted under SB 4 and SB 70
came as a result of funding the categorical programs
approximately 20 percent lower for the 2008-09 through
the 2014-15 fiscal years, as well as reductions to
school district and county office of education revenue
limits (the basic general purpose money allocated to
districts. (EC � 42605)
The Legislature stopped short of including all
categorical programs within the "Tier lll" flexibility
(reduction and flex), and decided that certain
programs, including partnership academies and
agricultural career technical education, were of such
high priority that no flexibility or limited
flexibility would be provided.
4) On the one hand, funding flexibility . The
Legislature, by a two-thirds vote in SB 4 (Chapter 12,
Third Extraordinary Session 2009), recognized the need
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to provide school districts with categorical funding
flexibility as a result of unprecedented fiscal
conditions requiring over $42 billion in General Fund
solution in order to balance both the 2008 (mid-year)
and 2009 Budgets.
Irrespective of the budget condition, categorical
funding flexibility has been advocated by school
business officials and non-partisan entities,
including the Legislative Analyst, for quite some
time. These entities typically reason that since
California has adopted rigorous academic standards and
assessments; let pupil performance as measured through
our assessments system drive local funding decisions.
5) On the other hand, categorical programs created for a
purpose . The primary strategy the state has used to
make sure local school districts spend funds
"appropriately" has been through the creation of
categorical programs - funds that are earmarked for
specific purposes or students. Some-such as Economic
Impact Aid and Special Education-were created to
assure that a given set of "special needs" students
received extra services. Other programs, such as K-3
Class Size Reduction and staff development days,
provide participating school districts with funding as
long as they implement a specific strategy state
leaders believe will improve instruction. While other
programs like child nutrition ensure low-income pupils
have access to free and reduced price meals.
Even in light of the most recent budget problems, in
2009 the Legislature stopped short of including all
programs in the "Tier lll" categorical funding
flexibility - certain programs were deemed to be of
such a high priority that no reductions and no
flexibility options were put in place, and the
programs were generally kept intact. Some examples
include: Economic Impact Aid, child development, child
nutrition, and home-to-school transportation programs.
6) Categorical block grant approaches proposed or used in
the past.
a) Funding flexible block grant, as described
above under Comment
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#3, through fiscal year 2014-15, converts
restricted categorical funds into discretionary
or unrestricted funding. However this approach,
among other things, suffers from its lack of
connection to the state's programmatic
priorities, and may place protected
subpopulations at risk.
b) Grouped or clustered block grant, where
funds allocated for
categorical programs focus on a similar pupil
subpopulation or similar activities are grouped
together to create one larger grant. Revenue is
consolidated and some flexibility is given on the
expenditure side, but the flexibility is focused
(or linked) to expenditure on programs within the
grouping. This approach maintains a flavor of
legislative spending priorities, but does not
provide a level of flexibility that likely allows
an LEA to truly create educational programs that
match the need of local student populations.
This approach was utilized under AB 825 (Chapter
871, Statutes of 2004).
c) True categorical block grants, are similar
to the grouped approach,
but an LEA would be allowed to expend funds in a
true block grant on a very broadly determined set
of activities.
7) Past related legislation . Over the last few years,
this Legislature has contemplated legislation that
would have modified the existing categorical
flexibility Tiered III by "pulling out" certain
programs, requiring greater local transparency in
actions taken, or examine the impact of specified
programs. For example:
a) SB 275 (Hancock, 2011) would have
established a "flexible" approach to utilization
of career technical education program funding. SB
275 passed this Committee on a 10-0 vote. But was
subsequently held on the Assembly Appropriations
suspense file.
b) Chapter 606, Statutes of 2011 (AB 189, Eng)
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modified existing public hearing and reporting
requirements local education agencies must adhere
to in order to participate in categorical
flexibility. AB 189 passed this Committee on a
7-2 vote.
c) AB 1673 (Mendoza, 2011), requires the LAO to
provide a report to the Legislature on the impact
of the flexibility provision on adult education
programs. The bill was held in the Assembly
Appropriations Committee suspense file in 2010.
8) Staff recommends the following amendments:
a) Consistent with the author's stated intent,
add an expansion of the findings and declaration
section to clarify the challenges facing school
districts, ?"including implementation of the
common core standards in mathematics and English
language arts and that pupils from low-income
backgrounds and English language learners who
come to school with unique challenges are
provided with supplemental instruction and
support services."
b) Provide clarity that part of the
demonstrated goals includes pupil progress in
passage of common core standards.
c) Consistent with past actions of this
Committee, exclude adult education, ROC/Ps, and
specialized secondary education grants from any
attempt to "flex" funding.
d) Technically change the "base" year of
categorical programs from 2007-08 funding levels,
to 2013-14. This will allow the budget process
to determine if any categorical programs will
restore past funding reductions.
9) Issues for consideration . As this measure continues
to move forward, the author should continue with a
focus on accountability measures and pre-conditions
for school districts to demonstrate in order to insure
underlying legislative priorities are maintained. In
addition, other concepts for future discussion should
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include but not be limited to:
a) Should there be sanctions for not
meeting goals, or rather just a
default to compliance with categorical program
regulations and statutes?
b) Can this measure be modified to
provide future incentives for
participation and meeting of goals?
c) Is there greater value in
providing funding discretion for sub-groups
of categorical programs?
d) Are there other categorical
programs of high legislative priority that
should be excluded from any discretionary
approach, or in the alternative, are there other
programs that should be included in a "flex"
approach?
SUPPORT
None on file.
OPPOSITION
California Agricultural Teachers Association
California Business Education Association
California Manufacturers and Technology Association
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---------------------------------------------------------
|Program | | |Program | |
| |2012-13 | | |2012-13 |
| | | | | |
| |(dollars | | |(dollars |
| |in | | |in |
| |thousands| | |thousands|
| |) | | |) |
| | | | | |
|-----------------+---------+-+-----------------+---------|
| | | | | |
|-----------------+---------+-+-----------------+---------|
|Summer School | $336,246| |Charter Schools | $180,006|
|Programs | | |Block Grant | |
| | | | | |
|-----------------+---------+-+-----------------+---------|
|ROC/Ps | 384,708| |Community Based | 40,082|
| | | |English Tutoring | |
| | | | | |
|-----------------+---------+-+-----------------+---------|
|Grade 7-12 | 167,056| |School Safety | 79,932|
|Counseling | | |Block Grant | |
| | | | | |
|-----------------+---------+-+-----------------+---------|
|Specialized | 4,892| |High School | 78,950|
|Secondary | | |Class Size | |
|Program Grants | | |Reduction | |
| | | | | |
|-----------------+---------+-+-----------------+---------|
|Gifted and | 44,225| |Advanced | 2,443|
|Talented | | |Placement Grant | |
| | | |Programs | |
| | | | | |
|-----------------+---------+-+-----------------+---------|
|Professional | 45,476| |Student | 26|
|Development | | |Leadership/CA | |
|Institutes for | | |Association of | |
|Math and English | | |Student Councils | |
| | | | | |
|-----------------+---------+-+-----------------+---------|
|Principal | 3,928| |Pupil Retention | 76,675|
|Training | | |Block Grant | |
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| | | | | |
|-----------------+---------+-+-----------------+---------|
|Adult Education | 634,805| |Teacher | 90,404|
| | | |Credentialing | |
| | | |Block Grant | |
| | | | | |
|-----------------+---------+-+-----------------+---------|
|Educational | 14,073| |Professional | 218,380|
|Technology | | |Development | |
| | | |Block Grant | |
| | | | | |
|-----------------+---------+-+-----------------+---------|
|Deferred | 250,826| |Targeted | 855,131|
|Maintenance | | |Instructional | |
| | | |Improvement | |
| | | |Block Grant | |
| | | | | |
|-----------------+---------+-+-----------------+---------|
|Instructional | 333,689| |School and | 370,000|
|Materials Block | | |Library | |
|Grant | | |Improvement | |
| | | |Block Grant | |
| | | | | |
|-----------------+---------+-+-----------------+---------|
|Community Day | 41,685| |School Safety | 14,349|
|school | | |Competitive | |
| | | |Grant | |
| | | | | |
|-----------------+---------+-+-----------------+---------|
|Staff | 25,957| |Physical | 33,519|
|Development | | |Education Block | |
| | | |Grant | |
| | | | | |
|-----------------+---------+-+-----------------+---------|
|National Board | 2,405| |Arts and Music | 87,987|
|Certification | | |Block Grant | |
| | | | | |
|-----------------+---------+-+-----------------+---------|
|California | 46,419| |County offices |8,016 |
|School Age | | |of education - | |
|Families | | |Williams | |
|Education | | | | |
|Program | | | | |
| | | | | |
|-----------------+---------+-+-----------------+---------|
|California High | 58,322| |Certificated | 8,583|
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|School Exit Exam | | |Staff Mentoring | |
| | | | | |
|-----------------+---------+-+-----------------+---------|
|Civic Education | $200| |Oral Health | 3,527|
| | | |Assessments | |
| | | | | |
|-----------------+---------+-+-----------------+---------|
|Teacher | 38| |Alternative | 26,191|
|Dismissal | | |Credentialing | |
|Apportionments | | | | |
| | | | | |
|-----------------+---------+-+-----------------+---------|
| | | | | |
|-----------------+---------+-+-----------------+---------|
| | | |CATEGORICAL |$4,569,15|
| | | |PROGRAMS |1 |
| | | |(approximation) | |
| | | | | |
---------------------------------------------------------