BILL ANALYSIS �
SENATE COMMITTEE ON EDUCATION
Carol Liu, Chair
2013-2014 Regular Session
BILL NO: SB 1137
AUTHOR: Torres
AMENDED: March 24, 2014
FISCAL COMM: Yes HEARING DATE: April 9, 2014
URGENCY: No CONSULTANT:Daniel Alvarez
SUBJECT : School transportation: apportionments.
SUMMARY
This bill provides for school districts to be funded at a
minimum of 50 percent of approved transportation costs,
thereby providing equalization funding for school districts
that are reimbursed at less than 50 percent; this
equalization would occur over a seven-year period beginning
in 2014-15. In addition, this bill provides that the
2013-14 fiscal year school transportation funding receive a
cost-of-living adjustment (COLA), as specified.
BACKGROUND
Current law authorizes school districts and county offices
of education to provide transportation services to regular
education students attending their schools at the
discretion of their governing board. State law requires
school districts to provide transportation services for
special education students whose individualized education
programs require such services.
(Education Code � 39800 and � 41850 et. seq.)
Federal law requires local educational agencies (LEAs) to
transport the following three groups of students: (a)
students with disabilities, (b) students attending
federally sanctioned schools, and (c) homeless students.
School districts generally use one of two types of funding
for pupil transportation: general purpose or categorical.
General purpose funds can be spent on everything from
teacher salaries to utility bills. Categorical funds must
be spent for specific purposes. One example of a
categorical program is the Home-to-School Transportation
(HTST) program, which is intended to help school districts
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provide transportation services to special education and
regular education students.
In 2013, the Local Control Funding Formula (LCFF) was
enacted. The LCFF replaces almost all sources of state
funding, including most categorical programs. The LCFF
establishes a per-pupil funding target that is adjusted for
differences in grade level, but otherwise is uniform across
the state. The LCFF also provides supplemental funding for
districts to serve students who are low-income, English
language learners or foster youth. However, one
categorical program not rolled into the LCFF is the HTST
program. This program retained its separate funding
stream; such that any district that received HTST funding
in 2012-13 continues to receive that same amount of funding
in addition to its LCFF allocation each year. However, the
HTST, unlike in prior years, would not be eligible for
future cost-of-living adjustments (COLAs). And state law
continues to require that districts spend HTST funding on
pupil transportation.
ANALYSIS
This bill provides for school districts to be funded at a
minimum of 50 percent of approved transportation costs,
thereby providing equalization funding for school districts
that are reimbursed at less than 50 percent; this
equalization would occur over a seven-year period beginning
in 2014-15. In addition, this bill provides that the
2013-14 fiscal year school transportation funding receive a
cost-of-living adjustment (COLA), as specified. More
specifically, this bill:
1) Requires the Superintendent of Public Instruction
(SPI), for the 2014-15 through 2020-21 fiscal years,
to apportion to each school district, county office of
education, entity providing services under a joint
powers agreement, or regional occupational center or
program that provides pupil transportation services
either 100 percent of its school transportation
apportionment for the 2013-14 fiscal year, as adjusted
for COLA; or the following amount, whichever is
greater:
a) For the 2014-15 fiscal year, 41 percent of
its approved transportation costs for the prior
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fiscal year.
b) For the 2015-16 fiscal year, 42.5 percent of
its approved transportation costs for the prior
fiscal year.
c) For the 2016-17 fiscal year, 44 percent of
its approved transportation costs for the prior
fiscal year.
d) For the 2017-18 fiscal year, 45.5 percent of
its approved transportation costs for the prior
fiscal year.
e) For the 2018-19 fiscal year, 47 percent of
its approved transportation costs for the prior
fiscal year.
f) For the 2019-20 fiscal year, 48.5 percent of
its approved transportation costs for the prior
fiscal year.
g) For the 2020-21 fiscal year, 50 percent of
its approved transportation costs for the prior
fiscal year.
2) Requires for the 2013-14 fiscal year school
transportation apportionment amount described above
shall be adjusted by the percentage change in the
annual average value of the Implicit Price Deflator
for State and Local Government Purchases of Goods and
Services for the United States, as published by the
United States Department of Commerce for the 12-month
period ending in the third quarter of the prior fiscal
year. This percentage change shall be determined
using the latest data available as of May 10 of the
preceding fiscal year compared with the annual average
value of the same deflator for the 12-month period
ending in the third quarter of the second preceding
fiscal year, using the latest data available as of May
10 of the preceding fiscal year, as reported by the
Department of Finance.
STAFF COMMENTS
1) Need for the bill . According to the author, the
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current statewide average reimbursement rate for the
HTST program is 38 percent. The funding distribution
is so uneven that some school districts see less than
10 percent reimbursement, while others receive over 80
percent of their approved costs. In California, from
the most recent data available from the Legislative
Analyst, school districts spent over $1.4 billion
transporting students; however, the budget provided
less than $492 million from the state to pay these
costs resulting in encroachment on general purpose
revenues. This funding deficit is an unequal burden
that hits rural and growing school districts much
harder than more densely populated and flat enrollment
school districts. This bill would bring severely
underfunded districts up to a 50 percent reimbursement
rate; while also providing for a COLA for
transportation funds for all school districts.
Applying a COLA can ensure districts will not be
negatively impacted as costs of service rise.
2) 2013 Budget Act . The 2013 Budget Act provided
approximately a total of $496 million in General Fund
(Proposition 98) for the HTST program provided for
pupil transportation, which includes both allocations
for home-to-school transportation and allocations for
some pupils with disabilities, specifically "severely
disabled and orthopedically impaired" pupils.
In addition, the Legislative Analyst was requested to
consider new approaches that could address historical
inequities and include incentives for efficient and
effective pupil transportation services. The LAO
report was issued February 2014, the report included a
description and assessment of three options: (1)
funding pupil transportation services within the new
LCFF, (2) creating a new targeted program to help
districts facing extraordinarily high transportation
costs, and (3) creating a broad-based program whereby
the state pays a share of each district's
transportation costs.
3) The most recent LAO report of February 2014 basically
concurs with the findings of the BSA 2007 audit. To
assist the Legislature's deliberations, the LAO
identified three options for funding pupil
transportation moving forward. The options primarily
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differ in the degree to which they account for
transportation costs separately from the other costs
districts face. These three options are to (1) fund
transportation costs within the LCFF, (2) fund only
extraordinary transportation costs, or (3) fund a
share of all transportation costs. Although the basic
approach for each option differs, all contain some key
advantages. Most notably, all three options provide a
means to phase out the use of allocations linked to
historical factors and apply the same funding rules to
all LEAs, addressing key problems with the state's
existing approach. In addition, all of the options
would encourage efficiency by requiring local budgets
to cover a notable share of total costs. Finally, all
three options would be relatively simple to implement
and easy for districts and the public to understand.
4) Problems with the existing program are not new . The
Bureau of State Audits (BSA) released a report on HTST
in 2007, acknowledging many problems with the existing
program funding formula. Some of the findings
include:
a) The current funding mechanism prevents some
school districts that did not receive HTST
program funds in the immediately preceding fiscal
year from receiving these funds because of the
basis of allocation.
b) Allocation increases are not always
consistent with student population growth. Some
school districts have experienced dramatic
increases in student population over the years;
however, their allocations have not always
increased at the same rate.
c) Most school districts had to use other
funding sources to pay for some transportation
costs and many reported it had varying levels of
fiscal impact on other programs.
5) Is COLA language clearly applicable as intended ?
According to information provided by the author, it is
the intent to ensure that all school districts receive
a COLA on their HTST funds; however, the language is a
bit vague. Therefore, staff recommends an amendment
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to clarify that all entities described in Section
41850.5 receive a COLA, as prescribed, for the 2013-14
fiscal year and annually thereafter through fiscal
year
2020-21.
6) How much funding exposure would this bill create ?
According to information provided by the author, the
total amount of funding to implement this measure is
approximately $204 million over the seven year
implement period, or an average increase per year of
approximately $29 million.
7) California has long provided state funding to school
districts for student transportation . Before 1984, a
law formally prescribed allocations for transportation
to elementary and high school districts. Legislation
passed in 1983 required that Education allocate the
Home-to-School program funds based on the same amount
as the school district's prior year's allocation,
increased by the amount provided in the Budget Act, if
its approved cost for that year was at least 95
percent of its Home-to-School program allocation for
the same year. Otherwise, this legislation required
that Education allocate an amount equal to the school
district's certified percentage of the prior year's
transportation costs plus 5 percent, the sum increased
by the amount provided in the Budget Act. Legislation
enacted in 1991 amended previous laws and created the
current funding formula. This legislation required
that, beginning with fiscal year 1993-94, each school
district receive a student transportation allowance
equal to the lesser of its prior year Home-to-School
program allocation or actual approved transportation
expenditures from that year, increased by the growth
in average daily attendance rate and cost-of-living
adjustments as specified in the Budget Act.
8) Related legislation . SB 1166 (Vidak), requires school
districts receive state reimbursement for the full
cost of the home-to-school transportation (HTST) of
pupils. This measure is scheduled to be heard in this
committee on April 9.
SUPPORT
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California Association of School Business Officials
California Association of School Transportation Officials
California School Boards Association
California School Employees Association
California Teachers Association
Central Valley Education Coalition (Fresno, Kings, Madera,
Mariposa, Merced, and Tulare county offices of education)
Kern County Superintendent of Schools
School Transportation Coalition
SEIU California
OPPOSITION
Charter Schools Association Advocates