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AB-586 School finance: funding formula.(2007-2008)

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AB586:v96#DOCUMENT

Amended  IN  Assembly  January 22, 2008
Amended  IN  Assembly  January 07, 2008
Amended  IN  Assembly  April 10, 2007

CALIFORNIA LEGISLATURE— 2007–2008 REGULAR SESSION

Assembly Bill
No. 586

Introduced  by  Assembly Member Coto

February 21, 2007

An act to add Chapter 6.5 (commencing with Section 42175) to Part 24 of Division 3 of Title 2 and repeal Section 41055 of the Education Code, relating to school finance.


LEGISLATIVE COUNSEL'S DIGEST


AB 586, as amended, Coto. School finance: funding formula.
Existing law requires a county superintendent of schools to calculate a revenue limit for each school district in the county pursuant to specified formulas, including the calculation of the average daily attendance of the district. Categorical programs exist to fund specific educational programs. Economic impact aid is provided to school districts based, in part, on the concentration of economically disadvantaged pupils and English language learners.

This bill would require the Superintendent of Public Instruction to begin implementing a new funding formula for kindergarten and grades 1 to 12, inclusive, school districts, defined as school districts, county offices of education, and charter schools, commencing with the 2010–11 fiscal year. The 3-year implementation process would require that 13 of the funding appropriated for kindergarten and grades 1 to 12, inclusive, education in the 2010–11 fiscal year be allocated pursuant to the new funding formula, and 23 be allocated pursuant to the funding formula utilized in the 2008–09 fiscal year, as calculated for the 2009–10 fiscal year; 23 of the funding appropriated in the 2011–12 fiscal year be allocated pursuant to the new funding formula, and 13 be allocated pursuant to the old funding formula; and all the funding appropriated in the 2012–13 fiscal year and each fiscal year thereafter be allocated pursuant to the new funding formula. During the implementation process of the new funding formula, a school district would be authorized to submit a hardship application to the Superintendent in order to receive funding in an amount that is higher than the amount that the district otherwise would receive during the applicable fiscal year, in order to assist the district in meeting unforeseen increases in the costs of providing educational services to its pupils.

The Superintendent would be required to calculate a cost-of-living index for each county in the state, to determine the base level of funding for each county based on how the cost-of-living index for that county compares to the indices for the other counties in the state, and to repeat that process every 3 years, beginning in 2010. This bill would prohibit this process from resulting in an even distribution of counties and from causing an increase in total funding. The Superintendent would be required to adjust the base level funding for a school district based on the grade levels served by the district and the individual needs of the pupils served by the district, including gifted and talented pupils, English language learners, economically disadvantaged pupils, and individuals with exceptional needs.

The Superintendent also would be required to review all state categorical funding programs for kindergarten and grades 1 to 12, inclusive, and to incorporate that funding into the new funding formula to the maximum extent possible. Funding for a categorical program that cannot be incorporated into the new funding formula would be required to be provided to a school district qualifying for that funding in the form of a block grant. The State Department of Education, the Legislature, or the Governor or another part of the executive branch would be required to prescribe minimal requirements for the manner in which block grant funding would be required to be spent. A school district receiving a block grant would be required to use the funding to serve the pupils the needs of whom were the basis for the receipt of that block grant by the district and to have an annual district plan and school-level plans for the use of that funding. A school or school district receiving block grant funding that does not demonstrate growth on the Academic Performance Index (API) in 2 out of 3 years or after a 3-year period would be required to revise the applicable school-level or district plan to include different strategies intended to result in API growth.

This bill would express legislative intent to simplify and make transparent the process through which funding is provided for each public school pupil, to equalize the funding for pupils within significant parameters, to focus per-pupil funding on enabling all California pupils to reach high state academic standards, and to implement a new funding formula and process after a 3-year implementation period commencing with the 2010–11 fiscal year.
The bill would require the Superintendent to convene a working group, with specified representation, to develop operational statutory language that would allow the legislative intent expressed in the bill to be enacted in subsequent legislation. The bill would require the Superintendent to submit the language developed by the working group to the Legislature no later than February 15, 2009. These provisions would become inoperative on July 1, 2009, and would be repealed on January 1, 2010.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

The Legislature finds and declares all of the following:

Section 41055 is added to the Education Code, to read:

41055.
 (a)  The Legislature finds and declares all of the following:

(a)

(1) The National Assessment of Education Progress in 2005 ranked California the seventh lowest in mathematics in grade 8 and the third lowest in reading in grade 8 among all 50 states and the District of Columbia. The results for science in 2005 stated that the performance of pupils in California was the second lowest among the 44 states that participated in that survey.

(b)

(2) The Governor’s Advisory Committee on Education Excellence, former Secretary for Education Alan Bersin, the President pro Tempore of the Senate, the Speaker of the Assembly, and the Superintendent of Public Instruction requested that the Getting Down to Facts Project be conducted to aid in the reform of public education in kindergarten and grades 1 to 12, inclusive, in California.

(c)

(3) The Getting Down to Facts Project, using grants provided by the Bill & Melinda Gates Foundation, the William and Flora Hewlett Foundation, the James Irvine Foundation, and the Stuart Foundation, brought together an array of scholars from 32 institutions with diverse expertise and policy orientations to synthesize what is known about the school governance and finance systems in California as a basis for convening the necessary public conversations to determine what should be done to improve public education in kindergarten and grades 1 to 12, inclusive, in California.

(d)

(4) On March 14 and 15, 2007, the findings of the more than 20 studies included in the Getting Down to Facts Project were released.
(5) It is necessary to replace the outmoded, arcane, and little understood formula used for funding kindergarten and grades 1 to 12, inclusive, education in California public schools.
(b) Therefore, it is the intent of the Legislature to do all of the following:
(1) Simplify and make transparent the process through which funding is provided for each public school pupil.
(2) Equalize the funding for pupils within significant parameters, including the varying costs of living throughout the state, the differences in the costs to educate pupils based on grade level, and the varying costs to educate pupils based on their individual needs.
(3) Focus per-pupil funding on enabling all California pupils to reach the high academic performance standards of the state.
(4) Supersede all previous pupil funding formulas after a three-year implementation period that commences with the 2010–11 fiscal year.
(5) Implement a new funding formula and process that do not result in an overall increase in the costs to the state for kindergarten and grades 1 to 12, inclusive, education.
(6) Have the funding formula and process for kindergarten and grades 1 to 12, inclusive, education be reviewed every 10 years, beginning in 2020.
(c) The Superintendent shall convene a working group consisting of representatives from each of the following:
(1) The Legislative Analyst’s Office.
(2) The State Department of Education.
(3) The Department of Finance.
(4) The Controller’s office.
(5) County offices of education.
(6) School districts.
(7) Staff of the Legislature.
(d) The working group convened pursuant to subdivision (c) shall conform with all of the following:
(1) Representation from the entities specified in subdivision (c) shall be balanced so as to reflect the diversity of the state.
(2) Representation from county offices of education and school districts shall include persons representing both urban and rural offices of education and school districts.
(3) The working group shall develop operational statutory language that would allow the legislative intent expressed in subdivisions (b) and (c) to be enacted in subsequent legislation.
(e) The Superintendent shall submit the language developed by the working group to the Legislature no later than February 15, 2009.
(f) This section shall become inoperative on July 1, 2009, and, as of January 1, 2010, is repealed, unless a later enacted statute, that becomes operative on or before January 1, 2010, deletes or extends the dates on which it becomes inoperative and is repealed.

SEC. 2.Chapter 6.5 (commencing with Section 42175) is added to Part 24 of Division 3 of Title 2 of the Education Code, to read:
6.5.Pupil Funding Equity and Reform Act of 2008
42175.

This chapter shall be known, and may be cited, as the Pupil Funding Equity and Reform Act of 2008.

42176.

(a)The Legislature finds and declares that it is necessary to replace the outmoded, arcane, and little understood formula used for funding kindergarten and grades 1 to 12, inclusive, education in California public schools.

(b)Therefore, it is the intent of the Legislature to do all of the following:

(1)Simplify and make transparent the process through which funding is provided for each public school pupil.

(2)Equalize the funding for pupils within significant parameters, including the varying costs of living throughout the state, the differences in the costs to educate pupils based on grade level, and the varying costs to educate pupils based on their individual needs.

(3)Focus per-pupil funding on enabling all California pupils to reach the high academic performance standards of the state.

(4)Supersede all previous pupil funding formulas after a three-year implementation period that commences with the 2010–11 fiscal year.

(5)Implement a new funding formula and process that do not result in an overall increase in the costs to the state for kindergarten and grades 1 to 12, inclusive, education.

(6)Have the funding formula and process for kindergarten and grades 1 to 12, inclusive, education be reviewed every 10 years, beginning in 2020.

42177.

For purposes of this chapter, “school district” means a school district, county office of education, or charter school, unless the context requires otherwise.

42178.

(a)Notwithstanding any other provision of law, the Superintendent shall calculate the funding for school districts pursuant to this chapter, according to the following schedule:

(1)For the 2010–11 fiscal year, one-third of the funding appropriated for kindergarten and grades 1 to 12, inclusive, education shall be allocated based on the funding formula pursuant to this chapter, and two-thirds shall be allocated based on the funding formula utilized in the 2008–09 fiscal year, as calculated for the 2009–10 fiscal year.

(2)For the 2011–12 fiscal year, two-thirds of the funding appropriated for kindergarten and grades 1 to 12, inclusive, education shall be allocated based on the funding formula pursuant to this chapter, and one-third shall be allocated based on the funding formula utilized in the 2008–09 fiscal year, as calculated for the 2011–12 fiscal year.

(3)Commencing with the 2012–13 fiscal year, all funding appropriated for kindergarten and grades 1 to 12, inclusive, education shall be allocated based on the funding formula pursuant to this chapter, which shall supersede all previous funding formulas.

(b)(1)During the implementation process of the new funding formula, a school district may submit a hardship application to the Superintendent in order to receive funding in an amount that is higher than the amount that the district otherwise would receive during the applicable fiscal year, in order to assist the district in meeting unforeseen increases in the costs of providing educational services to its pupils. However, a hardship application shall not be based solely on the receipt of fewer dollars per-pupil by a school district under the new funding formula, as compared to the funding formula utilized in the 2008–09 fiscal year.

(2)A school district may submit a hardship application in order to receive a total amount of funding for a fiscal year that is not greater than the amount that the district would have received under the funding formula utilized in the 2008–09 fiscal year, as calculated for the appropriate fiscal year of the 2010–11, 2011–12, and 2012–13 fiscal years.

42179.

(a)The Superintendent shall calculate the cost-of-living index each three years, beginning in 2010, based on existing indicators of housing cost including, monthly rent by percentage of population renting, average home value for percentage of owned homes, and average household income in California.

(b)(1)The Superintendent shall assign a county a percentage ranging from 90 to 110 percent, with 100 percent being assigned to the county or counties that are closest to the average cost of living for the counties within the state. This process shall not result in an even distribution of counties and shall not cause an increase in total funding.

(2)A county shall be assigned a whole number percentage based on how the cost-of-living index for that county compares to the indices for the other counties in California.

(c)The Superintendent shall determine what funding amount 100 percent represents and shall establish the base funding level for kindergarten and grades 1 to 12, inclusive, in the school district or districts in a county using the percentage assigned to that county pursuant to subdivision (b).

(d)(1)The Superintendent shall repeat the steps in subdivisions (a), (b), and (c) every three years, with each revision being completed in time for the new funding calculation to be used by July 1 of the third year, and the first change in calculation occurring in 2012. The revised calculation shall be published by February 1 of the year in which the changes will take effect.

(2)It is the intent of the Legislature that all school districts within a county be funded pursuant to the same cost-of-living index-based percentage used for their funding for the three years between each cost-of-living calculation taking effect.

42180.

The Superintendent shall adjust the base funding level of a school district pursuant the grade levels served by that district.

(a)A school district serving any of kindergarten and grades 1 to 6, inclusive, or grades 1 to 5, inclusive, if the district is configured in, or contributes to, a grade 6 to 8, inclusive, middle school format, shall receive 83 percent of its base funding level.

(b)A school district serving any of grades 7 to 12, inclusive, or grades 6 to 12, inclusive, if configured in a middle school format, shall receive 100 percent of its base funding level.

(c)A school district serving a combination of the grade levels represented in subdivisions (a) and (b) shall receive funding for kindergarten and grades 1 to 6, inclusive, or grades 1 to 5, inclusive, at the 83-percent rate, and funding for grades 7 to 12, inclusive, or grades 6 to 12, inclusive, at the 100-percent rate.

42181.

The Superintendent shall adjust the funding level for a school district based on the individual needs of its pupils.

(a)A pupil to whom none of subdivisions (b) to (e), inclusive, apply shall generate the standard level of funding.

(b)A gifted and talented pupil, as defined in Section 52201, shall generate 105 percent of the standard level of funding.

(c)An English language learner, which shall have the same meaning as a pupil of limited English proficiency, as defined in subdivision (m) of Section 52163, shall generate 125 percent of the standard level of funding. A pupil identified as an English language learner shall continue to generate that increased funding level as long as he or she remains enrolled in any of kindergarten and grades 1 to 12, inclusive, in order to provide language services to that pupil even after the pupil has been reclassified or redesignated as proficient or fluent in English for purposes other than this section.

(d)An economically disadvantaged pupil, defined as one whose family has an income that is below the federal poverty level, shall generate 125 percent of the standard level of funding.

(e)An individual with exceptional needs, as defined in Section 56026, shall generate 200 percent of the standard level of funding. The funding generated by an individual with exceptional needs shall include any and all applicable federal funding for special education.

(f)A pupil who meets the definitions in two or more of subdivisions (b) to (e), inclusive, shall generate the higher or highest of the percentages of funding in the applicable subdivisions.

42182.

(a)The Superintendent shall review all state categorical funding programs for kindergarten and grades 1 to 12, inclusive, and incorporate that funding into the new funding formula to the maximum extent possible.

(b)Funding for a categorical program that cannot be incorporated into the new funding formula shall be provided to a school district qualifying for that funding in the form of a block grant.

(1)The department, the Legislature, or the Governor or another part of the executive branch shall prescribe requirements for the manner in which block grant funding would be required to be spent. However, these compliance requirements shall be minimal.

(2)A school district receiving a block grant shall use the funding to serve the pupils whose needs were the basis for the receipt of that block grant by the district.

(3)A school district receiving a block grant shall have an annual district plan and school-level plans for the use of that funding. The plans shall be agreed upon by the applicable schoolsite councils and the governing board of the school district.

(4)A school or school district receiving block grant funding that does not demonstrate growth on the Academic Performance Index (API) in two out of three years or after a three-year period shall revise the applicable school-level or district plan to include different strategies intended to result in API growth.