Grow Schools, formerly Charter School Capital, Author at Grow Schools

Welcome to Charter School Capital’s weekly round-up where our team will feature charter school news about operations, policy, funding for charter schools, charter school facilities financing, and other trends.
This week is all about school staffing and “the growing need for school choice.” Tell us your thoughts in the comments below!

Why are 50% of U.S. School Staff Non-Teaching Employees?

A new report released by the Thomas B. Fordham Institute examines why the number of non-teaching staff in the United States has increased by 130% in the past 40 years.
Here’s a summary of the topic found on the first page of the report:
“The number of non-teachers on U.S. school payrolls has soared over the past fifty years, far more rapidly than the rise in teacher numbers. And the amount of money in district budgets consumed by their salaries and benefits has grown apace for at least the last twenty years.
Underneath the averages and totals, states and districts vary enormously in how many non-teachers they employ. Why do Illinois taxpayers pay for forty staff per thousand pupils while Connecticut pays for eight-nine? Why does Orange County, Florida employ eleven teachers aides per thousand students when Miami-Dade gets by with seven”

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The Cost of Neighborhood Schools, and the Growing Need for School Choice

The former executive of New Schools for New Orleans, Neerav Kingsland, has written an essay for the Washington Post about the challenge of neighborhood schools.
“For much of our nation’s history, neighborhood schools have been bastions of exclusion, not inclusion. And this exclusion persists to this day.

For every child who gets preferred access to a neighborhood school, there are many other children denied access to this same school. What is inclusive for one set of students is exclusive for a much larger set.”

Kingsland’s essay follows the announcement that the D.C. mayor’s office has released plans to redraw elementary school boundaries, a proposal that could affect thousands of families.

Welcome to Charter School Capital’s weekly round-up where our team will feature news about charter school operations, policy, funding for charter school, facilities financing, and other trends.
As charter school leaders and their teams prepare for students to return to school this Fall, at lot is going on in the charter school world. We hope you’ll find this round-up valuable. Read on!

New Report Shows Encouraging Improvement in Arizona Charter Schools

The Arizona Department of Education’s recent release of the 2014 AIMS test scores show that more than 70% of Arizona charter schools have improved in math and reading. The Phoenix Business Journal interviewed Ildi Laczko-Kerr, vice president of academics for Arizona Charter School Association, who noted:
“The fact that we saw such a large number of our schools improve from one year to the next is reflective of the changing systems in their schools and designing them to meet the needs of their students.”

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Strong Reactions to University of Arkansas’ Report on Charter School Productivity

Last week in our charter schools news roundup, we featured a new report released by the University of Arkansas that looked specifically at cost effectiveness and ROI when comparing the productivity of public charter schools to traditional school districts.
The report has stirred-up some debate among public charter school and traditional school district experts. NPR’s All Things Considered interview education policy experts Ted Kolderie and Joe Nathan who argue that the comparison made by the University of Arkansas doesn’t actually add up.
But Eric Hanushek, Senior Fellow at the Hoover Institution at Stanford University, voices his support for the report after reviewing the report’s methodology and key findings. “This study is path breaking and is likely to spearhead a new and important policy debate. Until the 2008 recession, schools largely acted as if they were immune from considering finances and returns on expenditures, but we now know that this is no longer possible. This timely study invites a more rational discussion of policy choices, not just with respect to charter schools, but also in a wider context.”
Patrick Wolf, the University of Arkansas head researcher, gets into more detail about the study he lead with his team in a Wall Street Journal interview and an Education Next response piece.

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Washington Post: D.C. Charter Schools Sue City, Alleging Unequal Funding

The D.C. Association of Chartered Public Schools filed a federal lawsuit last Wednesday under the grounds that the city has provided unequal funding to charter schools. According to the Association, since 2008 charter school students have received roughly $2,150 less each year from District of Columbia than the district students.

Charter School Capital supports the efforts of many state charter school associations across the country. In Ohio, charter schools are well-served by the new leadership at the Ohio Alliance for Public Charter Schools (OAPCS). Darlene Chambers is now the President and CEO at OAPCS. Below is an except of her recent letter that appeared on the OAPCS website as well as a link to read the letter in its entirety…

Letter from OAPCS President & CEO, Dr. Darlene Chambers (Excerpt)

This is a pivotal moment in Ohio’s charter school movement and I am honored to serve as President & CEO of OAPCS at this critical time. Those who already know me recognize I am a strong advocate in charter schools and all that they represent: innovation, entrepreneurialism, and choice. For those who don’t yet know me, my position on charter schools is they were founded and have thrived for a simple reason: one size no longer fits all when it comes to education. Parents should decide what’s best for their children. Our duty is to provide quality options…
A quality education for every child is a fundamental right that all of us can work together to achieve. OAPCS can address the challenges and improve educational options for all public school children in Ohio, but I need your help and I ask for your support as we continue on this important effort together. For too long, the charter school debate has been pitted in partisan rhetoric when the focus needs to stay on what is best for the children in Ohio. Collaboration is the key for achieving goals and we seek your input, feedback and support.
Over the next months, I am thrilled to have the opportunity to meet with you and share your story with the community. Please help me spread the word and share the positive messages about all that’s going right in our schools serving 120,000+ students. At the end of the day, charter schools provide a viable, important option – often for students who would not have access to a high-quality educational opportunity without them. Let’s work together to ensure all students have access to the education they deserve regardless of their zip code.

Read the full OAPCS letter.

A recent interview in Education Week highlights some charter school policy issues to watch for this year.
Todd Ziebarth, the senior vice president of state advocacy for the National Alliance of Public Charter Schools gives us a guide to 2014 charter school policy.
Here’s an excerpt from the interview:
Q. What policy trends do you expect to see in the charter sector this upcoming year?
A. Funding and facilities is one, authorizing and accountability has been and will continue to be a policy trend. I think we counted about seven states in the 2014 session that took steps to impact charter authorizing and accountability.
I do think that set of anti-charter bills that came up in Illinois will continue to come up. One in particular which is the whole issue of full-time virtual charter schools. That is often an issue of debate in new charter laws. The question is: Will this [law] allow full-time virtual charters and will they be for-profit?
Of all the issues in the charter space, that one seems to be the most problematic for folks. It combines full-time virtual education with another challenging issue which is for-profit providers. For some people, full- time virtual education is a problem; for others, for-profits, is a problem. But the bigger question is are full-time virtual models a good fit in the charter space?
There’s a lot of heat around that issue, and my guess is that will continue to be one of the more problematic issues.
The entire article is available at Education Week.

Charter schools are changing the face of education in America, and whenever change starts to happen, debate tends to follow.
Most charter school administrators and educators are used to hearing a wide spectrum of questions and concerns – some better informed than others.
Ember Reichgott Junge, charter school advocate and author of Zero Chance of Passage: The Pioneering Charter School Story , has been touring the country talking about her book, and addressing common charter school myths and misperceptions including those around charter school funding.
A story in the Minnpost last week highlights specific misconceptions that Junge frequently discusses:
1) Charters divert money from school districts
One of the most heated, and complex, issues in the charter school movement is whether public money should follow the student, which is the way the system is currently designed, or whether the students should follow the public money.
“The question here is who gets to spend it,” said Junge, “the parents and the teachers at the school or a district superintendent? … The real issue is that superintendents don’t get to spend the money the way they want.”
2) Charter schools don’t perform as well as district schools
Junge correctly points out that you will find studies supporting both sides of this argument, and that there isn’t a simple answer. “it’s a false comparison. Whether the school is a charter or district run is not what determines whether kids learn,” she said. “And that’s determined by whether the school is engaging its students.”
Ember Reichgott Junge is a former US Senator for Minnesota. She is highly regarded among charter school experts for helping author the nation’s first charter school law in Minnesota.

If there’s one thing we know at Charter School Capital, it’s charter school growth strategies.
We’ve supported charter school expansions, strategized about new locations, and created charter school funding opportunities. Not only has our team been able to support high-quality and accessible education for every student, but each school has given us incredible insight into what works, and what doesn’t.
In fact, charter school growth is one of our favorite topics to discuss with charter schools and leaders. That’s why we were excited when asked to participate in a webinar for the Florida Consortium of Public Charter Schools (FCPCS).
We’ve been providing working and growth capital and facilities financing to charter schools in Florida for nearly two years, and the demand from charter schools continues to grow. There’s currently 623 public charter schools operating in Florida with a student population of 229,233 currently enrolled in public charter schools. Click here to learn more about charter schools in Florida.
FCPCS is one of the oldest and largest charter school associations in the country. It has over 400 charter school members, and provides advocacy, support, resources, and networking opportunities to new and existing charter schools, parents and students.
Here’s the blurb from FCPCS’ website promoting the webinar: Charter School Capital will present recommendations and information on building a growth strategy for your charter school. Stuart Ellis, co-founder and CEO of Charter School Capital will explain best practices and common obstacles for charter schools during the start-up, growth and sustainability phases.
This event is only open to members of FCPCS, but we will recap the main charter school growth strategies on our blog, and you can find past presentations on similar topics on our SlideShare. Click here to download past presentations.
If you have questions about how Charter School Capital can help your school grow, or alleviate some growing pains, we’d love to hear from you.

We know that summer is a busy time for educators, and when you’re trying to manage staffing, budget for your school’s needs, develop organizational strategies, and have some summer vacation time, there isn’t a lot left over to keep-up with updates in charter school news. So, we’ve decided to compile our top picks for this week. Happy reading!

The Productivity of Public Charter Schools

The University of Arkansas just released a report on the productivity of public charter schools and district schools, looking specifically at cost effectiveness and ROI. Key finding indicates that charter schools nationwide are 40% more cost effective than district schools.
To read the whole report, click here.

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Sixty Year Anniversary of Brown v. Board of Education – Are Charter Schools Achieving Brown’s Vision?

In a Huffington Post article this week, Deborah McGriff, Chair of the National Alliance for Public Charter Schools, writes: “Sixty years ago this week, my family and other Black families across the country were wondering how the Supreme Court’s Brown v. Board of Education decision would impact their children’s education. How long would it take for the promise of a great education to become a reality?”
McGriff goes on to point out how charter schools are offering hope to low income and working class students that they will finally receive a high-quality education. She points out that in some cases “public charter schools are actually flipping the achievement gap – helping Black and Latino students outperform affluent, white students across their states.”

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NPR: High Performing Charter Schools May Improve Students’ Health

Research from UCLA and the Rand Corp. indicates that students at academically better schools were less likely to indulge in high-risk behavior, like smoking cigarettes, using marijuana, drinking, participating in gang activity, or having unprotected sex. The survey was made up of 521 Los Angeles charter school students and 409 local neighborhood schools.
To read the full NPR blog post, click here. The actual report can be found here.

When Jason Wall decided to open Young Scholars Academy, he wanted to focus on kids that everybody else had given-up on. Experienced in charter school administration, Wall and his wife decided that they needed to “put our money where our mouth was” and open a school specifically geared towards high-risk students that were struggling in public school.
“We opened Young Scholars in South Linden, Ohio which is probably the roughest area in all of Columbus,” explains Wall. “In the past six months, there have been 19 homicides within a two-mile radius of our school.”
Young Scholars started out as a very small school with only 30 students the first year. They received a Federal Startup Grant that helped them get started. As word spread about Young Scholars, the school found their enrollment nearly tripling the following year.
Despite having to staff for 80 students, Young Scholars was allotted funding based on their previous years enrollment numbers. That’s when Wall reached out to Charter School Capital.
“I truly don’t know how we would have been able to staff for that many students if it weren’t for Charter School Capital,” Wall says. “I probably would have had to come up with the money myself, or try to take some sort of outside funding that would have been far more complex and convoluted.”
Access to reliable funding has empowered Young Scholars to offer a very low teacher-to-student ratio and purchase 40 new computers for their students.
They also have adopted a unique staffing model to best serve their challenging student population; teachers are trained for months before the school term begins in order to receive in-depth training, at a considerable expense.
“A school is only as good as its teachers,” says Wall. “We’re able to have that model because we were able to get that extra cash flow from Charter School Capital.”
The school’s rigorous model, which focuses on creating individual educational “playbooks” for each student and imparting socially acceptable skills, also demands constant parental involvement and asks for rigid behavioral standards.
It’s not just educational growth that Young Scholars is tackling. Their goal is to actively engage with, and improve, their community in South Linden, including partnering with a local civic center, nearby churches, and sponsoring anti-violence events.
Wall describes the positive impact they’re having on their community. “When I pulled up the first day to hang the school sign, there were 15 gang members peddling drugs in front of the building. Since we’ve been open and having a presence in the community, they’ve taken their business elsewhere.”
Three years after opening their doors, Young Scholars has increased enrollment to 100 students. Once again they’ll be working with Charter School Capital to help finance their growth.

Last week, at the National Charter School Conference in Las Vegas, we announced an innovative $500 million charter school facilities program to help charter schools nationwide address one of the charter school movement’s biggest challenges – securing facilities that meet the growing needs of charter schools. The formation of American Education Properties, LLC (AEP) brings together Charter School Capital and investment firm, American Infrastructure MLP Funds (AIM) to help solve the growing facilities needs of America’s charter schools.
The offering is unlike any other facilities financing options available on the market today. Charter schools will now be able to determine their own long-term facility needs and maintain full control of their buildings. This represents a major improvement from the year-to-year lease renewals that many charter schools currently experience. By providing long-term facilities security and an investment partner interested in charter school expansion, charter schools now have the ability to expand their enrollment and educational offerings with confidence.
What does this mean to charter schools?

Charter schools now have the opportunity to provide the best facilities to match the needs of their educational programs as well as determine long-term facility needs while maintaining full control of their buildings.
Schools will be empowered with the flexibility to make choices about what to do with their space so it best suits their faculty, staff and student community.
Charter School Capital will work with all charter schools to facilitate the origination and sourcing, underwriting, asset administration, and property management.

Charter School Capital President and CEO, Stuart Ellis, noted, “The dramatic growth of charter schools – 13 percent in 2013 alone – makes it clear that facilities financing, which is already one of the industry’s largest challenges, will become an even more pressing issue during the coming years. In 2012, the National Alliance for Public Charter Schools (NAPCS) found that more than half of charter schools would outgrow their current facilities within five years. Collaborating with AIM in the formation of American Education Properties allows us to serve a broad array of charter schools nationwide by freeing-up resources that schools are then able to allocate to classroom instruction or other operational needs.”
The news has charter school advocates celebrating. “Nearly one million students nationwide are on charter school waiting lists. Charter school educators are eager to meet that demand. Fortunately, Charter School Capital has stepped up and created a solution to help parents,” states Caprice Young, President, Education Growth Group and founder and former CEO of the California Charter Schools Association. “These resources will open doors like never before! Public charter schools are now able to expand, offer new programs and customize their space to create the learning environment that best matches student needs.”
Nina Rees, president and CEO of the National Alliance for Public Charter Schools added, ” By providing charter schools security in their facilities, this effort helps lift a burden many schools face and will enable schools to focus, as they should, on their students and their academic results. School administrators will be better able to direct their scarce resources and time toward educating students rather than worrying about real estate needs.”
“We are pleased to be partnering with Charter School Capital on this important initiative,” said Bob Hellman, CEO of the American Infrastructure MLP Funds. “Our goal is to help solve America’s infrastructure needs with innovative capital solutions, and we believe that charter schools represent a critical and growing piece of this infrastructure puzzle. We look forward to working with schools and communities in need of secure, long-term facilities to provide the resources to help them continue to grow and thrive.”
Since we made this charter school facilities announcement, the availability of funds has been mentioned in several news media including the Portland Business Journal and Reuters.
What are your facility challenges? Has the inability to secure the right type of facilities impacted your charter school’s ability to enroll and educate more students in your community? Share your experiences with us below or email our team at GrowCharters@charterschoolcapital.com.

Below is an overview of the Governor’s May Revision provided by Capital Advisors Group:

The following is Capital Advisors Group‘s initial analysis of the Governor’s May Revision with a focus on the K-12 education components and impacts to California charter schools.
Overall State Revenues Continue to Improve – The Governor recognizes the continued growth in the state’s economy by revising his estimate of state revenues to reflect a net increase of $2.4 billion for 2014-15.
The revised revenue estimates reflect a private sector unemployment rate that has returned to pre-recession levels and continued revenue improvements from the top three sources: sales and use tax, personal income tax, and corporation tax.
It will be interesting to see if the Legislative Analysts Office (LAO) agrees with the Governor’s estimates. Some folks are already opining that the estimates may be low. Legislators have remarked in recent days that they are aware the Governor’s prior budget proposals have assumed lower levels of revenue than actually materialized – essentially making the argument that they may not want to be so conservative this time around. Obviously, one of the Governor’s claims to fame is his ability to constrain the Legislature’s tendency to overspend. Given the election year dynamics, we think the Governor is in a good position to continue holding the leash. If that is true, the May Revision doesn’t give the Legislature much to play with in terms of additional funding since the bulk of additional funding in the May Revision is being tapped to expand MediCal – which will be difficult for Democrats to oppose.
If the LAO disagrees with the Governor and opines that the estimates are low, we can expect some lively debate and negotiations over the next month. We expect their analysis in the coming days.
Governor’s Proposition 98 Estimate Reflects Minor Changes – The Governor’s estimate of the changes to the Prop 98 estimates for the prior year, current year, and budget year are minor, but important. Overall, the May Revision reflects a net $242 million increase in the Prop 98 guarantee over three years, as compared to the January proposal. Specifically, the May Revision reflects Prop 98 at the following amounts:
· 2012-13 – $57.8 billion (down $547 million from January)
· 2013-14 – $58.3 billion (up $1.5 billion from January)
· 2014-15 – $60.9 billion (down $700 million from January)
It will be interesting to see if the LAO agrees with the Administration’s estimates of the multi-year Prop 98 estimates.
Rainy Day Fund and Prop 98 Reserve
The Governor’s May Revision proposes a Rainy Day Fund and Proposition 98 Reserve that reflects the compromise that was worked out with legislative leaders. The proposal also includes a component to provide resources to pay down California’s long-term debts.
The General Fund (GF) revenues that will be transferred into the Budget Stabilization Account, the formal name of the Rainy Day Fund, will be calculated in two ways:
1. 1.5% of GF revenues in each fiscal year
2. GF revenues collected as part of the personal income tax on capital gains income, when those revenues exceed 8% of total GF revenues
These transfers will be made until the fund reaches a maximum of 10% of GF revenues.
The revenues transferred in this way will be used in several ways:
Rainy Day Fund
Prop. 98 Reserve
Withdrawal from, or suspension of, the Rainy Day Fund and the Prop. 98 reserve are permitted under limited circumstances if there is a budgetary emergency, a natural disaster or if spending remains at or below the highest level of spending over the last three years, adjusted for inflation and cost-of-living.
Debt Obligations: Between 2015-16 until 2029-30 half of the non-Prop 98 revenues transferred would be used to discharge debt obligations (e.g., Prop. 98 settle up, inter-fund loans, claims for mandated costs prior to 2004-05, and unfunded pension liabilities).
This revised Rainy Day proposal reflects a compromise worked out between Legislature and Governor Brown. Aside from one recent informational hearing held by the Assembly Budget Committee, this deal was largely worked out behind closed doors and has been made public as part of Governor Brown’s May Revision. The proposal is aimed at addressing California’s revenue volatility and inadequate reserves.
The proposal is in bill form in Assembly Constitutional Amendment X2 1 (ACA X2 1), carried by former Speaker John A. Perez; the bill was presented to the Senate Budget Committee on May 14. In that hearing the author indicated that there are further amendments pending on this bill. A more comprehensive analysis of this proposal will follow as soon as those additional amendments are available.
To take effect, the proposal would need to pass the legislature and be passed by the voters. If enacted, it would replace the current Rainy Day Fund (Prop. 58) and amend ACA 4, which is set to go before voters this November.
Fully Paying-Off Inter-Year Deferrals – Consistent with his January Budget proposal, the Governor continues to focus on paying off the state’s debt by the end of 2014-15. However, the mix of the one-time and on-going money is used to pay down these deferrals is changed.
Ambitious STRS Proposal – Easily the most significant K-12 education budget change contained in the May Revision, the Governor proposes to eliminate the unfunded liability associated with the California State Teacher Retirement System (CalSTRS) over the next 32 years; that unfunded liability is estimated by the Administration to be in excess of $74 billion.
As we have expected of any such proposal, the funding proposed to make the system whole comes from three sources:
1. Direct contributions by the state
2. Increased contributions from school employees covered by CalSTRS; and
3. Increased contributions from school employers
Details on each of these three sources are provided below. The Governor’s proposal is aggressive, places more than 60% of the funding burden on employers, and will certainly be the subject of additional discussion in the Legislature.
1) The state will cover approximately $20 billion of the total $74 billion by increasing its contribution rate from the current 3.04% of total employee compensation to 3.45% in 2014-15, 4.89% in 2015-16, and 6.33% in 2016-17 and beyond until the unfunded liability is discharged. This level of contribution from the state reflects the shortfall in CalSTRS funding that existed when a long‑term sustainable funding plan was put in place in 1990. In other words, the state feels that it has an obligation to contribute to the discharge of liabilities incurred prior to 1990, but not of those liabilities incurred after that point in time; the Administration argues that it is particularly not responsible for that portion of the liability created by benefit increases granted in 1998 and after.
The state will also continue to fund a supplemental inflation protection program or COLA in an amount equal to 2.5% percent of total employee compensation.
2) School employee contributions will cover approximately $8 billion of the total $74 billion through increases in the contribution rate. Because of existing statutory protections on employee contribution rates, the Administration is proposing to guarantee the (currently optional) supplemental inflation protection program in exchange for contribution rate increases. That rate is proposed to increase from the current 8% of compensation to 8.15% in 2014-15, 9.2% in 2015-16, and 10.2% in 2016-17 and beyond until the unfunded liability is discharged. These rates will apply to employees who entered the system prior to the 2013 enactment of the California Public Employees’ Pension Reform Act (PEPRA). For those employees who entered the system after the enactment of PEPRA the rate would increase to and be capped at 9.21%.
3) School employer contributions will cover approximately $47 billion of the total $74 billion, also through increases in the contribution rate. That rate is proposed to increase from the current 8.25% of compensation to 9.5% in 2014-15, and then will increase by an additional 1.6 percentage points each year until the rate reaches 19.1% in 2010-21; the 19.1% contribution rate will stay in place from that point on. There is no proposal to provide additional resources to school employers in order to fund this increase in costs.
The burden that an increase in the employer contribution rate from 8.25% to 19.1% places on local educational agencies is clear. According to the Department of Finance, the increase from the current rate of 8.25% to 9.5% in 2014-15 will cost districts $350 million, which translates to more than $55 per pupil as a statewide average (note that the impact in different districts may differ according to both the number of covered employees and compensation levels). To provide context for this level of cost increase, recall that the mid-year trigger cuts implemented in late 2011/early 2012 totaled $328 million. Because the first year increase in contribution rate is held at 1.25 percentage points, the budget impact in later years would be even greater.
Independent Study Reform – The Governor makes some edits to his January proposal to reform the state’s Independent Study (IS) law.
In January, the Governor proposed creating a “coursed-based” IS program option for LEAs, essentially allowing schools to claim ADA for students based upon course completion, an alternative to the traditional assignment-based IS. In the May Revision, the Governor removes a requirement from the January proposal that would have required the teacher, under the “course-based” IS option, to meet with students on a weekly basis. Additionally, because the Governor caught flack from the CDE over essentially possible for schools to receive 100% ADA under this option, the Governor revises the proposal to allow LEAs to claim the ADA but also applying the statewide excuses absence rate (so no LEA could receive 100% ADA).
Lastly, the May Revision changes the Governor’s IS reform proposal related to “site-based blended learning” to utilize a universal learning agreement that would apply to all students enrolled in the same course or courses.
The Legislature has opted not to include the IS proposal in the budget process and has instead opted to use SB 1143 (Liu) as the policy vehicle for these discussions. We have been working closely with the Administration and Senator Liu, chair of the Senate Education Committee, as she shepherds the bill through the Legislature. The changes to IS law contained in the bill, if enacted, would be a huge relief to LEAs in the state with students enrolled in IS programs. The most recent version of the bill amended-out the “site-base blended learning” option and instead focused on changes to current IS law and adding the “course-based” IS option. Staff in the Legislature have been resistant to the “site-based blended learning” option. The bill recently passed out of the Senate Education Committee with a bipartisan, unanimous vote.
High-Speed Internet Access For Smarter Balanced Assessments – While the Governor’s proposal does not contain additional one-time funds for Common Core implementation, he does use a little bit of the increased Prop 98 funding ($26.7 million) for a one-time increase in funding for the K-12 High Speed Network; the funding will be used to study broadband access in the state and provide grants to LEAs to expand networks based upon need.
LCFF Low Income Counts – The May Revision proposes some flexibility related the issue of determining, for LCFF purposes, the number of students receiving free or reduced-priced meals at Provision 2 and 3 schools.
The proposed solution is largely consistent with a resolution we have been advocating for since August. It would authorize Provision 2 and 3 schools to establish a base-year eligibility no less than every four years, provided that the school annually updates the count for newly enrolled (or dis-enrolled) students during the intervening years. It would also require the SPI to revise the LEA’s three-year rolling average of unduplicated counts (used to calculate LCFF) using 2014-15 instead of 2013-14, if doing so would increase the LEA’s rolling average.
K-12 Mandate Block Grant – The Governor proposes to increase funding for the block grant by $1.6 million due to increased ADA and adding three additional mandates to the block grant (Parental Involvement, Williams Case Implementation, and Developer Fees). This is in addition to two mandates proposed to be added to the block grant in January.
The Governor wants to pay off the state’s mandate backlog in 2016-17 and 2017-18. He counts this debt in his overall “Wall of Debt.” It is important to remember that the mandate obligations incur interest – making the later payoff is a bad deal for the state, but this means that those LEAs with outstanding claims will actually make some money off the delay if the claims are reimbursed.
Prop 39 Energy Efficiency Programs – The Governor decreases the amount of energy efficiency funding available to K-12 schools by $9 million to reflect a decrease in related revenue.
No Funding for Transitional Kindergarten (TK) – Not surprisingly, the Governor’s proposal does not contain funding for TK. However, we expect this to be a focus in final budget negotiations with the Legislature because Senate Pro Tem Darrell Steinberg is pushing hard for this to be included in his last budget as Senate leader. The lack of significant additional funding in the Prop 98 guarantee will likely hinder Steinberg’s effort.
Additional One-Time Common Core Funds? – Despite continued growth in state revenues, the Administration does not propose to provide another round of one-time funds for Common Core implementation. Some are encouraging a serious conversation about potentially taking two-years to pay off the inter-year deferrals and using some one-time money in 2014-15 for another round of Common Core funding.
What’s Next? – Over the next month, the Legislature will hold their final budget subcommittee hearings and each house will pass a budget bill that will go to the two-house Budget Conference Committee to put together a final budget bill that will ultimately go to the Governor. For every day after June 15 that the Legislature does not send a budget to the Governor, Legislators forfeit pay. We expect an on-time budget.
We expect the Governor, Senate Pro Tem, and Assembly Speaker to begin meeting privately soon. Additionally, because Democrats lack 2/3 control in the Senate, any components of the budget that would require 2/3 votes (The rainy day fund is an example of a 2/3 requirement; however, most parts of the budget impacting education would not require 2/3 vote) will mean Republican support will be necessary and would likely bring Senate Minority Leader Bob Huff (R-Diamond Bar) into the fold. We expect Democrats to do everything in their power to avoid issues that require 2/3 vote.
Thank you to Capital Advisors Group for their permission to distribute the above information.