Local Control Funding Formula Archives

As the budget process moves ahead, below we’ve outlined some key information and initiatives that impact California charter schools.
This week the California legislative budget subcommittees and the full Assembly and Senate Budget Committees will finish their work reviewing and voting on their respective budget blueprints. Once that process is complete the Joint Budget Conference Committee will begin meeting so the legislative houses can begin to ‘hash out’ the differences between their blueprints and pass one budget through both houses by June 15th. After that Governor Jerry Brown will have 30 days to sign or veto the budget; he can also blue line (or reduce) certain amounts of funding within the budget.
For the education community, including charter school funding, the budget is robust with extra funding. The Assembly has included $3.1 Billion additional dollars for the Local Control Funding Formula (LCFF) while the Senate included $2.979 Billion. Both houses also have included over $1 Billion to pay off the mandate backlog.
For California charter schools specifically, the legislature rejected the Governor’s effort to add $20 Million for Charter School Start Up Grants. The Governor had proposed the money because California did not get approved for the next round of federal dollars for charter school funding. The legislature’s rationale is there is still over $24 Million in federal carryover dollars available for the program and they will take a look at it again next year. They did approve an additional staff person for the California School Finance Authority to work on the Charter School Facility Grant Program. Additionally, the Senate included language that will allow independent study charter schools to store their records electronically. The Assembly did not include that language so it will be a conference item.

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As the year progresses the education community, including charter school leaders, in California is coming face-to-face with two propositions that will appear on the November ballot. Construction and business leaders are pushing a $9 billion school bond while the teachers union is championing a measure to continue the Proposition 30 tax increases that Governor Jerry Brown sponsored several years ago. Several weeks ago the fear was that if both measures appeared on the ballot it could hurt either effort to attract votes but now it appears that voters favor passage of both measures.
The Public Policy Institute of California (PPIC) released a recent survey which showed support for the two initiatives. PPIC tested other subjects as well, including knowledge of the Governor’s Local Control Funding Formula, the Governor’s job approval and other K-12 areas. Below, are some key findings of the survey:

Although state spending on schools has increased, 61 percent of adults and 60 percent of likely voters say the current level of funding is not enough.
64 percent of adults and 62 percent of likely voters favor extending Prop 30 tax increases for 12 years for those making over $250,000 a year to fund education and health care.
76 percent of adults and 63 percent of likely voters would vote yes for a state school facilities bond.
For parcel taxes, less than the two-thirds (62 percent) of likely voters (needs two-thirds vote) would support, and only 52 percent or likely voters would support lowering the two thirds majority threshold.
76 percent of adults say state government should fund voluntary preschool programs in CA, and 63 percent of adults would support using the surplus for preschool, while only 34 percent would prefer to pay down the state debt and build up a reserve.

To see the full results of the poll go to PPIC’s website at www.ppic.org.
Though the election is months away this poll gives a boost to the education community who has shown strong support for the school bond measure (which includes $500 million for California charter schools) and could see overall charter school funding reduced if the Proposition 30 taxes are not extended.

This week California Governor Jerry Brown released his proposed budget that invests significantly in K-12 education. The California budget update contains very good news for the education community while also storing away money in a healthy reserve. This begins the budget deliberation process, next the legislature will begin to hold hearings on the various proposals in the budget and the Governor will submit revisions to his budget in May. In this proposed budget the Governor wants to continue to restrain spending and increase budget reserves, and these dire economic predictions support his proposal to add about $3.5 billion to the Rainy Day Fund in 2016-17. This proposal seeks to transfer $2 billion more to the Budget Stabilization Account (BSA) than what is required under Proposition 2, and would bring the BSA total to just over $8 billion.

Continued Growth in K-12 Spending and LCFF Implementation

The Governor estimates that the Proposition 98 guarantee for 2016-17 will be $71.6 billion, which he compares to the pre-recession guarantee of $56.6 billion in 2007-08 and the deep recession guarantee of $47.3 billion in 2011-12. The increase in the guarantee for 2016-17 is sufficient to provide a fourth year investment of about $2.8 billion for LCFF implementation. The Department of Finance calculates that this funding will eliminate about 49% of the remaining LCFF funding gap, and when combined with the roughly $12.8 billion provided over the prior three years, will bring total LCFF implementation to about 95%. The budget proposal also provides a very modest $1.7 million increase to the county office of education LCFF to cover COLA and ADA adjustments.

One-Time Discretionary Funding

Upward adjustments of the Prop. 98 Guarantee in 2014-15 and 2015-16 allow the Governor to again propose an allocation of fully flexible, one-time funding to school districts, county offices and charter schools. The amount proposed for 2016-17 is $1.2 billion, and builds on the $3.6 billion provided over the last two budgets. Note that all of these funds count toward offsetting any mandate reimbursement claims filed by the LEAs receiving the funds.

California School Facilities

The Governor continues to cite “deficiencies” with the existing school facilities program and emphasizes the need for a new state program that is less complex and focuses on districts that have less local capacity to build or modernize schools. He observes that the $9 billion bond proposed for November 2016 does not reform the existing program but, in response to a question at his press conference this morning, did not state that he is currently opposed to that measure. The budget proposal, however, makes fairly clear that he intends to work with the Legislature and stakeholders to provide some sort of alternative to the November school bond measure.

Early Education Block Grant

The Administration proposes to consolidate Prop. 98 funding for the State Preschool Program, transitional kindergarten, and the Preschool Quality Rating and Improvement System Grant into a $1.6 billion Early Education Block Grant. The Governor suggests that the block grant will provide greater local flexibility to address community needs and focus on the most at-risk children. The proposal does not include many specifics, but promises further detail by the May Revision. Many legislators, including Speaker of the Assembly Anthony Rendon, have stated that expanding early education opportunities is their top priority. Stay tuned.

Career Technical Education

The Governor proposes to continue the commitment made in the 2015 Budget Act to provide $900 million in one-time funding over three years for competitive matching grants to support high-quality CTE programs. Funding for 2016-17 will be $300 million.

Proposition 39 Energy Efficiency

The budget proposes $365.4 million to support school district, county office and charter school energy efficiency projects in 2016-17. This is an increase of about $50 million over what was provided last year.

Cost-of-Living Adjustments (COLA)

The COLA is calculated at 0.47%, and the budget proposal includes $22.9 million to provide COLAs to categorical programs that remain outside of the LCFF, including Special Education, Child Nutrition, Foster Youth, Preschool, American Indian Education Centers, and the American Indian Early Childhood Education Program.
Any questions on how this may impact your charter school? Let us know at GrowCharters@charterschoolcapital.com

In our ongoing effort to provide CA budget updates, here is the most relevant information for charter schools in California.

On Wednesday last week, the Budget Conference Committee met and heard all open items and items that had not been previously discussed during the budget hearings. They are attempting to ‘close’ out the budget and forward it to both houses of the legislature for a final vote before the June 15^th deadline. If the budget is not passed by the legislature by June 15^th legislators will cease to receive their paychecks. The Conference Committee adopted several pieces of compromise language to the Proposition 98 package. Here are the highlights from the education package that was adopted:

Assumes the Governor’s revenue projections, which provides an overall Proposition 98 funding level of $60.9 billion for 2014-15.
Reduced deferral payments by $897 million, but included trigger language to make the payment if revenues are sufficient.
Provides $450 million to pay down the K-14 education mandates backlog, with the intent that monies freed up from this payment be dedicated to implementation of the Common Core State Standards. Includes $26.7 million for the K-12 High Speed Network for improving internet connectivity in our K-12 schools.
Provides $250 million in one-time funding for Career Technical Education (CTE) through the Career Pathways Trust competitive grant program.
Approves Supplemental Report Language directing the Department of Finance to report to the Legislature, concurrent with the release of the Governor’s 2015-16 January Budget, with recommendations for future treatment of funding for any former categorical education program, including but not limited to Regional Occupational Centers and Programs (ROCPs) and Beginning Teacher Support and Assistance (BTSA).
Increases funding for Local Control Funding Formula (LCFF) implementation by $250 million above the Governor’s proposed $4.5 billion, additionally, makes the following changes related to LCFF:

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.

This week California Governor Jerry Brown presented his May Revision, which revises his January budget proposal. It is forecast that the state’s revenues will come in at $2.4 billion more than earlier anticipated. This is positive news for charter school education in California. The major pieces of his May Revision are:

Creation of a larger state rainy day fund (which already has reached agreement with the legislature)
A Proposition 98 reserve
Paying off the deficit in the State Teacher’s Retirement Fund
Expansion of the state’s Medi-Cal program

The May Revise includes total funding of $75.9 billion ($45.1 billion General Fund and $30.8 billion other funds) for all K-12 programs. Specifically, the revise continues the changes outlined in the Governor’s January budget proposal by maintaining the additional $4.5 billion proposed for implementation of the Local Control Funding Formula (LCFF), creation of a Proposition 98 reserve and focusing on eliminating inter-year deferrals. He is also proposing to create a K-12 High Speed Network to study Internet connectivity and infrastructure and allocate grant funding to those school districts with the greatest need. This will aid in meeting technology requirements associated with Common Core implementation and adaptive testing. The revise contains $26.7 million for this program. It also proposes a fix for an issue that some schools participating in Provision 2 and 3 of the National Schools Lunch Program are having with the implementation of LCFF. Additionally, there is good news for charter schools with independent study programs as the Governor modifies his January proposal by:

Eliminating the requirement that teachers and students meet weekly to assess if a student is making satisfactory grades
Provides schools the opportunity to offer site-based blended learning, utilizing a universal learning agreement for all students enrolled in the same course or courses
Funds students enrolled in course-based indpendent study programs on the basis of average daily attendance, and not enrollment, and applying the statewide excused absence rate to average daily attendance claimed by local education agencies

To review the entire May Revision go to www.dof.ca.gov and click the link for 2014-2015 May Revision. We’ll be posting additional updates and information on the Governor’s revision and additional budget and legislative information as it becomes available, so check back or subscribe to our blog for ongoing posts on this topic and others relevant to charter schools.

BUDGET PROPOSAL POSITIVE BUT MAY CLASH WITH LEGISLATIVE PRIORITIES
Last week California Governor Jerry Brown released his proposed budget for the year. With revenues rising and the state finally coming out of years of deficit spending the Governor has decided to increase his spending on education. The Proposition 98 guarantee will be funded at $61.6 Billion which is an increase of $6.3 Billion over the 2013 Budget Act level. Additionally, the Governor is proposing:

An additional $6.4 Billion in spending to eliminate all of the education deferrals that have been in place.
$4.5 Billion in funding to implement his Local Control Funding Formula and
$46.5 Million to implement the Common Core standards.
An increase of $25.9 million Proposition 98 General Fund for county offices of education LCFF in 2014-15.
An increase of $74.3 million Proposition 98 General Fund to support projected charter school growth.
A decrease of $2.2 million Proposition 98 General Fund to reflect a decline in Special Education ADA.
Cost-of-Living Adjustment increases of $33.3 million to support a 0.86 COLA for categorical programs that remain outside the LCFF, including Special Education, Child Nutrition, American Indian Education Centers, and the American Indian Early Childhood Education Program. COLAs for school districts and county offices of education are provided within LCFF increases.

All of this additional funding is a very positive sign for the education community but it does set up a battle of priorities between the Governor and the legislature. The legislature, while they will probably support much of this new funding, has its own set of principles that it has publicized. The Democratic members of the State Assembly put out their own budget blueprint last month that included a variety of new spending and program expansions. The Senate leadership has been clear that it would like to use the state’s new revenues to increase access to early learning programs in California. The President Pro Tempore of the Senate, Darrell Steinberg, has already introduced legislation (SB 837) that would establish transitional kindergarten programs for all children in the state. Additionally, early education advocates are preparing legislation that would establish universal preschool in the state as well. While not commenting on the proposals the Governor did say in his budget press conference that it would not be fiscally prudent to establish new programs in the state simply because revenue projections are up. This will set up a tug of war between the Governor and legislative leaders that may not resolve until a final budget is adopted in June.
To learn more about the Governor’s proposals and other California state updates may impact your charter school, register for a free webinar hosted by Charter School Capital on Tuesday, January 21st at 9:00 a.m. PST. Register now.

To Test or Not to Test: That is The Question

Last week, California Governor Jerry Brown signed bill AB 484 brought forth by Assemblywoman Susan Bonilla. AB 484 would essentially end standardized testing as it currently exists in California. The measure could potentially eliminate Academic Performance Index (API) scores and current assessments for the next two years with an option for the State Board of Education to extend the measure to three years. This would occur as the State Board of Education (SBE) and California Department of Education (CDE) begin creating new assessments and performance standards that include the new common core standards.
AB 484 would also provide Local Educational Agencies (LEAs) the opportunity to administer only one of the two common tests (language arts or math); both tests would not need to be administered until the new assessments are created. During this two to three year period, no new API scores will be generated so schools will either use their most recent API score or the average of their last three API scores, whichever is higher. At this time, the potential impact this may have on charter schools facing renewal or revocation is unknown. Additionally, it is unclear how the provisions of AB 484 will work with the school accountability measures that are part of the new Local Control Funding Formula.
This proposal created a firestorm in the Capitol during the last days of the legislative session and forced a response from Arnie Duncan, the US Secretary of Education. Mr. Duncan threatened the state’s future federal funding (and any waivers that the state is seeking from the Federal Government) and expressed anger at the language in AB 484, though he later retracted some of his comments.
It remains to be seen what the ramifications to California charter schools will be as a result of the signing of this new bill. Charter School Capital will continue to provide updates on this policy change in the state of California.
Be sure to register for our blog to receive future updates. To view AB 484 visit www.leginfo.ca.gov and enter in bill number AB 484 when prompted.

The California Legislature has adopted a budget and passed it, along with the trailer bills, to the Governor for his signature. The Governor won the fight over changing how schools are funded in California as a form of his Local Control Funding Formula was adopted but the education trailer bill created new accountability for charter schools. This accountability also comes with removal of a charter schools ability to appeal certain revocations. While the California State Board of Education will have to work out the process through regulations; California charter school policy has taken a step backwards as the language will allow charter school authorizers new ways to show their hostility to charters under their jurisdiction. Below is a short outline of the accountability measures that were adopted for charter schools, as you can see the consequences can be devastating.
A charter school petition will be required to include a description of the school’s annual goals for academic achievement for all students and each subgroup of students. These goals will have to be updated each year by July 1^st beginning in 2015 and will also have to identify specific actions that will be taken to meet these goals using a template created by the State Board of Education that will include:

A review of the progress toward the goals included in the charter, an assessment of the effectiveness of the specific actions described in the charter toward achieving the goals and a description of changes to the actions that the charter school will make as a result of the review and assessment.
A listing and description of the expenditures for the fiscal year implementing the specific actions included in the charter as a result of the reviews and assessment.

Charter schools will also be required to consult with teachers, principals, other staff, parents, and pupils in the annual update. The State Board of Education is also authorized to revoke any charter, whether it is the authorizer or not, if it finds the charter school failed to improve pupil outcomes across multiple state and local priorities.
Additionally, there are interventions if a charter school fails to improve pupil outcomes for pupil subgroups in regards to more than one state or local priority in three out of four consecutive school years:

The chartering authority shall provide technical assistance to the charter school, using the rubric created by the State Board of Education.
The Superintendent of Public Instruction may assign, at the request of the chartering authority and approval of the State Board, newly created California Collaborative for Educational Excellence to provide technical assistance to the charter school.

The language also requires a chartering authority to consider the revocation of any charter school to which the California Collaborative for Educational Excellence has provided advice and assistance and has made either of following findings:
1. The charter school has failed to implement, or is unable to implement their recommendations.
2. The inadequate performance of the charter school is either so persistent or so acute as to require revocation.
A charter school is not allowed to appeal a revocation under this section of new law.
This creates terrible policy for California charter schools and their supporters. You should call the Governor’s office and urge him to reject this language which is contained in Assembly Bill 97. To view the entire bill go to www.leginfo.ca.gov and put in the bill number. You can call the Governor’s office at (916) 445-2841.

Monday night, June 10th, the conference committee closed out the open items in the budget negotiations. The legislature and the California Governor have reached agreement on a budget deal and while we are still waiting for the language to actually appear for the education trailer bill (and other issue area trailer bills), it is very important that we see the actual trailer bill language because that will be the language that fully implements this agreement but here is a summary of the deal.
Proposition 98 will be funded at levels similar to the Governor’s May Revision, with minor adjustments – $15 million less in the current year and $22 million higher in 2013–14. The compromise spends virtually the same on deferral buy down in the current year, but spends $650 million less than the Governor proposed for 2013-14. There will also be $1.25 billion in the budget for the implementation of common core standards. The federal sequestration cuts to special education are not going to be backfilled but the budget does spend $30 million for equalization. Proposition 39 funds will be used for K-14 schools only. The pending language should revolve around a poverty-weighted allotment of Prop 39 funds to each school district and community college district based on their average daily attendance (ADA). Charter schools should be included in these allotments. You would be responsible for submitting applications for energy saving projects based on criteria established by the California Energy Commission and to have those applications approved before receiving funds. A small amount of funds will be provided for the Workforce Investment Board ($3 Million) for Veterans and at-risk youth focused on energy related projects. Additionally, the requirement that LEAs give charter schools first priority on sale or lease of surplus property will be extended until 2016.
The Governor also won on his effort to change the way that schools are funded in California. Though he compromised with the legislature his Local Control Funding Formula will be implemented with changes to proposed funding levels and the supplemental and concentration grants. There will be $2.1 billion to implement the plan, roughly $214 million more than the Governor proposed. The Administration says the compromise spends 84% of the funds on the Base Grant and 16% on the Supplemental and Concentration Grants.
Here are the highlights of the plan:

Increases target per-pupil Base Grant by $537 above the May Revision.
The portion of the overall formula that is devoted to Base Grants is 84% (May Revision was 80%).
The compromise provides additional funding for an “economic recovery payment” to ensure that virtually all districts get back to their 2007-08 state funding levels, adjusted for inflation. (Because of some anomalies, a small number of very small school districts would not get back to the 2007-08 levels.)
Districts and charter schools would receive an additional 20 percent of the Base Grant for low income and English learner students.
While the Supplement Grant rate is reduced from the May Revision level (35% of the base rate), the Supplemental Grant rate is calculated on the much higher Base Grant. Thus, there is very little difference between the lower Base Grant/higher Supplemental Grant approach vs. and higher Base Grant/lower Supplement approach.
Districts and charter schools would qualify for additional concentration funding if 55% of their students are low income and English learners. (May Revision threshold was 50 percent.)
The Concentration Grant rate would be at 50% of the Base Grant for each low income and English learner student above the 55 percent threshold.
Full implementation is estimated to take eight years.
There are also ‘hold harmless’ provisions so no district or charter school receives lower funding in the budget year than they currently do.

These are the highlights and what is available today. We are all waiting for the actual language to be released so everyone can provide a better analysis and make sure the figures are accurate.