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Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair

AB 18 (Brownley) - California Task Force on School Finance.

Amended: July 6, 2012 Policy Vote: Education 6-2
Urgency: No Mandate: No
Hearing Date: August 6, 2012
Consultant: Jacqueline Wong-Hernandez

This bill meets the criteria for referral to the Suspense File.

Bill Summary: AB 18 creates the 19-member California Task Force
on School Finance (Task Force) to review and analyze alternative
formulas for allocating funds to public schools and to recommend
formulas that best meet the needs of California's public school
system and pupils, as specified.

Fiscal Impact:
Task Force: Approximately $250,000 General Fund to convene
the Task Force, perform the analysis, and make the findings
and recommendations specified.
Funding recommendations: Unknown fiscal impact to implement
any new recommended funding formula and related
recommendations developed by the Task Force.

Background: Existing law provides for Revenue Limit funding for
school districts that is, in part, based on average daily
attendance (ADA), where ADA is calculated by dividing the number
of days of attendance for all pupils enrolled in the district by
the number of instructional days in the district's fiscal year,
and a day of attendance is generally defined as a minimum number
of instructional minutes (specific to grade level) in a
classroom setting with a certificated employee of the school
district present. The funding computation uses the annual ADA
reported by each district in the last attendance report of the
fiscal year, for the current or prior fiscal year, whichever is
greater. Total Revenue Limit funding (local property taxes plus
state General Fund) for a district is then calculated by
multiplying the district's per-pupil base revenue limit by ADA.

Existing law also establishes and funds categorical programs
that focus resources and/or compliance requirements on specific
classes of students or schools, or on specific uses of funds,

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identified by the Legislature as priorities.

Categorical flexibility: SB 4 (Chapter 12, 2009) and extended by
SB 70 (Chapter 7, 2011), authorized local educational agencies
(LEAs) through the 2014-15 fiscal year, to use funding for
approximately 38 categorical programs for virtually any
educational purpose, to the extent permitted by federal law.
Categorical flexibility was implemented in order to assist
schools in absorbing extensive budget reductions imposed on them
in recent years.

Proposed Law: AB 18 creates the Task Force to review and analyze
alternative formulas for allocating funds to public schools and
to recommend a formula or formulas that best meet the needs of
California's public school system and public school pupils.
This bill specifies criteria to evaluate different funding
formulas to include, but not be limited to: a) The degree to
which any formula results in a level of funding for LEAs that
match a particular LEA's needs as determined by pupil
demographics, grade level enrollment, regional cost differences,
and other factors identified by the Task Force; b) the degree to
which a formula facilitates the attainment of educational policy
objectives; c) the degree to which a formula can be modified
over time to reflect changing conditions and policy objectives;
d) the degree to which a formula can be easily administered and
understood by policy makers and the public.

This bill requires the Task Force to to be comprised of 19
members: 8 members appointed by the Governor; 5 members
appointed by the Speaker of the Assembly; 5 members shall be
appointed by the Senate Committee on Rules; The Superintendent
(SPI) or his or her designee shall be a member of and serve as
chair of the task force.
This bill further specifies legislative intent to include
representation from urban, suburban, and rural school districts;
currently employed teachers, administrators, and classified
school employees; school board members; parents; historically
underserved pupil populations; and members of the research
community with expertise in school finance.

This bill requires the Task Force to do all the following:

1) Identify key issues related to the fair, efficient, and
equitable distribution of resources among and within LEAs.

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2) Identify means by which a funding formula can maximize
local decision-making authority while ensuring statewide
policy objectives are met.

3) Solicit comments and suggestions from professional
educators and administrators, parents, school finance
experts, and other interested parties.

4) Develop alternative formulas for distributing resources
to LEAs, as specified.

5) Simulate the distribution of funds under alternative

6) Identify, for each formula simulated, a target level of
funding for each LEA.

7) Report its findings and recommendations to the
Legislature on or before April 1, 2013.

Related Legislation: AB 8 (Brownley) 2009 required the Director
of Finance and the Legislative Analyst to convene a working
group to make findings and recommendations to the Legislature
and the Governor regarding the implementation of a restructured
school finance system. That bill was vetoed by Governor

Staff Comments: This bill convenes the Task Force to evaluate a
number of issues relative to education finance, to create and
analyze funding formulas, and to report its findings and
recommendations for future state education funding by April 1,
2013. The CDE estimates that convening a 3-month intensive task
force, comprised of the specified members and staffed by the
CDE, would cost $250,000.

The most substantial future fiscal impact, however, will be
determined by the Task Force's education funding
recommendations. This bill requires not only that alternatives
to the current system be evaluated, but that the Task Force
"make recommendations regarding a methodology for transitioning
to a new funding formula." The bill presumes that the Task Force
will be the first step in moving to a new funding formula. While
implementing education finance reforms will need additional

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legislation, this bill creates cost pressure to make those
changes based on the required recommendations.