governor’s proposals for the 2014-15 state budget and k-12 education presented by school services...
TRANSCRIPT
Governor’s Proposals for the2014-15 State Budget and K-12 Education
Presented by
School Services of California, Inc. Staff
Introduction
© 2014 School Services of California, Inc.
Themes for the 2014 Budget
What a difference a year makes!
Only 14 months ago we were facing deep cuts if Proposition 30 didn’t pass
Governor Jerry Brown is proposing the greatest increase in per-student average funding since 2000-01
He takes a wrecking ball to the “wall of debt” by buying down the remaining K-14 deferrals
The Proposition 98 entitlement skyrockets even while the California economy as a whole only improves at a moderate rate
The increase in Proposition 98 creates a window of opportunity unlike any we have had before
To protect public education during the eventual downturns, the Governor proposes two rainy day funds: one for education and one for the rest of the State Budget
The Governor is proposing a continuous appropriation for the Local Control Funding Formula (LCFF)
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Fiscal Prudence and Policy Implications
The state of California’s taxing structure results in significant volatility in state funding that directly impacts Proposition 98
Most of the state’s past financial problems were the result of over-exuberance during good financial years, not just the onset of bad times
Every school district in the state knows all about the importance of reserves and multiyear planning – the state, not so much
The Governor proposes setting up reserves during the good times to help smooth out any rough spots during the bad times
Sure seems to have worked for the 1,000 school districts in the state during the last recession, the worst of our time
We believe that the Governor’s Proposal is reasonable and prudent, but we expect to see push back from the Legislature – the appetite for spending is very strong
© 2014 School Services of California, Inc.
A-2
Economics Still Rule
The slow economic recovery continues . . . UCLA Anderson Forecast
Unemployment rates are falling for both the nation and California
California’s housing market, which took the biggest fall among the states during the recession, is now recovering briskly
While it has been 4½ years since the recovery started, the nation has yet to recover the jobs lost since the start of the recession
The major bell weather of optimism is the stock market – new highs signify high hopes for the future
© 2014 School Services of California, Inc.
A-3
Education Is this Governor’s Top Priority
While the state still faces significant Budget pressures for the non-Proposition 98 part of the Budget, the Administration’s attitude toward education is dramatically different this year
While public education took more than its fair share of the cuts during the recent recession, public education under this Governor is recovering at a much faster rate
The Governor understands the message the public sent in the passage of Proposition 30 – and is responding to it
Local districts will control programs for the first time in 40 years!
And the education community is more together than it has been in recent years
These factors together gives us a tremendous opportunity – we cannot let it get away!
© 2014 School Services of California, Inc.
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Complete Mind Shift of Governance and Planning
Policy
Funding
Program Rules
Local Board Implementation
School Site Performance
Audits and Compliance Reviews
Old
Syst
em S
tate
of C
alifo
rnia
Compliance Model
New
Syst
em
Empowerment Model
BoardRevises Policy
Results Reported to Public
Local Board Empowers Schools
State Provides Funding
Local Board Sets Policy
Community Involvement
Focus onStudents
Student Achievement
© 2014 School Services of California, Inc.
7
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Education Receives More But Our Needs Are High
Our current commitment to education is nearly last in the nation
Forty years of underfunding has created “structural deficits” in fundamental educational achievements, not just financial deficits
The energy needed to “catch up” is greater than what would be needed to “keep up”
The consequences of poor education policies and funding take time to materialize, but make no mistake, the consequences are severe
We are very encouraged by the recent actions of the Governor
But we must commit to never let our obligations to our children slide again
At Pearl Harbor, there are buildings with unrepaired bullet holes from December 7, 1941 – there is a sign on each of them “Lest We Forget”
© 2014 School Services of California, Inc.
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© 2014 School Services of California, Inc.
Overview of the State Budgetand the State Economy
© 2014 School Services of California, Inc.
U.S. Economic Outlook
The U.S. economy continues to show positive growth, but most recent quarters are not only below recovery levels, they are also below normal growth rates
The latest reported quarter, Quarter 3 (Q3) 2013, is encouraging; at 4.1% it eclipses what we would look for in a “normal” quarter, about 3.5%
The economy is growing more evenly than in the past
The stock market is hitting new highs, regularly indicating optimism in the investment community
Housing markets are heating up in most areas of the country
Capital investment by business is up
Employment is improving
Consumer spending is up
The economy seems to be consolidating its hard-fought gains
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© 2014 School Services of California, Inc.
U.S. Economic Outlook
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3-10.0%
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
-3.7
%
-8.9
%
-6.7
%
-0.3
%
1.4%
4.0%
2.3%
2.2% 2.6%
2.4%
0.1%
2.5%
1.3%
4.1%
3.7%
1.2%
2.8%
0.1% 1.
1%
2.5%
4.1%
U.S. Gross Domestic Product(Percent Change)
2008 20102009 2011 2012 2013
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Stock Market Has RecoveredB-3
Dow Jones Industrial Average(Dow Jones Global Indexes: INDU)
Source: CNN Money
© 2014 School Services of California, Inc.
0%
5%
10%
15%
20%
25%Change in GDP*
Years into the Recovery
199114.2%
1 2 3 4
200910.0%
200114.5%
Average18.9%
198223.1%
Sluggish Growth – Comparing Recent Recoveries
How the expansion that began in 2009 compares with the first four years of other recoveries
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Note: Average is for recoveries after WWII, excluding the one that started in 2009*Adjusted for inflation and the seasonsSource: Commerce DepartmentThe Wall Street Journal, December 18, 2013
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Job ShortfallB-5
Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13125,000
127,000
129,000
131,000
133,000
135,000
137,000
139,000
141,000
143,000
145,000
Num
ber o
f job
s (t
hous
ands
)
Note: Congressional Budget Office estimates of the potential labor force (found here: http://cbo.gov/sites/default/files/cbofiles/attachments/43910_Key AssumptionsProjectingPotentialGDP.xls) are used to calculate the number of jobs needed to keep up with the growth in the potential labor force.Source: Author’s analysis of Bureau of Labor Statistics Current Employment Statistics public data series and Congressional Budget Office data
7.9 millionJob shortfall6.7 million
Jobs not gained
1.2 millionJobs lost
Recession has left a job shortfall of nearly 8 millionPayroll employment and the number of jobs needed to keep up with the growth in the potential labor force, 2000–2013
© 2014 School Services of California, Inc.
The California Economy
California’s economic outlook is also improving
Employment is still a problem; job growth lags the nation and California is among the five states with the highest unemployment
The unemployment rate is declining, but slower than the rest of the nation
Personal income is forecast to grow at an accelerated rate over the next couple of years, but actual performance has fallen short of past forecasts
Housing markets are heating up along the coastal areas, but inland and central valley areas are moving up more slowly
Prior to the “Great Recession,” our economy, without temporary taxes, produced General Fund revenues of just over $100 billion
For 2014-15, the Department of Finance (DOF) projects revenues of $106 billion, including $7 billion in temporary taxes from Proposition 30
The state has a Budget surplus because of past Budget reductions, economic growth, and the temporary taxes
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© 2014 School Services of California, Inc.
California’s Unemployment RateB-7
Jan July Jan July Jan July Jan July Jan July Jan July Aug Oct0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
5.9%
7.3%
9.7%
11.7%12.3% 12.4% 12.1% 11.9%
11.0% 10.6%9.8%
8.7% 8.9% 8.7%
Unemployment Rate
Source: Employment Development Department, 2014
2008 2009 2010 2011 2012 2013
© 2014 School Services of California, Inc.
California’s Unemployment Rate vs. Other States
Nevada Rhode Island Michigan Illinois California6.0%
7.0%
8.0%
9.0%9.0% 9.0%
8.8% 8.7%8.5%
Highest State Unemployment Rates(November 2013)
NationalAverage
6.7%
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Source: Bureau of Labor Statistics, November 2013
California – Employment Forecast
2013 2014 2015
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
1.7%
2.2%
2.0%
1.7% 1.8%
2.2%2.1%2.0%
2.7%
Employment Forecast(Percent Change)
LAO, November 2013UCLA, December 20132014-15 Governor's Budget
B-9© 2014 School Services of California, Inc.
California – Personal Income Forecast
2013 2014 2015
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
2.1%
5.4% 5.5%
2.1%
5.3%5.7%
2.5%
4.6%5.0%
Personal Income(Percent Change)
LAO, November 2013UCLA, December 20132014-15 Governor's Budget
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Inflation Forecast
2013 2014 2015
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
1.5%1.6% 1.7%
1.5%
2.0%
2.5%
1.6%1.8%
1.9%
Inflation Forecast(Percent Change)
LAO, November 2013UCLA, December 20132014-15 Governor's Budget
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© 2014 School Services of California, Inc.
Forecast State Budget Surpluses
In its 2013 November State Budget Forecast, the Legislative Analyst’s Office (LAO) projected growing budget surpluses through 2019-20, reaching $9.6 billion in that year
Armed with this forecast, many lawmakers are eager to spend this surplus by establishing new programs or restoring past program cuts
The LAO’s forecast methodology, which is clearly spelled out in the report, indicates that most automatic cost-of-living adjustments (COLAs) for state programs were repealed in 2009 to cope with the budget gaps resulting from the recession
As a result, the LAO’s long-term forecast does not increase program expenditures with respect to COLAs, except where required by federal law
Proposition 98, however, is implicitly adjusted for COLAs as part of the three Tests
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© 2014 School Services of California, Inc.
Adjusting State Expenditures for COLAs
Even though current law does not require COLAs for most state programs, it is unlikely that the Legislature will ignore the need for inflation adjustments for the entire six-year forecast period
The California Consumer Price Index is expected to increase about 2.5% annually through 2019-20
If this adjustment is not provided, state programs would suffer a loss of purchasing power of about 14% by the end of the decade
What happens to the forecast surplus if COLAs are provided to all state programs?
If COLAs are provided, the operating surplus falls significantly: $2.1 billion in 2014-15, peaking at $4.9 billion in 2017-18, and dropping to $2.3 billion by 2019-20
This outcome would leave little funding for new programs or the restoration of the cuts made during the recession
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© 2014 School Services of California, Inc.
State Budget Surplus Assuming COLAs
2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 $-
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
$8.0
$9.0
$10.0
$3.2
$5.6
$8.3
$9.7 $9.6 $9.8
$2.1
$3.4
$4.9 $4.9
$3.5
$2.3
Forecast of Operating Surplus 2014-15 Through 2019-20 (In Billions)
Limited COLAsCOLAs for all programs
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Source: LAO, November 2013; School Services of California, Inc., January 2014
© 2014 School Services of California, Inc.
Small Recovery Begins After Decade of Deficits
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
-$50.0
-$40.0
-$30.0
-$20.0
-$10.0
$0.0
$10.0
(Dollars in Billions)
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Source: Governor’s Budget Summary, page 5
© 2014 School Services of California, Inc.
2014-15 Governor’s BudgetGeneral Fund Budget Summary (In Millions)
© 2013 School Services of California, Inc.
2013-14 2014-15
Prior-Year Balance $2,528 $4,212
Revenues and Transfers $100,147 $104,503
Total Resources $102,675 $108,715
Total Expenditures $98,463 $106,793
Fund Balance $4,212 $1,922
Budget Reserve:
Reserve for Encumbrance $955 $955
Reserve for Economic Uncertainties
$3,257 $967
Budget Stabilization Account $0 $1,591
Total Available Reserve $3,257 $2,558
Revenues and transfers increase 4.3%, while expenditures increase 8.5% in 2014-15
The Budget year provides nearly $1.6 billion the Budget Stabilization Account
The Budget proposes a nearly $1 billion reserve for economic uncertainties
Source: 2014-15 Governor’s Budget
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© 2014 School Services of California, Inc.
What’s Proposed for the Rest of the Budget?
What the Budget proposes outside of education:
$670 million for expanded Medi-Cal benefits, including mental health, substance abuse disorder, adult dental, and specialized nutrition services
A 5% increase in California Work Opportunity and Responsibility to Kids (CalWORKs) grants
$815 million for deferred maintenance in state parks, highways and roads, K-12 schools and community colleges, state hospitals, and other facilities
$850 million in “Cap and Trade” auction proceeds for programs that will reduce greenhouse gases, including $250 million for high-speed rail
$1.6 billion to the “Rainy Day Fund” in addition to the $967 million reserve
$1.6 billion supplemental payment to retire the Economic Recovery Bonds
$142 million to UC and $177 million to CSU to avoid a fee increase
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© 2014 School Services of California, Inc.
What’s Not in the Budget?
What the Budget does not address:
No proposal for a statewide school facilities bond
No new funding to address the unfunded liability in the California State Teachers’ Retirement Systems (CalSTRS) fund
No new funding to address special education shortfalls
No new funding for early childhood education
No payments on the prior-year state mandate credit card
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California’s Investment in Education
After 40 years of neglect, with each year’s funding being well below the national average, we have a lot of catching up to do
Even after the turnaround began in 2013-14, California is nearly last in the nation in per-student funding
The Governor’s proposal for dramatically increased funding in 2014-15 will help us catch up
But we have a long way to go and the road ahead could be a bit slippery
Our economy is still fragile and vulnerable, making out-year projections volatile
Just 13 months ago, absent Proposition 30, education would have faced another large cut
How many of us forecast that a little more than a year later we would be seeing a 10.9% increase?
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© 2014 School Services of California, Inc.
California Invests in Education
2007-08 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 $40.0
$45.0
$50.0
$55.0
$60.0
$65.0
$70.0
$75.0
$56.6
$47.2
$58.3 $56.8
$61.6 $64.5
$67.0 $69.6
Budget Continues to Invest in Education(Proposition 98 Dollars in Billions)
Proposed Estimated
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Source: Governor’s Budget Summary, page 5
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Per-ADA Funding Volatility
1999-00
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
-15%
-10%
-5%
0%
5%
10%
15%Per-Average Daily Attendance Revenue Change
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© 2014 School Services of California, Inc.
Money Matters in Student Performance
Results of the 2013 Grades 4 and 8 Math and Reading Proficiency Scoring from the National Assessment of Educational Progress (NAEP) show that the majority of the lowest performing states with the lowest levels of proficiency in math and reading rank in the 15 states with the lowest expenditures per ADA
This includes California, Arizona, Georgia, Mississippi, Nevada,Oklahoma, Tennessee, and Texas
Conversely, the states with the highest 2013 Grades 4 and 8 Math and Reading Proficiency Scoring rank in the top 15 states with the highest per-ADA expenditures in 2011-12
This includes Connecticut, Maine, Montana, New Hampshire, New Jersey, North Dakota, Pennsylvania, Vermont, and Wyoming
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Source: Education Week Quality Counts 2014 – January 9, 2014
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Money Matters in Student Performance
Overall, California’s per pupil expenditures continue to lag the national average, ranking 49th in the nation in 2011-12, the most recent data comparison
California reported per pupil expenditures of $8,341, comprising about 70% of the U.S. average of $11,864
California continues to have some of the highest salaries in the U.S.; however, student enrollment to teacher is also reported as the highest in the nation in 2011-12 at 25.6:1
Other student enrollment to staff ratios continue to grow:
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2009-10 2010-11
Guidance Counselors 810:1 1,016:1
Librarians 5,489:1 8,309:1
Current Expense of Education Per ADARanking of the States – 2011-12
Source: Education Week Quality Counts 2014 – January 9, 20141United States Average includes the District of Columbia
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Ranking State Current Expense Per Student(Adjusted for Regional Cost Differences)
Percentage of National Average
1 Wyoming $19,534 165%
2 Alaska $17,554 148%
3 Vermont $17,388 147%
4 New York $16,835 142%
5 Maine $15,063 127%
6 New Jersey $14,920 126%
7 Rhode Island $14,794 125%
8 Connecticut $14,751 124%
9 New Hampshire $14,556 123%
10 Montana $14,489 122%
United States 1 $11,864 100.0%
49 California $8,341 70%
National Rankings: Average Teacher Salaries and Student/Teacher Ratio – 2011-12
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Ranking StateAverage
Salaries of Public School
Teachers
1 New York $73,398
2 Massachusetts $71,721
3 Connecticut $69,465
4 District of Columbia $68,720
5 California $68,531
6 New Jersey $67,078
7 Maryland $63,634
8 Alaska $62,425
9 Rhode Island $62,186
10 Pennsylvania $61,934
United States $55,418
Ranking StateStudents Enrolled
Per Teacher in Public K-12 Schools
1 California 25.6
2 Utah 21.9
3 Oregon 20.2
4 Washington 19.7
5 Michigan 18.4
6 (tie) Idaho 18.2
6 (tie) Nevada 18.2
8 Arizona 18.0
9 Colorado 17.8
10 Ohio 17.3
United States 16.0
Source: NEA Rankings and Estimates 2012
California Lags the Nation© 2014 School Services of California, Inc.
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California’s Schools Lag Behind Other States on a Number of Measures
California Rank
California Rest of U.S.
K-12 Spending Per Student (2011-12)* 49 $8,341 $11,364
Staffing
K-12 Students Enrolled Per Teacher (2011-12)* Last 25.6 16.0
K-12 Students Per Administrator/Official (2010-11)** N/A 1,757 766
K-12 Students Per Guidance Counselor (2010-11)** N/A 1,016 471
K-12 Students Per Librarian (2010-11)** N/A 8,309 984
Note: Number of students per administrator, guidance counselor, and librarian are based on statewide enrollment*Source: Education Week Quality Counts 2014 – January 9, 2014**Source: National Center for Education Statistics digest of Education Statistics 2012
California’s staffing ratios continue to grow, causing increased pressure on staff and students
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© 2014 School Services of California, Inc.
Education is the Great Homogenizer
Opportunities for a free and appropriate public education have fueled the American dream for wave upon wave of new Americans for 200 years
Education turns tax receivers into tax payers
Education enables all citizens to participate in our democratic society
The traditional avenues for transition to work and higher education have been Regional Occupational Centers/Programs (ROC/P), Adult Education, and community colleges
All of these programs have been cut more than even the deep cuts experienced by K-12 education
As a result, many Californians may feel that the window of opportunity has passed them by
There is a direct linkage between education and earnings
We need to be sure the window of opportunity is re-opened and that it stays open
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© 2014 School Services of California, Inc.
Education, Unemployment, and Wages
All
Less than high school
High school diploma
Some college (no degree)
Associate's degree
Bachelor's degree
Master's degree
Professional degree
Doctoral degree
6.8%
12.4%
8.3%
7.7%
6.2%
4.5%
3.5%
2.1%
2.5%
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$815
$471
$652
$727
$785
$1,066
$1,300
$1,735
$1,624
Note: Data are for persons 25 and older. Earnings are for full-time wage and salary workers.Sources: U.S. Bureau of Labor Statistics, the College BoardThe Sacramento Bee, December 22, 2013
Those who have education beyond high school earn more, and are more likely to be employed than those with a high school diploma or less
Education Unemployment Rate, 2012 Median Weekly Earnings, 2012
The Education Budgetand Challenges Ahead
© 2014 School Services of California, Inc.
Proposition 98: How Much in 2014-15?
$61.6 billion in K-14 Proposition 98 funds are available for 2014-15
This is a $6.3 billion increase – 11.4% over the 2013-14 budgeted level
On average, $751 per ADA ongoing is K-12 education’s share
In addition, $3.3 billion more is provided in one-time funding from prior years
$1.8 billion from 2012-13
$1.5 billion from 2013-14
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Proposition 98 Revenues
'07-08 '08-09 '09-10 '10-11 '11-12 '12-13 '13-14 '14-15
$56.6
$49.2
$51.7$49.7
$47.2
$56.5$55.3
$58.3$56.8
$61.6
Proposition 98 (In Billions)
Enacted Budget 2014-15 Governor's Budget
© 2014 School Services of California, Inc.
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State Revenue Growth vs. Proposition 98 Growth
Proposition 98 growth or decline closely tracks changes in state revenue
As the state goes, so goes education funding
© 2014 School Services of California, Inc.
'08-09 '09-10 '10-11 '11-12 '12-13 '13-14 '14-15-20%-15%-10%-5%0%5%10%15%20%25%
Annual Percentage Change: State Revenues Compared With Proposition 98
State Revenue Proposition 98
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Proposition 98 Revenues and Spending
Proposition 98 sets the minimum funding level for K-12 education and the community colleges, but . . . the Legislature and the Governor decide how to spend it
© 2014 School Services of California, Inc.
Constitutional Guarantee Statutory Programs
Prop. 98 Revenues K-14 Spending
DeferralsQEIA/ASES*
Child Nutrition
LCFF
Other Programs
Community Colleges
Special Education
* Quality Education Investment Act/After School Education and Safety Program
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K-12 Proposition 98 Proposals for 2014-15© 2014 School Services of California, Inc.
$5.5 billion of one-time and ongoing Proposition 98 to fully eliminate interyear K-12 apportionment deferrals in 2014-15
$4.472 billion in additional funding for school districts and charter schools to continue implementation of the LCFF
$25.9 million to complete the implementation of the COE LCFF
$316.5 million to support Proposition 39 energy efficiency projects
$33.3 million to fund a 0.86% statutory cost-of-living adjustment (COLA) for categorical programs that remain outside of the LCFF
$74.3 million to fund projected growth in charter school ADA
$46.5 million for assessment costs associated with implementation of CCSS
$188.1 million for the Emergency Repair Program (ERP) from one-time Proposition 98 funds
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The Rest of Proposition 98 – Community Colleges© 2014 School Services of California, Inc.
K-12 education shares the Proposition 98 guarantee with the California Community Colleges (CCCs)
And much like K-12, CCCs are benefitting from an upswing in the minimum guarantee:
3% growth in general purpose apportionments
Complete retirement of deferrals
Additional funding for certain student success priorities
One-time funds for deferred maintenance and instructional equipment
Unlike K-12, CCCs have not yet resolved the unwinding of temporary categorical flexibility, which expires July 1, 2015
The Governor proposes additional partial categorical flexibility in a few more programs, but the expiration date remains
CCCs are still funded through a system of base apportionments and categorical programs
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K-12 Education and Community Colleges
Proposition 98$0
$10
$20
$30
$40
$50
$60
(Amount in Billions)
K-12
CCCs
10.93%
89.07%
© 2014 School Services of California, Inc.
CCCs Proposition 98 percentage share mirrors statutory requirement
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Amendments to the “Rainy Day Fund”
The Governor is proposing a constitutional amendment to make major changes to the state’s “Rainy Day Fund,” which was established in 2004 through Proposition 58The amendments are intended to address revenue volatility stemming from the capital gains taxThe specific provisions include:
Establishing a Proposition 98 reserve in addition to the existing Rainy Day FundRequiring contributions to these reserves when capital gains revenues exceed 6.5% of General Fund tax revenuesEstablishing a maximum size for the Rainy Day Fund of 10% of revenues, as opposed to the 5% maximum of Proposition 58 Allowing supplemental payments to existing debt in lieu of a deposit to the Rainy Day FundLimiting withdrawals to 50% of the balance in the first year of a recession
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C-8
Proposition 98 Reserve
When capital gains tax revenues exceed 6.5% of General Fund revenues, an appropriation to the Proposition 98 reserve would be made
The amount appropriated would equal Proposition 98’s share of General Fund expenditures in that year
The appropriation to the reserve would not affect the calculation of the minimum guarantee
The reserve could be no greater than 10% of the Proposition 98 guarantee
Withdrawals from the reserve would be made when growth in the guarantee was insufficient to fund workload increases, such as in a Test 3 year
The goal of this initiative is to smooth out state revenues apportioned to education and avoid program cuts during an economic downturn
The plan is to place the initiative on the November 2014 ballot for implementation commencing in 2015-16
© 2014 School Services of California, Inc.
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2014-15 Local Control Funding Formula© 2014 School Services of California, Inc.
Budget proposes $4.5 billion for continued implementation of the Local Control Funding Formula (LCFF)
New funding is estimated to close the gap between 2013-14 funding levels and LCFF full implementation targets by 28.05%
Combined with elimination of 11.78% of the gap in 2013-14, the new formula would be over one-third of the way toward implementation in the first two years
2014-15 LCFF growth provides an average increase in per-pupil funding of 10.9%, or $751 per ADA
Individual LEA experiences will vary
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LCFF – A Quick Review© 2014 School Services of California, Inc.
The LCFF makes fundamental changes to how we allocate state Proposition 98 revenues to schools
At full implementation, the LCFF will fund every student at the same base rate
The LCFF provides two weighting factors applied against the LCFF base grant
20% on behalf of each eligible student
An additional 50% for the eligible students exceeding 55% of total enrollment
Each school district receives at least as much state aid in future fiscal years as the district received in 2012-13
The LCFF continues the necessary small school funding adjustment for eligible school districts
The LCFF provides an Economic Recovery Target to assure district funding is restored to 2007-08 levels, adjusted for inflation
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LCFF – Base Grant Entitlement Calculation© 2014 School Services of California, Inc.
2014-15 target entitlement calculation
Grade span per-pupil grants are increased annually for the COLA
Factors K-3 4-6 7-8 9-12
2013-14 Base Grant per ADA $6,952 $7,056 $7,266 $8,419
COLA @ 0.86% $60 $61 $62 $72
Base grants – 2014-15 $7,012 $7,117 $7,328 $8,491
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T A R G E T
LCFF – K-3 CSR and CTE Adjustments© 2014 School Services of California, Inc.
K-3 CSR and 9-12 Career-Technical Education (CTE) Grade Span Adjustments are additions to the base grant
CTE is unrestricted; CSR requires progress toward maximum site average of 24 students enrolled in each class
Factors K-3 4-6 7-8 9-12
Base grants – 2013-14 $7,012 $7,117 $7,328 $8,491
Adjustment percentage 10.4% CSR - - 2.6% CTE
Adjustment amount $729 - - $221
Adjusted grant per ADA $7,741 $7,117 $7,328 $8,712
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T A R G E T
LCFF – Supplemental and Concentration Grants Per ADA
© 2014 School Services of California, Inc.
Supplemental and concentration grant increases are calculated based on the percentage of total enrollment accounted for by English learners, free and reduced-price meal (FRPM) program eligible students, and foster youth
Factors K-3 4-6 7-8 9-12
Adjusted grant per ADA $7,741 $7,117 $7,328 $8,712
20% supplemental grant $1,548 $1,423 $1,466 $1,742
50% concentration grant (for eligible students exceeding 55% of enrollment)
$3,871 $3,559 $3,664 $4,356
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T A R G E T
LCFF – An Example© 2014 School Services of California, Inc.
A district with 60% eligible students would calculate the following LCFF target grants for 2014-15
Factors K-3 4-6 7-8 9-12
Adjusted grant per ADA $7,741 $7,117 $7,328 $8,712
% Enrollment eligible (example) 60% 60% 60% 60%
60% of Supplemental $929 $854 $879 $1,045
5% of Concentration (percentage above 55%) $194 $178 $183 $218
Total 2014-15 LCFF target grant per ADA $8,864 $8,149 $8,390 $9,975
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T A R G E T
LCFF – An Example© 2014 School Services of California, Inc.
Each grade span amount is multiplied by the district’s ADA for the corresponding grade span – example district with 8,000 ADA
Factors K-3 4-6 7-8 9-12
2014-15 LCFF target grant/ADA $8,864 $8,149 $8,390 $9,975
Average daily attendance 2,500 1,850 1,250 2,400
Total – by grade span $22,160,000 $15,075,650 $10,487,500 $23,940,000
Transportation and TIIG $836,850 and $1,000,000
Total – Example District LCFF target $73,500,000
Supplemental/Concentration Share $9,075,400 (in total)
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T A R G E T
© 2014 School Services of California, Inc.
Proportionality and Targeted Funds
The LCFF statutes direct the State Board of Education (SBE) to develop regulations by January 31, 2014, to require LEAs to:
Increase or improve services for eligible pupils in proportion to the increase in funds apportioned on the basis of the number and concentration of eligible pupils
LEAs are also required to include in their LCAP a description of expenditures that serve pupils eligible to generate supplemental and concentration grants
Goals, activities, and services that increase or improve support for eligible students is a local decision
The proportion of the increase in funds attributable to the number of eligible pupils enrolled is a calculation
It is important to keep this distinction in mind, and it is why we are calling supplemental and concentration grant funding targeted, rather than restricted
© 2014 School Services of California, Inc.
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State Board of Education Regulations
Recently proposed SBE regulations provide a method of calculating the proportional share of LCFF dollars that are attributable to supplemental and concentration grants each year
Proportionality calculation and the Local Control and Accountability Plan (LCAP) will be taken up for a vote by the SBE on January 16, 2014
Calculation of proportional increase for supplemental and concentration grants is specific
LCAP is flexible, providing significant local control over services, activities, and plan content
© 2014 School Services of California, Inc.
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An Example of Gap Funding Per ADA
$9,000
$7,900
2013-14 2014-15Funding
2014-15Target
Total Gap
$9,000 - $7,000
$2,000
$2,000x 28.05%
$561
Target 2013-14Total gap
Total gap$4.5 Billion14-15 Inc.
Supplemental and Concentration Grants
2014-15 Target Base
61
Economic Impact Aid
$7,000
$6,700
LCFF Base
$300 EIA
$1,100
$7,561
$3,787
$6,700
$300 EIA
$561$224 Supplementation and Concentration Grants$337 Base
Dol
lars
per
AD
A
$1,100-$300$800
$800x 28.05%
$224
Supp/ConcEIANet gap
Net gapClosureSupp/Conc share
LCFF Increase
© 2014 School Services of California, Inc.
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LCFF – From 2013-14 to 2014-15
2013-14 base adjustments for 2014-15Remember, the share of your base that came from 2012-13 categorical funding is not adjusted for changes in ADAThe share that came from the revenue limits and the 2013-14 LCFF incremental increase is adjusted for changes in ADA
Per ADA example: 2014-15 minimum proportionality percentage (new regulation)
Determine the funding provided for eligible pupils, which equals the base year funding for EIA, other district funds for eligible pupils, and the incremental increase from supplemental and concentration grants: in the example, $300 plus $224 equals $524Calculate district base funding, which excludes funding for eligible pupils
In the example, total funding of $7,561 less the funding provided for eligible pupils of $524 equals $7,037Minimum proportionality percentage of funding for eligible pupils as a percentage of base funding equals 7.4% (= $524 ÷ 7,037)
© 2014 School Services of California, Inc.
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© 2014 School Services of California, Inc.
Use of Supplemental/Concentration Grants
The proposed LCFF regulations would provide districts varying degrees of latitude in the expenditure of supplemental/concentration grant funds, depending upon the percentage of eligible studentsIf the district has unduplicated counts of the following:
Greater than 55%, then these funds may be spent on a districtwide basis, provided the district
Identifies the districtwide servicesDescribes how these services meet the district’s goals for the targeted students in the state priority areas
Less than 55%, districtwide expenditure of these funds is authorized, provided the district
Identifies the districtwide servicesDescribes how these services meet the district’s goals for the targeted students in the state priority areasDescribes how these services are the most effective use of the funds
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© 2014 School Services of California, Inc.
Use of Supplemental/Concentration Grants
The proposed regulations also address school site enrollment and the authorized use of these funds
A district that has a school with an enrollment of eligible pupils in excess of 40% of the school’s total enrollment, the district may expend the targeted funds on a schoolwide basis, provided the district
Identifies the schoolwide services
Describes how these services meet the district’s goals for the targeted students in the state priority areas
A district that has a school with an enrollment of eligible pupils less than 40% of the school’s total enrollment, the district may expend the targeted funds on a schoolwide basis, provided the district
Identifies the schoolwide services
Describes how these services meet the district’s goals for the targeted students in the state priority areas
Describes how these services are the most effective use of the funds
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Targeted Funds – Conclusion
2013-14 is the first transition year toward full implementation of the LCFF
Districts will not have developed and adopted their LCAP until 2014-15
Don’t be overly concerned about how funds are used, but . . .
Once regulations are adopted, your actions will have to be consistent with those requirements going forward
If your direction is wrong this year, you may need larger corrections next year
Be thoughtful about how you use new dollars for districtwide purposes, and about how you will demonstrate additional support for eligible students with those dollars that you do receive on their behalf
© 2014 School Services of California, Inc.
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What Are the Distributional Impacts of the LCFF?
During the eight-year implementation phase, there are major distributional consequences of the LCFF
Once fully implemented, all districts will share equally in any new state funding provided for COLAs or enhanced funding levels
Prior to full implementation, however, there are major differences in funding increases among districts statewide
What are the distributional consequences of the LCFF?
Size of district
Percent eligible for supplemental/concentration grants
Type of district
© 2014 School Services of California, Inc.
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LCFF Funding by District Size© 2014 School Services of California, Inc.
1st Quintile3-200
2nd Quintile200-770
3rd Quintile770-2,800
4th Quintile2,800-8,400
5th Quintile8,400-550,000
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
1.7%
4.0%
5.1%5.4% 5.4%
Average Percent Increase per ADA in 2013-14
1.565% (COLA)
District Size (ADA)
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LCFF Funding by District Type© 2014 School Services of California, Inc.
Elementary High School Unified0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
4.11% 4.14%
4.75%
Average Percent Increase by District Type in 2013-14
1.565% (COLA)
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Range of LCFF Increases© 2014 School Services of California, Inc.
1st Quintile 2nd Quintile 3rd Quintile 4th Quintile 5th Quintile0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
0.8%
3.5%
4.4%
5.5%
7.4%
District Average Percent Increase by Quintile in 2013-14
1.565% (COLA)
Lowest Increase Highest Increase
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LCFF Funding and High Needs Students© 2014 School Services of California, Inc.
1st Quintile0%-29%
2nd Quintile29%-50%
3rd Quintile50%-66%
4th Quintile66%-82%
5th Quintile82%-100%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
3.0%3.4%
3.8%
4.9%
6.4%
Average Percent Increase by Percent Eligible for Supplemental/Concentration Grants
1.565% (COLA)
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Policy Conclusions for LCFF
Increased funding is targeted to districts with the highest percentage of eligible students
The 200 districts with the greatest percentage of eligible students received more than twice the increase of the 200 districts with the fewest eligible students
The new funding model aggressively pursues the differential funding rates
The 200 districts with the smallest increases in 2013-14 averaged a 0.8% gain, with 89 districts experiencing no gain at all
The 200 districts experiencing the greatest gain averaged a 7.4% increase in 2013-14, a nine-fold gain over the bottom quintile
© 2014 School Services of California, Inc.
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Policy Conclusions for LCFF
Small districts experience little gain under LCFF, most likely because ofprior-year funding received under the necessary small schools adjustmentand pre-existing revenue limit differentials
Otherwise, the new model is neutral with respect to both district size and district type
The long-term implications of the LCFF are profound
At full implementation, districts with the greatest concentrations of eligible students will have about 20% more funding per ADA than the average district
Districts with the lowest concentration of eligible students will have about 6% less funding per ADA than the average district
© 2014 School Services of California, Inc.
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Apportionment Deferrals
The Governor’s Budget proposes to fully extinguish the remaining $6.1 billion in K-14 apportionment deferrals in 2014-15 ($5.5 billion for K-12 education and $593 million for the community colleges)
This proposal accelerates last year’s plan to eliminate the deferrals in 2016-17
Commencing in 2014-15, the “5-5-9” apportionment schedule (i.e., 5% paid in July, 5% paid in August, and 9% paid in each of the following 10 months) will finally be implemented
Funding is provided from both one-time and ongoing revenues
$1.8 billion in one-time funds from 2012-13
$1.5 billion in one-time funds from 2013-14
$2.7 billion from ongoing revenues in 2014-15
At the peak of the state’s fiscal woes, approximately 45% of the state aid owed to LEAs was deferred to the following year
© 2014 School Services of California, Inc.
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LCFF “Categorical Programs” and the COLA
The LCFF includes funding from more than 40 former categorical programs, including Tier III and Economic Impact Aid
Transportation and Targeted Instructional Improvement Grants (TIIG) are now part of the formula, but are not adjusted for COLAs nor are they adjusted for workload changes
The LCFF base grant targets, and implicitly all of the categorical programs folded into the LCFF, are adjusted for an estimated 0.86% COLA for 2014-15
However, the actual amount received by districts is dependent upon
The district’s demographic profile, which determines eligibility for supplemental and concentration grants and current base funding level
State funding provided for LCFF
Agricultural Vocational Education and Specialized Secondary Program funding are proposed to be folded into the LCFF calculation
© 2014 School Services of California, Inc.
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COLA for Categorical Programs Outside of the LCFF
For 2014-15, categorical programs outside of the LCFF will receive an estimated 0.86% COLA, an increase of $33.3 million
These programs include:
Special Education
Foster Youth
American Indian Education Centers
American Indian Early Childhood Education Programs
Child Nutrition
Adults in Correctional Facilities
© 2014 School Services of California, Inc.
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Greater Certainty With a Continuous Appropriation
Under revenue limits, state law provided for a continuous appropriation to remove this key source of district funding from annual Budget negotiations
Absent legislation amending the revenue limit statutes, the continuous appropriation provided the authority for state payments to districts regardless of whether an approved State Budget was in place
The Legislature, however, has enacted Budget Trailer Bills that have suspended the statutory COLA and imposed cuts to the revenue limit
The Governor’s Budget proposes to establish a continuous appropriation for the LCFF to provide greater certainty to districts, similar to revenue limits
The annual minimum appropriation for LCFF will be based on a fixed percentage of any new funds provided by the growth in Proposition 98
This percentage has yet to be determined
© 2014 School Services of California, Inc.
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County Office of Education
LCFF funding of COEs is similar to the funding for school districts
The two-part formula includes:
Per-ADA funding to support students attending community schools and juvenile court schools
Unrestricted funding for general county office operations, distributed based on the total number of school districts in the county and the total ADA of all students in the county
Counties will receive a base grant per ADA for students served in alternative schools and community schools
And targeted supplemental grants for English learners and low-income students, comparable to the LCFF for school districts
Like school district and charter school funding, increases would occur over time to reach the funding target
Under the Governor’s Proposal, the COE LCFF is fully implemented by the end of 2014-15
© 2014 School Services of California, Inc.
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Adult Education
The Governor does not propose any changes to the 2013-14 Budget agreement for Adult Education Programs
LEAs must maintain at least the same level of Adult Education expenditures in both 2013-14 and 2014-15
The Governor indicates his “intention to make an investment in Adult Education programs (including programs provided in county jails) through a single categorical program” beginning 2015-16
No details are provided, but the Governor indicates he intends to work jointly with the California Department of Education and Community Colleges Chancellor's Office to “complete the adult education consortia plans, while working with the Legislature to ensure that any legislation pertaining to adult education aligns with and supports the planning process currently underway, and provides consistent guidance to K-12 and community college districts.”
© 2014 School Services of California, Inc.
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Special Education
The Governor’s proposed 2014-15 State Budget for special education provides $31.6 million to pay for a 0.86% COLA
Estimated COLA is $4.39 per ADANo other major changes are proposed, but separate from the Governor’s Proposed Budget, a Special Education Task Force co-chaired by SBE member Carl Cohn, and Fred Weintraub, Los Angeles Unified School District federal court-appointed independent special education monitor, has been established
An appointed 32-member task force is focusing on identifying the state’s vision and mission for students with disabilities and the development of specific goals in the following areas:
Teacher preparation, credentialing, and professional developmentEducation delivery modelsAssessment and accountabilityEarly learningFiscal issues
© 2014 School Services of California, Inc.
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Charter Schools
The Governor’s Proposal includes an increase of $74.3 million to support charter school ADA growth
The Proposal continues to include charter schools in the LCFF
Charter schools are eligible for supplemental and concentration grants that may be used for any educational purpose
A charter school’s eligibility for a concentration grant may not be greater than the percent eligible for the school district in which the charter school resides
© 2014 School Services of California, Inc.
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Child Care
The Governor’s Budget proposes $115 million to fund a three-year Parent/Child Engagement Demonstration pilot program to serve 2,000 families in six counties
Will involve low-income families who face multiple barriers of entry into the workforce, cannot access licensed child care, or who fall into CalWORKs sanction status
Goal is to get children into stable, licensed child care, and provide parenting, life skills, and work readiness training to parents that will move them to self-sufficiency
Stage 2 Child Care is increased by $6.3 million to reflect an increasedcost per case of eligible beneficiaries and a slight decrease in caseload
Base budget: $364.1 million
© 2014 School Services of California, Inc.
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Child Care
Stage 3 Child Care is increased by $2.8 million to reflect an increased cost per case of eligible beneficiaries and a slight decrease in caseload
Base budget: $185.8 million
Child Care and Development Funds will see a net decrease of $9.1 million in federal funds in 2014-15 to reflect a reduction of available carryover funds ($3.2 million) and a decrease of $5.9 million to the base grant
Total federal funding is $555.6 million
© 2014 School Services of California, Inc.
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Independent Study Proposal
To eliminate many administrative challenges of nonclassroom-based independent study programs, the Governor proposes legislation to streamline and expand the instructional opportunities for independent study
Goal is to stabilize and increase student attendance for students at risk of dropping out or transferring to other private institutions
The new proposed process will require that independent study courses meet requirements commensurate to their classroom-based equivalent courses, including:
The same rigor and educational qualityEquivalent total educational minutesMaintenance of classroom-based equivalent pupil-to-teacher ratios unless an alternative ratio is collectively bargainedHolding at least one meeting per week between the student and teacher to verify that the student is working toward course completionNot earning more than one unit of ADA for participating students
© 2014 School Services of California, Inc.
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Common Core and Student Assessments
No proposed increase to the money received by LEAs – $1.25 billion inone-time funds – provided in the 2013 Budget Act for implementation of the Common Core State Standards
To be used for professional development, technology, and instructional materials during 2013-14 and 2014-15
The Governor’s Budget proposes an additional $46.5 million to implement Chapter 489, Statutes of 2013 (AB 484), which established a revised student assessment system that is aligned to the new state standards
These funds will be used at the state level for assessment development
© 2014 School Services of California, Inc.
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Federal Programs
A recent agreement reached in Congress provides schools relief from sequestration cuts to education
The Bipartisan Budget Act (BBA) restored a large portion of the sequester cuts
At a minimum, there will be no additional cuts to federal education programs below current funding levels
The House and Senate are finalizing 2014 spending levels through the traditional appropriations process
Since federal education programs are forward funded, this impacts California’s education budget in 2014-15
© 2014 School Services of California, Inc.
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Federal Programs
The relatively flat spending level agreement reached in the BBA will require lawmakers to choose which programs to fund
The major national education organizations are advocating for the majority of the funds to go to the formula programs such as Title I and Special Education
Not to competitive programs, such as Race to the Top or new programs, such as the President’s budget proposal to expand preschool
Also looming is the expiration of the debt ceiling limit, which must be resolved by February to allow additional federal borrowing to fund the higher spending levels authorized in the agreement
Absent a deal on the debt ceiling, federal spending could not be sustained and any budget compromise would, at that point, become moot
© 2014 School Services of California, Inc.
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Local Control Accountability Plan
The Local Control and Accountability Plan
This section will focus on the Local Control and Accountability Plan (LCAP) and will cover the what, the how, and the when of plan development
The statutory requirements
How we develop the plan and engage stakeholders
A sample timeline for development and adoption
An abbreviated timeline for the current year
We’ll also talk about . . .
The role of the Superintendent and Board
The impact of the LCAP on negotiations
Next Steps – SBE Rulemaking and Regulatory Process
© 2014 School Services of California, Inc.
D-1
Shift Happens!
The LCFF is as much about equity and justice for our neediest students as it is about subsidiarity
The wide gap in student achievement that now exists threatens our future
The LCFF is designed to close the achievement gap by providing additional funds to support improved student outcomes and accountability
The LCFF shifts the state away from a system of rule compliance, measured by audits and enforced through penalties, to a system of accountability based upon local needs, measured by progress toward annual goals, and explicitly linked to the LEA’s budget
We are no longer implementing the state’s plan for eligible students – we must develop a plan locally that achieves improved results
This will require that we think and plan differently
© 2014 School Services of California, Inc.
D-2
Our Old Paradigm Focused on Input
3
4
1
2
How do we comply with state law?
How much money do we have?
What are the audit requirements and
penalties?
What are we allowed to use
it for?
Program Decisions
D-3© 2014 School Services of California, Inc.
What are our expectations for
students?
What programs and services are
achieving desired results?
What are our achievement goals and what must we do to improve the
conditions of learning, increase engagement, and improve school
climate?
What can we accomplish in three years?
How will we measure our progress?
Based on the resources available,
what actions and activities
will we implement next year?
A New Way of Thinking
The new system requires us to think first about outcomes
No longer are you limited by what you can afford to do in a single year – start thinking about what you could accomplish in three years
Program Decisions
D-4© 2014 School Services of California, Inc.
LCAP Requirements
The LCFF accountability system requires that LEAs develop a three-year LCAP and annually update it
The LCAP must
Identify goals based on state priorities for all students, “numerically significant subgroups”, students with disabilities, and eligible students
List annual actions that the LEA will implement in accomplishing the goal
Describe expenditures in support of the annual actions and where they can be found in the LEA’s budget
The LCAP is intended to be a comprehensive plan
School site plans and the Single Plan for Student Achievement must align with the LCAP
The LCAP may reference and describe actions and expenditures of other plans
© 2014 School Services of California, Inc.
D-5
LCAP Requirements
Draft LCFF spending regulations were presented to the SBE on November 7, 2013, along with a conceptual framework for the LCAP
Following the November SBE meeting, the SBE reached out to stakeholder groups for feedback
The SBE revised regulations incorporating many of the recommendations from the field
The revised LCFF spending regulations and the LCAP template have been submitted for SBE approval
The SBE will take action on January 16, 2014, to approve the emergency regulations and commence the rulemaking process for the final regulations
The SBE-proposed LCFF spending regulations require LEAs to increase or improve services for eligible pupils in proportion to the increase in the funds apportioned to supplemental and concentration grants and to demonstrate proportionality in the LCAP
© 2014 School Services of California, Inc.
D-6
Where and How Do We Start?
The LCAP will require that you show evidence of a needs assessment
Data, both quantitative and qualitative, will inform your plan goals
Remember to think big – you are not limited to what you can accomplish in a single year – what do you hope to accomplish in three years?
The LCAP template being presented to the SBE provides a roadmap for planning
© 2014 School Services of California, Inc.
D-7
Three Categories for Planning Purposes
The proposed LCAP template groups the eight state priorities into three categories for planning purposes
Initial LCAP planning requires the collection of data you will use to inform plan goals and actions, and precedes the engagement of stakeholders in plan development
1 2 3
Conditions of Learning
Pupil Outcomes Engagement
© 2014 School Services of California, Inc.
D-8
What Does the Data Tell Us About the Conditions of Learning?
1
Conditions of Learning
The first planning category groups together the following state priorities:
Priority 1 – Basic Conditions
Priority 2 – Implementation of State Standards
Priority 7 – Course Access
Focus planning on assessing to what extent:
Teachers are qualified and appropriately assigned
School facilities are in good repair
Students have access to standards-aligned materials and are receiving instruction that is aligned with state-adopted content and performance standards
Students are enrolled in a broad course of study
For County Offices Only:Assess the coordination of instruction of expelled students and services to foster youth (Priorities 9 and 10)
© 2014 School Services of California, Inc.
D-9
What Does the Data Tell Us About Pupil Outcomes?
2
Pupil Outcomes
The second planning category groups together the following state priorities:
Priority 4 – Pupil Achievement
Priority 8 – Other Pupil Outcomes
Planning would focus on assessing:
Performance on standardized tests
Percentage of students who are college and career ready
English learner reclassification rate
Pass rate on advanced placement exams
Student outcomes in all core curriculum areas
© 2014 School Services of California, Inc.
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What Does the Data Tell Us About Student and Parent Engagement?
3
Engagement
The third planning category groups together the following state priorities:
Priority 3 – Parent InvolvementPriority 5 – Pupil EngagementPriority 6 – School Climate
Focus planning on measuring: Parent involvement in decision making and the degree to which you promote the participation of parents of eligible pupils School attendance rates including chronic absenteeismDropout and graduation ratesSuspension and expulsion ratesThe degree to which students feel safe and connected to school
© 2014 School Services of California, Inc.
D-11
So We Have the Data, Now What?
1 2 3
Stakeholder Engagement
Goals and Progress Indicators
Actions, Services, and Expenditures
© 2014 School Services of California, Inc.
The proposed LCAP template is comprised of three sections and includes a description of each section, provides instructions, and lists guiding questions to facilitate completion of the template based on the data collected
Once you’ve conducted your needs assessment, it is time to engage stakeholdersYou’ll be required to show evidence of stakeholder engagement in the first section of the LCAP
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LCAP Section 1
1
Stakeholder Engagement
Meaningful engagement of parents, students, and other stakeholders is not only important but it is a statutory requirement
LEAs will have to demonstrate evidence of stakeholder engagement, describe how stakeholders were involved, and what impact that engagement had on development of the plan
A few guiding questions from the proposed template:
“What information was made available to stakeholders and used by the LEA to inform the LCAP
goal setting process?”
“In the annual update, how has the involvement of stakeholders supported improved outcomes for
pupils related to the state priorities?”
© 2014 School Services of California, Inc.
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LCAP Section 2
2
Goals and Progress Indicators
Section 2 must describe the LEA’s goals for the term of the plan
The annual update must include a review of progress based on an identified metric (qualitative or quantitative)
Goals must address each state priority area and any additional local priorities
A few guiding questions from the proposed template:
“What are the LEA’s goals to address the conditions
of learning, pupil outcomes, and parent and
pupil engagement?”
“What data/metrics were considered in developing
goals to address each state or local priority and to review progress toward
goals in the annual update?”
© 2014 School Services of California, Inc.
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LCAP Section 3
3
Actions, Services, and Expenditures
Identify annual actions to meet the goals in Section 2 and describe expenditures to implement the action
In describing actions and expenditures that will serve eligible pupils, identify whether they are for school-, district-, county-, or charter-wide purposes
This section has four subsections
A. Annual actions and expenditures related to the goals for all pupils
B. Annual actions and expenditures provided to eligible pupils above what was provided to all students
C. Describe how the LEA is expending supplemental and concentration grant funds for any school-, district-, county-, or charter-wide purpose and how they are the most effective use of funds
D. Demonstrate proportionality
© 2014 School Services of California, Inc.
D-15
LCAP Planning
So you know where to start – gather data and assess your needs based on the three planning areas provided for in the proposed LCAP template – it is a good roadmap And you know what is expected in terms of the plan
For those of you with unlimited time and who welcome the opportunity to develop another plan related to student achievement, this should be a cinch
If you don’t have unlimited time, you need to think strategically and the next step is identifying who needs to be involved in the development of the plan, their level of engagement, and then mapping out a timelineYou will not need to engage all stakeholders at the same level, or at the same stage of the planning process – again, be strategic
Who will you involve in your needs assessment?Who will you consult in developing your goals?Who will you need to keep informed and offer opportunities for input?
© 2014 School Services of California, Inc.
D-16
Levels of Engagement in LCAP Development
Think about what the statute requires
Also think about other groups that may have a high level of interest or influence on the final decision makers – the governance team
You may not be required to engage them, but you’d be smart to do so
We would identify three levels of engagement
© 2014 School Services of California, Inc.
1 2 3
InvolveWho will you involve in developing a draft plan based on your needs
assessment?
ConsultWho will you consult in developing your
goals?
InformWho will you need to keep informed and
offer opportunities for input?
D-17
Levels of Engagement as Required by Statute
12
34
Consultation with:TeachersPrincipalsSchool personnelPupilsLocal bargaining units
Present for review and comment to:
Parent advisory committeeEnglish learner parent advisory committeeThe superintendent must respond in writing to comments received
Opportunity for public input:
Notice of the opportunity to submit written commentPublic hearing The superintendent must respond in writing to comments received
Adoption of the plan:Adopted concurrent with the LEA’s budgetSubmitted to COE for approvalPosted on district websiteCOE posts LCAP for each district/school or a link to the LCAP
© 2014 School Services of California, Inc.
D-18
Adopting and Updating the LCAP
1
Consultation with:TeachersPrincipalsSchool personnelPupilsLocal bargaining units
Level of Engagement
INVOLVE
Remember you need to start with your needs assessment
We believe that the collection of data and identification of needs is the responsibility of the leaders of the district and must precede this level of engagement
Promise to Stakeholders
We will work with you to ensure that your concerns are reflected in the goals and actions of the LCAP
Methods of Engagement
Forums and workshops
© 2014 School Services of California, Inc.
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Adopting and Updating the LCAP
2
Present for review and comment to:
Parent advisory committeeEnglish learner parent advisory committeeThe superintendent must respond in writing to comments received
Level of Engagement
CONSULT
Promise to Stakeholders
We will keep you informed, listen to and acknowledge concerns, and provide feedback on how your input has influenced the LCAP goals and actions
Methods of Engagement
Surveys
Focus groups
Public meetings
Develop draft plan in advance of this level of engagement
© 2014 School Services of California, Inc.
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Adopting and Updating the LCAP
3
Opportunity for public input:
Notice of the opportunity to submit written commentPublic hearing The superintendent must respond in writing to comments received
Level of Engagement
INFORM
Promise to Stakeholders
We will keep you informed and provide you an opportunity to comment on our plan
Methods of Engagement
Fact Sheets
Newsletters
Notices regarding comment period
Notice of Public Hearing
© 2014 School Services of California, Inc.
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Developing a Timeline for LCAP Development
Now you know where to start, what is expected in terms of the plan, and how to engage stakeholders in a meaningful way
So what does a timeline look like for a typical year and what do you do now if you haven’t started planning?
First let’s take a look at a normal year
We believe the planning, developing, implementing, and reviewing progress will be a continuous and ongoing 12-month process
© 2014 School Services of California, Inc.
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A 12-month Planning and Adoption Process© 2014 School Services of California, Inc.
Assess and
Engage
Draft and
Consult
Inform and
Respond
Decide and
Implement
Jul - Oct Nov - Jan Feb - Mar Apr - Jun
Conduct needs assessment and involve parents,
community members,
students, staff, and bargaining
units in a discussion of
goals.
Identify goals, actions, and metrics. Once the Governor’s January
Budget is released, you can begin thinking about the resources you may have available. Consult
with parent groups, advisory committees, and
other interested stakeholders.
Inform advisory groups and other
interested stakeholders of the
proposed plan. Respond to input and comments.
Finalize the plan following the
Governor’s May Revision. Hold public meetings on the LCAP
and district budget.Respond to any public comments and adopt
the LCAP and budget at a subsequent meeting.
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A Sample Timeline for the Current Year
1 2 3 4 5 6
Begin needs assessment
now!
By March 15
Complete your LCAP draft
May – June
Commence public comment period and hold public hearing
By February 15
Involve parents, school personnel,
pupils and bargaining groups in plan development
By April 15
Inform parent advisory groups
and other stakeholders and respond in writing
to comments
By June 30
Adopt LCAP and LEA budget
© 2014 School Services of California, Inc.
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The Role of the Superintendent
The Superintendent is given a heavy responsibility to be the conductor of the LCAP development process
The Superintendent is charged with ensuring that the obligation to consult with employee organizations and to facilitate a response to comments by community groups is met
Additionally, the Superintendent is charged with recommending specific strategies to the Board and implementing those that are adopted
The Superintendent leads the Cabinet in analyzing student performance and selecting appropriate interventions
The quality and integrity of the development process are the domain of the Superintendent
The Superintendent and Cabinet provide the professional expertise to implement the plan and to assess results and recommend revisions
© 2014 School Services of California, Inc.
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The Role of the Board
The Board represents the visions and values of the community and has final accountability for the performance of students and the financial solvency of the district
The Board sets the direction for the development of the LCAP
Through the use of study sessions and open meetings, the Board hears and evaluates input from the administration, the community, and all stakeholders
The Board conducts public hearings in accordance with the law
Qualitative decisions about priorities are the domain of the Board
The Board assesses performance annually and approves amendments to the plan
Ultimately, the Board gives final approval to both the LCAP and the district budget, and ensures that they are consistent and represent the community interest
© 2014 School Services of California, Inc.
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Impact of LCAP on Negotiations
We cannot overemphasize the importance of management and labor groups using the mandatory consultation obligation as a bridge to collaborative negotiations
The district cannot include commitments in the LCAP that are within the scope of bargaining but have not yet been negotiatedBut the district can include strategies and goals within the scope of bargaining if it is clear they will not be implemented until the conclusion of the bargaining process – even to the point of impasse if necessary
We, therefore, believe that best practices dictate that the district define deficient areas in student achievement and collaborate with bargaining units on solutions
No one knows what our students need better than our professional teachers who are with our students every dayAnd we have the data to define the areas where our students need additional service
© 2014 School Services of California, Inc.
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Impact of LCAP on Negotiations
The consultation period needs to be formal and data-drivenWe have an eight-year LCFF implementation period, a three-year plan, and defined actions for the first budget yearWe do not have to do everything the first year, but we need to set the stage for continuous improvementWhat does our assessment data tell us about what we need to address first?
It may be appropriate to address gateway skills like elementary reading and math to build a foundation for the futureBut in other districts, parent involvement, teacher preparation, or facilities may need to be addressed firstMany of the eight LCAP focus areas specified by the state are tightly inter-related and implementation of one strategy may help other areas
The planning categories in the proposed template will help you keep an eye on alignment
© 2014 School Services of California, Inc.
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Impact of LCAP on Negotiations
District preparation for consultation meetings
Do not go to the meeting with nothing but blue sky and dreams!
Develop a carefully crafted agenda
Work with Cabinet to assess needs in each of the eight plan areas and develop data to support why those specific areas need to be addressed in the early years of the LCAP – recognize that some things will have to wait until later years
Offer the bargaining units an opportunity to provide input into the areas to be addressed
Jointly develop specific strategies to address each of the deficit areas
© 2014 School Services of California, Inc.
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Impact of LCAP on Negotiations
Include discussion of personnel and compensation impacts
Time and payment for professional development, extra time, and higher levels of professional preparation are all within the scope of negotiations
Discuss planned use of CCSS funding to enhance professional development
Discuss how your planned strategies will affect numbers of staff, duties of staff, and compensation of staff
Be sure the LCAP includes an explanation of how any particular expenditure “increases and improves” education – every expenditure of supplemental or concentration grant funding requires that we establish this nexus
If there ever was a time for quality collaboration, it is now – don’t let this opportunity pass
© 2014 School Services of California, Inc.
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Regular Regulatory Process: LCFF Spending Requirements and LCAP Template
Adoption of proposed regulations (January 16, 2014)45-day comment period opens
Public hearing held (March 17, 2014)SBE and California Department of Education (CDE) consider comments received
If there are no changes to regulations, comments are addressed, and regulations are approved and submitted to the Office of Administrative Law (OAL)If substantial and significant related changes are made to proposed regulations, an additional 15-day public comment period is opened
Then, if no major or substantial changes, comments are addressed and regulations are approved and submitted to the OAL
If major changes are made, a new 45-day comment period opens and an additional public hearing may be held at the conclusion of the period
Then, if no major or substantial changes, comments are addressed and regulations are approved and submitted to the OAL
© 2014 School Services of California, Inc.
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Emergency Regulatory Process: LCFF Spending Requirements and LCAP Template
© 2014 School Services of California, Inc.
1 2 3
Approval of Finding of
Emergency and Emergency
Regulations by SBE
SBE submits Finding of Emergency and
Regulations to OAL
OAL has ten calendar days to
approve Emergency
Regulations
Public comment can be submitted for first five
calendar days
OAL approves Emergency Regulations
(In effect for
180 days)
To become permanent, regulations must go
through regular rulemaking process
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Local Agency Operationsand the Budget
© 2014 School Services of California, Inc.
Overview
Temporary Flexibility – Current Law
Planning for 2014-15
Pension and Health Care Reform
Operational Efficiencies
Negotiations
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© 2014 School Services of California, Inc.
Temporary Flexibility – Current Law
There are no proposed changes to the temporary flexibility expiration dates
This flexibility will expire in 2015 and 2016
Expires E.C. Description of Flexibility
June 30, 2015
1240.3 Standards-aligned instructional materials sufficiency (Williams compliance) – suspends required textbook adoptions
17070.766 Routine restricted set-aside reduced to zero (except as necessary for Williams compliance)
46201.2 Reduction of school year by up to five days and/or equivalent in instructional minutes (effective starting 2009-10)
60200.7 Suspension of instructional materials adoption requirement
Advice: Plan to offer a school year of 180 days in your district’s multiyear projection. Local agreements may require more work calendar days. Bring routine restricted back to 3%.
January 1, 2016 17463.7 Sale of surplus property to benefit General Fund (with significant requirements)
Advice: Review E.C. 17463.7 to ensure that the district is able to meet all of the requirements of this flexibility related to the restriction of state facilities funding.
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Managing Volatile Projections
Multiyear projections (MYP) are required by AB 1200 (Chapter 1213/1991) and AB 2756 (Chapter 52/2004)
Multiyear financial planning is a sound business practice that allwell-run organizations do regardless of any legal requirements
But it is very challenging to prepare meaningful MYPs in this environment
This year’s State Budget Proposal includes significant education funding changes and, again, LEAs need to build the MYP based on the best information available
The two best ways to deal with volatility are conservative revenue estimates and higher reserves
© 2014 School Services of California, Inc.
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The SSC Dartboard
The first and last sections of the SSC Dartboard continue to contain the planning factors users have seen in the past
But the actual planning section is no longer applicable to each district in the same way; therefore, we link our SSC Dartboard to the SSC LCFF Simulator® for the district-specific calculations
Districts that use the SSC Dartboard and the SSC LCFF Simulator® in the manner intended will find that they can easily obtain an updated projection whenever there is a change in:
The amount of money the state provides in the current year
The revenue or COLA forecasts for the out years
The LCFF distribution formula
Any district that did not elect to use the SSC Dartboard would need to develop its own unique planning factors
© 2014 School Services of California, Inc.
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© 2014 School Services of California, Inc.
SSC Financial Planning Dartboard
Factor 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
LCFF Planning Factors SSC LCFF Simulator
SSC LCFF Simulator
SSC LCFF Simulator
SSC LCFF Simulator
SSC LCFF Simulator
SSC LCFF Simulator
Statutory COLA 1.565% 0.86% 2.20% 2.40% 2.60% 2.70%
California Consumer Price Index 2.00% 2.20% 2.40% 2.70% 2.80% 2.60%
Ten-year Treasuries 2.90% 3.20% 3.40% 3.50% 3.70% 3.50%
Reserves
State Reserve Requirement District ADA Range Reserve Plan
The greater of 5% or $50,000 0 to 300
SSC recommends one year’s increment
of planned revenue growth
The greater of 4% or $50,000 301 to 1,000
3% 1,001 to 30,000
2% 30,001 to 400,000
1% 400,001 and higher
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Multiyear Projections for the 2014-15 Budget
2013-14 2014-15 2015-16 2016-17$6,000
$6,500
$7,000
$7,500
$8,000
Chart Title
SSC Recommends
DOF Forecast
DOF Forecast
© 2014 School Services of California, Inc.
2013-14 2014-15 2015-16 2016-17LCFF Target $8,990 $9,066 $9,264 $9,484Estimated DOF Projection $6,650 $7,327 $7,688 $7,859*SSC Recommends $6,650 $7,327 $7,484 $7,654Net Change per ADA $313 $677 $157 $170Net Percent Change 4.93% 10.18% 2.14% 2.27%
*In the absence of a current projection for 2016-17 from the DOF, the purchasing power increase—the same as “SSC recommends”—is used
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Unrestricted Fund Balance – Statewide Averages
2011-12 Unrestricted General Fund Balance Plus Fund 17 Special Reserve as a Percent of the Total General Fund
Unified School Districts 15.44%Elementary School Districts 23.75%High School Districts 19.79%
Source: CDE state-certified data
© 2014 School Services of California, Inc.
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© 2014 School Services of California, Inc.
Education Protection Act 2014-15
Revenues generated from Proposition 30 will continue to be accounted for in a separate Object Code and received on a quarterly basis
The Budget Proposal estimates $7.3 billion or 11.8% of K-14 funding to be distributed on a quarterly basis
LEAs are required to do the following with the EPA funds:
Discuss the use of funds in an open public meeting
Not use the funds for salaries and benefits for administrators and other administrative costs
Report the amounts received and their use on the LEA’s website
We recommend you continue to monitor the use of these funds to ensure your district’s compliance with the Proposition 30 requirements
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© 2014 School Services of California, Inc.
© 2014 School Services of California, Inc.
Apportionment Deferrals and Cash Flow
We’ve heard the good news that under the Budget Proposal all deferrals would be eliminated
This is welcome news in the education community
However, because this is a proposal, LEAs need to ensure they continue to manage cash flow and have a plan in place for borrowing should the proposal not be fully realized
LEAs should:
Continue to prepare cash flow projections based on current law with deferrals
Project cash flow for more than one fiscal year
18 months to 24 months out
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© 2014 School Services of California, Inc.
Apportionment Deferrals and Cash Flow
Meet and discuss external borrowing needs with financial advisors
Work with them to develop a timeline that takes into account the possibility that an LEA may not need to borrow as much or at all once the State Budget is enacted
Try to develop options that allow you to eliminate or reduce the amount of borrowing after the final State Budget is enacted
This will reduce or eliminate borrowing costs
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© 2014 School Services of California, Inc.
School Facilities Issues – Sale of Surplus Property
As part of the 2013-14 State Budget Act, flexibility to use the proceeds from the sale of surplus property for one-time General Fund expenses was extended through January 1, 2016
Keep in mind the following:
The proceeds are one-time resources and may not resolve an ongoing budget problem
Unless you have a local General Obligation Bond, this may be the only source you have for capital facilities expenditures
Use your facilities master plan to identify future facilities needs – be sure you will not be second guessed later
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School Facilities Issues – Sale of Surplus Property
Current law requires local educational agencies (LEAs) to give charter schools first right to surplus property if the property is declared surplus after July 1, 2012
The law was amended with approval of the 2013-14 State Budget:
Applies only to charter schools having projections of at least 80 units of in-district ADA for the following fiscal year; and
Districts are not required to offer the property to charter schools on or after July 1, 2016, unless the law is extended again
Remember, the current procedural requirements for the sale of surplus property, including the findings and notices required under the Education Code and Government Code, remain in place
© 2014 School Services of California, Inc.
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School Facilities Issues – Deferred Maintenance
The Deferred Maintenance program is now permanently part of the LCFF base grant
Funds may be used for any educational purpose
No local contribution is required to receive the funds
LEAs should:
Evaluate deferred maintenance needs
Include deferred maintenance and other capital facilities needs in the context of the entire budget
Remember that we need safe, clean, and functional school facilities in order to support the learning environment
Compliance requirements do not cease to exist when the state eliminates the categorical program
Williams Settlement
Program Improvement status/requirements
© 2014 School Services of California, Inc.
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School Facilities Issues – Routine Restricted Maintenance
The Governor’s Budget Proposal does not change the minimum contribution requirement for routine maintenance
Though the budget flexibility that reduced or waived the minimum requirement has been in place since 2008-09, this flexibility expires at the end of 2014-15, and the 3% Routine Restricted Maintenance contribution requirement returns for 2015-16
Keep in mind . . .
Priority 1 of the LCAP requires that school facilities be maintained in good repair as defined in the Education Code
© 2014 School Services of California, Inc.
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School Facilities Issues – Routine Restricted Maintenance
Currently, the majority of expenditures in this area are for:
Classified salaries and benefits
Materials and supplies to repair and maintain facilities
Again, LEAs must consider the needs of the agency when planning General Fund expenditures
We recommend LEAs establish staffing allocations and an expenditure budget for this critical function
© 2014 School Services of California, Inc.
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School Facilities Issues – Emergency Repair Program
The Governor’s proposed Budget dedicates $188.1 million of one-time Proposition 98 dollars to the Emergency Repair Program (ERP)
Funds will provide grants for reimbursement of the cost of repairing or replacing building systems that pose a health and safety risk
As of January 2013, the State Allocation Board (SAB) apportioned $338.4 million for funded projects and approved an additional $459.5 million for unfunded projects
ERP applications are no longer being accepted by the Office of Public School Construction (OPSC)
© 2014 School Services of California, Inc.
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School Facilities Issues – Proposition 39
Funding for education was increased as a result of the passage of Proposition 39 – California Clean Energy Jobs Act
The Governor proposes to allocate an additional $363 million in 2014-15
$316 million to K-12 school districts and $39 million to community colleges for energy efficiency project grants
$5 million to the California Conservation Corps for continued technical assistance to K-12 school districts
$3 million to Workforce Investment Board for continued implementation of the job-training program
© 2014 School Services of California, Inc.
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School Facilities Issues – Proposition 39
This is a restricted program that has specific compliance and reporting components
The State Superintendent of Public Instruction (SPI) began releasing energy audit and planning funds in November 2013
Energy expenditure plans are now being accepted, and award allocations will begin in February 2013
All funds must be encumbered by June 30, 2018, and projects must be completed by June 30, 2020
© 2014 School Services of California, Inc.
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School Facilities Issues – State Allocation Board
Currently, there is no remaining bond authority in the School Facility Program (SFP) for new construction or modernization
The Governor proposes transferring $211 million of remaining SFP bond authority currently allocated to specialized programs (i.e., Seismic Mitigation, Career-Technical Education, High Performance Incentive Grant, and Overcrowding Relief Grant) to the new construction and modernization programs
This transfer will allow some school districts currently awaiting funds to move forward with construction of new classrooms and modernization
© 2014 School Services of California, Inc.
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School Facilities Issues – State Allocation Board
The last statewide school facilities bond was approved by the voters in 2006
The Governor proposes continuing the dialogue on the future of school facilities funding, including “what role, if any, the state should play in the future of school facilities funding”
While two bills, Senate Bill (SB) 45 (Corbett, D-San Leandro) and AB 41 (Buchanan, D-San Ramon), to place a statewide education facilities bond on the 2014 ballot were introduced in 2013, neither was approved
However, the Legislature still has time to pass a bill this year
The Governor noted that any future school facility program should be easy to understand and provide school districts with local control and fiscal incentives
© 2014 School Services of California, Inc.
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School Facilities Issues – State Allocation Board
The SAB Program Review Subcommittee has spent the last year reviewing the SFP and discussing areas that could be improved should a future school facility bond program be established
Consensus was reached that there is a need for a new school facility bond to fund new construction and modernization projects
OPSC staff has developed estimates of new construction and modernization funding needs
New construction – estimates ranging from $5.9 to $12.3 billion
Modernization – estimate $4.7 billion
The Subcommittee’s report will be finalized and presented to the full SAB at its meeting in January 2014
© 2014 School Services of California, Inc.
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© 2014 School Services of California, Inc.
Local Bonds Pass at Record Rates
In November 2012, more than $14 billion in local bonds were on the ballot
More than $12 billion passed
Local funding, not state funding, is now the primary source of school facility funding
Types of ElectionsTotal
Elections on Ballot
Pass Fail Passage Rate
Dollar Value of Voter-Approved
Measures(in Millions)
Two-Thirds General Obligation (GO) Bonds 2 1 1 50% $40.0
55% GO Bonds 100 81 19 81% $12,525.6
55% School Facility Improvement District (SFID) GO Bonds
4 4 0 100% $227.1
Total 106 86 20 81% $12,792.7
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© 2014 School Services of California, Inc.
Mandated Programs
The Budget Proposal continues to support mandate reform but makes no changes to the funding level or to the list of state mandates included in the Mandate Block Grant (MBG)
In 2013-14, school districts and charter schools opting-in to the MBG received the funds in November 2013
The apportionment, totaling $206.4 million, was made from funds provided by Item 6110-296-0001 of the Budget Act of 2013 (Chapter 20/2013)
The apportionment paid 100% of each LEA’s MBG entitlement for fiscal year 2013-14
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© 2014 School Services of California, Inc.
Mandated Programs
The Administration recognizes the $4 billion liability in unfunded K-12 mandates
And intends to pay down the obligation over the next few years with completion by the end of 2017-18
To date, there’s no repayment plan in place
No funds are included in the 2014-15 Budget Proposal to reduce the debt
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© 2014 School Services of California, Inc.
Mandated Programs
LEAs that opt in to the MBG can plan for the rates in all three years of the multiyear projection (MYP)
The rationale for a higher rate for the 9-12 grade span is due to the inclusion of the Graduation Requirements mandate within the MBG
We recommend LEAs weigh the benefits of receiving money now versus an unfunded receivable with no time-certain reimbursement
Grade Span School Districts Charter Schools COEs
K-8 $28 $14 $29
9-12 $56 $42 $57
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© 2014 School Services of California, Inc.
Transportation in 2014-15
Under current law, LEAs that operate transportation programs will receive the funding as an add-on to the LCFF, with the following requirement:
Maintenance of effort: LEAs must expend no less than the amount expended for Home-to-School Transportation in 2012-13
The maintenance of effort is the lesser of:
Actual 2012-13 transportation expenditures, or
Amount of transportation revenue* received in 2013-14
Direct-funded Home-to-School Transportation joint powers authorities (JPAs) will continue to receive direct funding in 2014-15
*Pupil Transportation Entitlement: Home to School, Special Education, COE Bus Replacement
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© 2014 School Services of California, Inc.
Transportation in 2014-15
LEAs should plan for and consider the following:
Review transportation routes to determine if services can be further streamlined
Consider other local transportation options, including cost sharing options that reduce the share your agency is currently paying
Analyze special education transportation policies and ensure individualized education program (IEP) teams are aware of the policies
Do not provide transportation if it is not necessary
Discuss consequences if transportation is not provided or if fees are assessed/increased
If your LEA opts to assess fees, put systems in place to make it easy for parents/guardians to make payments such as through PayPal, a drop box, etc.
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© 2014 School Services of California, Inc.
K-3 Grade Span Adjustment
Under current law, the K-3 Grade Span Adjustment (GSA) (formerly known as K-3 Class-Size Reduction) is a 10.4% adjustment to the LCFF base grant
This percentage is added to the base grant to support lowering class sizes in grades kindergarten through 3
As a condition of apportionment, districts must ensure all school site average class enrollment ratios meet the target ratio of 24:1
Unless a collectively bargained alternative ratio is agreed to by the school district and bargaining unit
For 2014-15, districts must demonstrate progress toward reducing the gap between their 2013-14 school site average K-3 class size and the 24:1 target by 28%
Caution: A district’s failure to meet the required progress at one school site would result in the loss of all K-3 GSA funds districtwide
The penalty will likely be out of proportion to the error
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© 2014 School Services of California, Inc.
K-3 Grade Span Adjustment
Districts should keep in mind the following with the K-3 GSA:
If school sites already have a site ratio of 24:1 or less, they must permanently maintain the 24:1 ratio to be eligible for K-3 GSA funds
Class-size waivers (for E.C. 41376-41378) granted by the SBE will not excuse districts from the K-3 GSA 24:1 school site requirement
We anticipate in the coming months that instructions will be established in the Audit Guide to ensure compliance
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K-3 GSA – Sample Calculation
Example of school site calculation for relative progress for 2014-15 school year, based on 28% revenue increase toward full implementation of LCFF
© 2013 School Services of California, Inc.
Sample Calculation for K-3 GSA School Site Progress 2014-15 2013-14 average class enrollment for school site: XYZ Elementary School (Grades K-3, inclusive) 28.4:1*Target for K-3 CSR at LCFF full implementation, 2020-21 24:1Difference 4.4 Progress required in 2014-15 (28%) 4.4 x .28 = 1.2Average class enrollment target progress for 2014-15 for XYZ Elementary School
28.4 – 1.2 = 27.2:1
* Average class enrollment for school site after the first year of the LCFF
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LCFF and Provisions 1, 2, and 3
On a yearly basis, school districts distribute meal applications to parents to make determinations of eligibility for FRPMs under the National School Lunch Program (NSLP) and the School Breakfast Program (SBP)
The paperwork and administrative burden associated with the meal counting, claiming, and eligibility are demanding
Especially for those districts with large FRPM populations
Congress offers three special assistance alternatives for LEAs known as Provision 1, Provision 2, and Provision 3 to help reduce paperwork and administrative burden at the local level
© 2014 School Services of California, Inc.
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LCFF and Provisions 1, 2, and 3
Special Assistance Alternatives
Frequency of StudentEligibility Determination
Provision 1 Every 2 consecutive school years
Provision 2 Every 4 years, including the base year
Provision 3 Every 4 years, excluding the base year
© 2014 School Services of California, Inc.
The table displays the three Special Assistance Alternatives and how often each alternative determines the students’ eligibility for FRPMs
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LCFF and Provisions 1, 2, and 3
Unfortunately, the relief from the administrative burden provided by the Special Assistance Alternatives creates a challenge for the school districts under the LCFF
LCFF provides concentration and supplemental funding to school districts for FRPM students on an annual basis
Districts are prohibited from collecting eligibility determinations through the NSLP application for its Provision 1, 2, and 3 schools on an annual basis
CDE has offered school districts an optional Alternative Income form
The form enables the district to determine the FRPM status of the students attending the Provision 1, 2, and 3 schools during the period when they are precluded from verifying eligibility
The sample Alternative Income form is located at http://csis.fcmat.org/Pages/Tools-Samples-Links.aspx
© 2014 School Services of California, Inc.
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© 2014 School Services of California, Inc.
LCFF and Provisions 1, 2, and 3
Remember, the CDE’s Alternative Income form is just that – it’s an alternative
If your district has already established an effective method to determine the eligibility status of the students in these particular schools, by all means, use it
The goal is to ensure your district’s accuracy of the students entered into California Longitudinal Pupil Achievement Data System (CALPADS)
For the LCFF, FRPM-eligible students are those students enrolled on the Fall Census Day, the first Wednesday in October
The certification deadline was December 13, 2013
The amendment window is December 14, 2013, to February 7, 2014
In 2013-14, the CDE will allow LEAs that have one or more schools with Provision 2 or 3 status under the NSLP to extend the CALPADS Fall 1 amendment window to March 21, 2014
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© 2014 School Services of California, Inc.
State Board of Education Update
SBE has been front and center this past year in shaping the implementation of the LCFF and at the January 15 and 16, 2014, SBE meeting the following is on the agenda:
Approval of the emergency regulations for LCFF spending requirements and the LCAP template
Also on the agenda: the approval of the regular rulemaking process for the final regulations for the LCFF spending requirements and LCAP template
Approval of the emergency regulations and commencement of the final rulemaking process for the new assessment system replacing the Standardized Testing and Reporting (STAR) assessments, the California Assessment of Student Performance and Progress (CAASPP)
To immediately implement the changes for the 2013-14 school year
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© 2014 School Services of California, Inc.
State Board of Education Update
At this same meeting, a public hearing will be held on the 2014 Mathematics Adoption of Instructional Materials
Instructional Quality Commission will be recommending mathematics programs for adoption
Remember, an LEA is not required to use the SBE-adopted instructional materials and may use other instructional materials if they are aligned with the academic content standards (AB 1246 [Chapter 668/2012])
Mathematics instructional materials must be aligned to the Common Core academic content standards
If an LEA chooses to use instructional materials not adopted by the SBE, the LEA shall ensure that a majority of the participants of any review process conducted by the LEA are classroom teachers who are assigned to the subject area or grade level of the materials
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CalSTRS
California State Teachers’ Retirement System (CalSTRS) developed a plan to audit a sampling of LEAs
Audits have resulted in determinations that certain positions designated by governing boards as certificated do not qualify and should be designated as classified
Therefore, these positions do not belong in the CalSTRS membership
Incumbents in these positions who did not complete an election form to stay in CalSTRS membership within 60 days of assuming the position are exposed
And, therefore, are at risk of losing their service credit
© 2014 School Services of California, Inc.
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CalSTRS
CalSTRS is providing an amnesty period for these members
File the election form with justification by May 23, 2014
The CalSTRS Circular went to employers
So employers need to initiate the process for members that may be affected
© 2014 School Services of California, Inc.
Go to www.sscal.com/govbud.cfm for Fiscal Report article, “CalSTRS Members Face Retirement Uncertainty,” “CalSTRS Presents a Solution!”, and CalSTRS’ Employer Information Circular article, “Right of Retirement Systems Election When Changing Positions”
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CalSTRS
The Governor acknowledges the $80.4 billion shortfall within the CalSTRS basic retirement plan
Assets may be exhausted in 30 years
Would cost more than $4.5 billion per year to resolve right now
Bad news does not get better with age – this will grow if not addressed
Three ways to fix it:
Reduce benefits: difficult given legal protections
Already in place for new hires starting January 1, 2013
Increase earnings: means taking more risk with investment portfolio
Increase contributions: most likely solution
© 2014 School Services of California, Inc.
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CalSTRS
CalSTRS contribution rates and benefit levels are set in statute
Legislation is required to change the rates
The Governor proposes to work with stakeholders on a “plan of shared responsibility” to achieve a fully funded system within 30 years
He also states that:
Employers should anticipate absorbing much of any increased contribution requirement
The state’s role as a contributor should be evaluated
The funding plan will be included in his 2015-16 Budget Proposal
Employers need to brace themselves for increased CalSTRS contribution requirements in multiyear financial planning
© 2014 School Services of California, Inc.
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CalPERS
The employer contribution to the California Public Employees’ Retirement System (CalPERS) for 2013-14 is 11.442%
“Classic” members pay 7.00%
New members (hired on or after January 1, 2013) pay 6.00%
The CalPERS retirement plan is 75.5% funded
The CalPERS Board has changed the asset smoothing and amortization methods to improve the funded status
We can expect to see significant contribution rate increases in the future
CalPERS Board will set the employer rate for 2014-15 in May
Stay tuned for estimates of rates in the out years
© 2014 School Services of California, Inc.
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Affordable Care Act
Implementing the employer shared responsibility provisions of the Affordable Care Act (ACA) means providing health coverage:
To all employees working 30 hours per week or more
Or Draconian penalties apply
That is of minimum value and is affordable
Or penalties apply – although less punitive
See detail in regulations referred to below
To ensure that all eligible employees are offered coverage:
Determine the standard measurement, administrative, and stability periods
Implement a system of tracking and reporting employee hours of service
Please visit www.sscal.com/govbud.cfm for IRS Notice 2013-42 and IRS Regulation 138006-12
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Affordable Care Act
Determine whether coverage is of minimum value and affordable
If not, weigh the cost of providing affordable minimum value coverage against the potential penalties
All of this is effective in 2015
So, employers should be measuring employee hours right now
Many employers may want to implement early, during plan renewal in 2014
Work with your broker or carrier to decide
Work with employees and governing boards to increase their understanding of the ACA and its impact on your agency and its employees
Evaluate your workforce and determine the potential financial impact of the implementation of these ACA requirements
Tools are available to help with this analysis
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Gaining Operational Efficiency
Now is a good time to take stock of noninstructional operations – finance, facilities, transportation, etc. – to see where your agency lies in the aftermath of this last era of cuts
What is budgeted for vendor service contracts?
What are your current staffing levels?
What are the service levels being provided to the rest of your agency?
For example, how long do work orders stay unaddressed?
What are the contributions to routine maintenance, food services, and transportation?
© 2014 School Services of California, Inc.
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Gaining Operational Efficiency
The LCFF implementation changes things considerably
No more funding earmarked for deferred maintenance
A new maintenance-of-effort requirement for transportation
Virtually all resources are available to improve student outcomes
More efficient operations mean more resources can be directed toward instruction
© 2014 School Services of California, Inc.
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Gaining Operational Efficiency
An example: custodial workload – square footage per custodian
Over 500 different measures of operational efficiency – key performance indicators – are now available to California school districts through the ActPoint® KPI Performance Management System . . . check it out!
© 2014 School Services of California, Inc.
Source: ActPoint® KPI Performance Management System, www.actpoint.com/ca
Summary of Results
1st Quartile 45,009 sq ft to 30,357 sq ft
2nd Quartile 29,125 sq ft to 25,806 sq ft
Median 25,012 sq ft
3rd Quartile 24,217 sq ft to 17,877 sq ft
4th Quartile 17,857 sq ft to 9,710 sq ft
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© 2014 School Services of California, Inc.
Collective Bargaining Issues
This will likely be a very challenging year for collective bargainingThere are too many issues, many new concepts, and very little time
The typical District will be negotiating most of the following issues:Restoration of past concessions The effects of pension reformPotential compensation increasesProfessional development related to Common CoreThe effects of the Affordable Care ActClass-size reduction progressMaintenance of Adult Education and Regional Occupational Program programs
All of this on top of the time and energy needed to develop the LCAPWe suggest that you set aside plenty of time to prepare and conduct purposeful negotiations
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© 2014 School Services of California, Inc.
Restoration of Concessions
Given the revenue gains in 2013-14 and the extraordinarily high level of funding proposed for 2014-15 through LCFF, most districts will be able to do something in terms of compensation increases and/or restoration of concessions
But not all districts will be able to do more
Districts with heavy declining enrollment, low reserves and high levels of deficit spending may be asking for concessions, even as neighboring districts are giving raises
Districts with low numbers of LCFF-eligible students may find that step and column movement, health and welfare benefit cost increases, and deficit spending consume all new monies
Every district will have a different level of revenue and capacity for addressing compensation
For most districts, restoration of concessions will be a top priority
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© 2014 School Services of California, Inc.
How Much Money is Available?
“You got 11%; you owe me 11%” will not work!
Districts receive LCFF dollars for the base grant, the supplemental grant, and the concentration grant
The increase in the base grant is generated by all students and is available for expenditure for any legal purpose – good money for negotiations
The supplemental and concentration grants are dedicated to “increasing and improving services” for the students who generate the funding
If the parties plan to use supplemental or concentration grant funding for any purpose, they must answer the question, “why is this expenditure the most effective use of funds?”
So, the parties need to be sure that the LCAP establishes a nexus between the use of funds for compensation and “increased and improved” services
Our updated SSC LCFF Simulator® clearly shows the amount of the base grant increase vs. the total increase – use that as a starting point
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© 2014 School Services of California, Inc.
How Do We Show a Nexus to Student Services?
Services to students are clearly “increased and improved” if you:
Extend the number of instructional minutes and the teacher workday
Add teachers for supplementary programs or to reduce class sizes
Add stipends or special columns on the salary schedule for teachers who improve their qualifications to serve eligible students
Increase beginning teacher salaries to attract particularly well-qualified teachers
An across the board salary increase might meet the test under the right circumstances, and provided the LCAP details the rationale for raising compensation, but this is not automatic
For a District with a low number of eligible students, the supplemental money will need to be narrowly targeted to services for those students
The key is the LCAP; it must support the expenditure of supplemental and concentration grant funding
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© 2014 School Services of California, Inc.
Getting Started
We suggest both parties review the contract carefully and mark articles which must be negotiated this year
Sunshined proposals should open all of the appropriate articles and specify what changes are proposed
The parties need to spend extra time learning how the new funding system works, understanding new pension rules, and how health care reform will impact the district and its employees
We recommend you allow time to exchange more information than was needed in the past
Over the past five very difficult years we have seen high numbers of Districts going through the impasse and factfinding process
But one of the highest years on record was 2001; a year when funding increased more than 10%
Careful preparation and respectful attitudes will be needed this year
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The Road Ahead
© 2014 School Services of California, Inc.
The Road Ahead
Education wins big again this year due to an improving economy, the temporary taxes, and past program cuts
The average increase for K-12 school districts will be 10.9%, or approximately $751 per student
This is the second year that the Governor proposes that the lion’s share of new revenues be committed to education, to the exclusion of other major segments of the State Budget
The Legislature will have a lot to say about the Governor’s priorities and whether or not they agree with him
The Governor’s Budget Proposals do not mark the end of the Budget cycle –they mark the beginning
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© 2014 School Services of California, Inc.
Enacting the State Budget – The Official ProcessF-2
SAUSAGE PRODUCTION
Enacting the State Budget – CliffsNotes™ Version
While the process is complicated and covers six months, here’s the CliffsNotes™ version
Governor introduces State Budget Proposal
Budget Bill introduced in both houses shortly thereafter
January 10 February Early Spring
Budget Trailer Bills are released, providing critical details to the January proposal
Budget Subcommittees examine specific details of the Proposal
Some policy decisions made, most delayed until May Revision
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© 2014 School Services of California, Inc.
Enacting the State Budget – CliffsNotes™ Version
Following the Governor’s May Revision, which provides an update to the Governor’s Proposal based on new revenue figures and stakeholder feedback, the subcommittees independently finish their work
Subcommittees report to their respective Assembly or Senate Budget Committee, which approves their version of a State Budget
In “normal” years, a Budget Conference Committee is established to hash out the differences between the two houses
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ASSEMBLY VERSION
SENATE VERSION
CONFERENCE COMMITTEE COMPROMISE
© 2014 School Services of California, Inc.
Enacting the State Budget – CliffsNotes™ Version
Behind the scenes, legislative leaders and the Governor negotiate the “big ticket” items, such as revenue assumptions and overall spending level, the corresponding Proposition 98 minimum guarantee, and any particular policy priorities
Last year, a final big ticket item was the details of the LCFF
This year, Transitional Kindergarten (TK) may be a sticking point
Once agreement is reached, the final version of the State Budget is drafted into a main Budget Bill and corresponding trailer bills, addressing various specific aspects of the Budget
To continue to receive their pay, members of the Legislature must approve the State Budget by June 15, which they have done the past two years!
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© 2014 School Services of California, Inc.
Other Proposals Will Emerge
Democrats and Republicans will want to lay their claim to revenues generated by an improving economy
The only major education proposal introduced to date would expand TK
Although not included in the Governor’s Proposal, TK for all four-year-olds is shaping up to be a hot topic in 2014
Introduced this fall in the Assembly Democratic Caucus’s “Blueprint for a Responsible Budget”
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© 2014 School Services of California, Inc.
Other Proposals Will Emerge
Echoed by Senate President pro Tempore Darrell Steinberg (D-Sacramento) as a State Budget priority and introduced as SB 837 (Steinberg, et al.):
Implementation would begin in 2015-16, rolling out in a similar fashion to current TK implementation and fully implemented by 2019-20
Class sizes no larger than 20, with each class having a teacher and an associate teacher
TK students would earn two-thirds of the K-3 base grant and grade span adjustment
Senator Steinberg estimates SB 837 would cost nearly $1 billion ongoing once fully implemented
While this is the only major education proposal to date, other proposals are likely to emerge
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The Road Ahead
Our past financial problems have stemmed from over-exuberance in good times – not just the onset of bad times
It is important for us to look at the prospects for stability that underpin the Governor’s proposals
A rollercoaster that can take us up quickly can take us down just asquickly unless there is a safety net
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© 2014 School Services of California, Inc.
Final Thoughts
It is important to know how much more funding we stand to receive next year
It is equally important to understand the state’s requirements related to the expenditure of those funds
The days of categorical program compliance and implementing the state’s plan for our neediest students are in the rearview mirror
The road ahead is paved with challenge and opportunity – but who best to decide what is needed locally than the dedicated board members, teachers, administrators, classified employees, and parents committed to ensuring a brighter and more hopeful future for our students and our state
We are likely to hit a few unexpected bumps along the way as the journey towards local accountability unfolds
We stand witness to the rebirth of our school finance system
Let history also show that 2014-15 was the year California began to close the achievement gap and started its march toward equity for its children!
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Thanks you