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www.capitoladvisors.org

www.capitoladvisors.org. 1. www.capitoladvisors.org. 1. Workshops created and presented by:. Gerry Shelton , Partner. Susan Stuart, Partner. Richard Gonzalez, Chief Facilities Advisor. Jack O’Connell, Partner. Kevin Gordon, President and Partner. Abe Hajela , Partner.

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www.capitoladvisors.org

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  1. www.capitoladvisors.org 1 www.capitoladvisors.org 1

  2. Workshops created and presented by: Gerry Shelton, Partner Susan Stuart, Partner Richard Gonzalez, Chief Facilities Advisor Jack O’Connell, Partner Kevin Gordon, President and Partner Abe Hajela, Partner Barrett Snider, Partner Lee Angela Reid, Senior Legislative Advocate www.capitoladvisors.org 2

  3. Workshops created and presented by: Adonai Mack Legislative Advocate Dave Walrath President, Murdock, Walrath & Holmes www.capitoladvisors.org 3

  4. Vetted among numerous energy-oriented companies by CAG on behalf of School Districts. Energy services company that has a genuine track record of work in the K-12 education space Direct representation of multiple lines of Energy Efficiency Equipment & Energy Dashboards Workshops sponsored by: www.capitoladvisors.org 4

  5. 2013-14 Budget Act www.capitoladvisors.org 5

  6. Budget Act Themes and Thoughts www.capitoladvisors.org Balanced and conservative Focus on K-12 schools & health care Compromise bridges key political and fiscal differences It’s a transition year – LCFF, Common Core, Prop 39 Balancing local control and equity Spend wisely – restore or redirect? 6

  7. How it Came Together www.capitoladvisors.org • Compromise represented strong win by Governor across the board • Legislature couldn’t assert extraordinary power • His revenue numbers • LCFF – Emphasis on poverty/ELL – solving cost issues without spending more • Prop 39 – largely the Governor’s vision • Democrats – base raised, economic recovery target, tinkering on poverty/ELL formula 7

  8. 2013-14 Budget Agreement www.capitoladvisors.org $96.3 billion budget with $1.1 billion in reserve Prop 98 grows to $56.5 billion in 2012-13 and $55.3 billion in 2013-14 $2.1 billion toward LCFF implementation Governor’s LCFF model with some modifications LCFF accountability system modified since May Revision Adult Education and ROCP MOE requirement $3.9 billion buy-down of K-12 inter-year deferrals (2 years) $1.25 billion for Common Core implementation $381 million to K-12 for Prop 39 implementation $250 million for career pathway innovative grants $50 million increase in mandate block grant funding 8

  9. State General Fund Revenues(Billions of Dollars) www.capitoladvisors.org 9

  10. State Revenues www.capitoladvisors.org • The Governor appeared to low-ball 2012-13 & 2013-14 revenues to hold back legislators • Actual tax receipts through May and June suggest that LAO’s projections are more accurate • Higher GF tax receipts mean a higher Prop 98 guarantee • Prop 98 settle-up is used for one-time purposes in later years – this fits the Governor’s plan to pay down the “Wall of Debt” and appropriate funds without creating on-going state costs 10

  11. Prop 98 Changes Over Time www.capitoladvisors.org 11

  12. Inter-Year (Cross-Year) Deferrals www.capitoladvisors.org 12

  13. Governor’s Plan to Pay Down Debt www.capitoladvisors.org 13

  14. LCFF Compromise www.capitoladvisors.org 14

  15. LCFF Compromise www.capitoladvisors.org Fundamental structure of Governor’s proposal retained New: Economic Recovery Target (ERT) New: Base Grants increased New: Supplemental and Concentration Grants adjusted New: CTE/Adult Ed in transition New: Accountability modified 15

  16. LCFF Entitlement Target www.capitoladvisors.org • Entitlement Target = Base Grant + Augmentations + Supplemental Grant + Concentration Grant + Add-ons • Base Grant per ADA (will receive annual COLA) K-3 = $6,8457-8 = $7,154 4-6 = $6,9479-12 = $8,289 • Augmentations– 10.4% ($711.88) for K-3 CSR and 2.6% ($215.51) for 9-12 16

  17. LCFF Entitlement Target www.capitoladvisors.org Supplemental Grant – additional 20% of Base Grant + Augmentations for each EL, low income and foster pupil (by enrollment) Concentration Grant – additional 50% of Base Grant + Augmentations for each student eligible for supplemental grant above 55% concentration threshold Add-ons – Home-to-School Transportation and Targeted Instructional Improvement Grant (TIIG) 17

  18. LCFF Excluded Categoricals www.capitoladvisors.org • Special education • After School Education and Safety Program • State Preschool • Quality Education Investment Act • State Testing Program • American Indian Education Centers • Early Childhood Education Programs • Specialized Secondary Programs • California Partnership Academies • Agricultural Education Incentive Program • Foster Youth Programs • Adults in Correctional Facilities 18

  19. LCFF Hold Harmless Funding Entitlement Target TIIG Add-on Trans. Add-on 2012-13 TIIG Concentration Grant 2012-13 Trans. 9 - 12 Augmentation 2012-13 “Included” Categoricals Supplemental Grant K – 3 CSR Augmentation Base Grant 2012-13 Revenue Limit www.capitoladvisors.org 19

  20. Economic Recovery Target www.capitoladvisors.org Goal is to restore all districts to at least 2007-08 funding levels by leveling up LCFF “losers” ERT = undeficited revenue limit in 2012-13 + COLA (1.94%) for 2013-14 thru 2020-21 + categorical funding in 2012-13 w/o 20% flex reductions or “fair share” reductions A district will transition toward the greater of its LCFF Entitlement Target or ERT Most districts will have LCFF ET > ERT 20

  21. Economic Recovery Target www.capitoladvisors.org 21 Approx. 230 districts will have ERT>LCFF ET Approximately 96 of the 230 districts will have an ERT above the 90th percentile (more than $14,500 per ADA) and will not be eligible to receive ERT payments 45 of those 96 districts receive necessary small school funding 130+ of the 230 districts will have an ERT below the 90th percentile and will receive ERT payments to restore them to their ERT by 2020-21 ERT payments will be made in 8 equal, annual installments and will be in addition to any LCFF “gap” funding

  22. Impact on Small School Districts www.capitoladvisors.org Funded in LCFF if eligible LCFF changes eligibility rules and funding levels by ratcheting down school sizes Continues soft landing for declining enrollment - ADA is “greater of current or prior year” NSS funding increased proportional to increases in statewide average LCFF allocations Uncertainty for some small districts above the 90thpercentile with respect to Economic Recovery Target payments 22

  23. County Offices of Education www.capitoladvisors.org • New oversight responsibilities – LCFF • Supplemental and concentration grants different (supplemental Grant = 35%, concentration grant = 35% after 50%) • Creates two-part formula based on costs for regional services and for alternative education Regional support funding: • Base grant of $655,920 • Additional amount of $109,320 per school district in the county • Additional $40 to $70 per ADA in the county (based on a sliding scale, with less populated counties receiving a higher amount per ADA) Alternative education funding: • Base rate of $11,045 per eligible pupil (pupils who are incarcerated, on probation, probation-referred, or mandatorily expelled) 23

  24. Budget Act LCFF Data Runs www.capitoladvisors.org DOF has produced LCFF data runs, which we are providing to you Outcomes are predicted, not guaranteed Use this for general planning purposes, but make your own assumptions and do your own calculations 24

  25. CTE/ROCPs www.capitoladvisors.org • Partnership Academies, Ag Incentive Grants and Supplemental Secondary Grants pulled out • ROCP funds stay in the LCFF • 2-year prohibition on redirection of ROCP JPA funds • 2-year MOE requirement on ROCP expenditures • Grade 9-12 augmentation – restrictions (now you see them, now you don’t) • $250 million career pathways funding (one-time) 25 25

  26. Adult Education www.capitoladvisors.org • Adult Ed funding stays in the LCFF • 2-year MOE requirement on Adult Ed expenditures • $25 million in 2013-14 for 2-year planning and implementation grants 26

  27. Grades K-3 Class Size Reduction www.capitoladvisors.org Transition to 24:1 Identify gap between 2012-13 K-3 average class enrollment by school site and target of 24:1 Begin to close K-3 class size gap in proportion to progress toward closing LCFF entitlement gap – 2013-14 progress toward entitlement target is 11.74% Base Grant add-on is per ADA while CSR goal is based on enrollment Can locally negotiate a different ratio 27

  28. LCFF Accountability www.capitoladvisors.org • Compromise between January proposal (local control) and May Revision (strict expenditure restrictions) • Major decisions moved to SBE rather than Legislature • Most provisions will not apply for 2013-14, but be careful • Follow broad reference in trailer bill and DOF guidance • Need to plan ahead for 2014-15 • Advocacy groups mobilized to scrutinize spending decisions 28

  29. Expenditure of Supplemental and Concentration Grant Funds SBE to adopt regulations by Jan 31, 2014 that: • Require a school district, COE, or charter school to “increase or improve services” for grant generating students “in proportion to the increase in funds apportioned on the basis of the number and concentration” of those students • Authorize use of these grant funds for school-wide or district-wide purposes in a manner that is no more restrictive than the restrictions in Title I of the federal No Child Left Behind Act of 2001

  30. Accountability – State Priorities www.capitoladvisors.org Compliance with Williams criteria – instructional materials, teacher assignments and credentials, facilities Implementation of SBE adopted academic content standards, including programs and services for ELs to access the common core and ELD standards Parental involvement Pupil Achievement – statewide assessments, API, completion of A-G requirements, CTE sequences and AP courses, EL progress toward proficiency, college preparation (Early Assessment Program) 30

  31. Accountability – State Priorities (cont.) www.capitoladvisors.org Pupil engagement – attendance, dropout and graduation rates School climate – suspension and expulsion rates, etc. Access, including for subgroups and special needs, to a broad course of study in specified subject areas Pupil outcomes in specified subject areas 31

  32. Local Control and Accountability Plans www.capitoladvisors.org By July 1, 2014 each LEA must adopt (over 2 public hearings) a local control and accountability plan (LCAP) that describes: • Annual goals, for all students and for each LCFF subgroup, for each of the specified state priorities and for any additional identified local priorities • The specific actions the LEA will take to achieve those goals 32

  33. Budget Aligned to LCAP www.capitoladvisors.org For 2014-15, and each subsequent year, the LCAP must be adopted before the LEA adopts its budget The county superintendent, or SPI, shall disapprove a budget that does not include the expenditures necessary to implement the LCAP 33

  34. Updated LCAPs www.capitoladvisors.org For 2015-16, and each subsequent year, the LCAP must be updated to include: A review of LCAP goals, an assessment of progress toward the goals and the effectiveness of specific actions linked to those goals, and any changes to the goals and specific actions A listing and description of expenditures (CSAM) for that fiscal year that implement the specific actions identified in the LCAP A listing and description of expenditures that will serve students that generate supplemental and concentration grants 34

  35. Evaluation and Technical Assistance www.capitoladvisors.org • SBE to adopt LCAP evaluation rubrics by October 1, 2015 that: • Assist LEAs in evaluating strengths and weaknesses and areas needing improvement • Assist county superintendents or the SPI to identify LEAs in need of technical assistance • Assist the SPI to identify LEAs for which intervention is warranted • California Collaborative for Educational Excellence (CCEE) - $10 million to create the CCEE to provide technical assistance to LEAs to meet the state priorities identified in each LCAP 35

  36. Oversight and Intervention www.capitoladvisors.org • LCAPs submitted to county superintendent (the SPI for COEs) for review, and shall be approved if: • LCAP adheres to SBE template, and • The budget includes expenditures sufficient to implement the specific actions identified in the LCAP • If LCAP is not approved, or if the LEA requests technical assistance, the county superintendent (or SPI) may: • Assist in identifying strengths or weaknesses related to the state priorities • Assign an academic expert or team to assist in implementing effective programs and improving student outcomes • Assign the CCEE to provide advice and assistance 36

  37. Oversight and Intervention www.capitoladvisors.org The SPI is authorized to intervene if both of the following criteria are met: The LEA did not improve outcomes for three or more pupil subgroups (ethnic, socio-economically disadvantaged, ELs, special needs, foster youth) with respect to more than one state priority for three out of four years, AND The CCEE has provided assistance and submits findings of failure to implement recommendations or persistent inadequate performance 37

  38. Oversight and Intervention www.capitoladvisors.org SPI intervention may include: Modifications to the LCAP Budget revisions to improve outcomes related to the state priorities Stay and rescind any actions, other than those required by CBAs, if doing so will improve outcomes Appoint a trustee to exercise this authority 38

  39. LCAP Timeline www.capitoladvisors.org • January 31, 2014 • SBE regulations on use of supplemental/concentration grant funds • March 31, 2014 • SBE template for LCAPs • July 1, 2014 • First LCAPs with 2014-15 budget expenditures aligned to the LCAP • July 1, 2015 • First LCAP update with additional expenditure reporting • October 1, 2015 • SBE evaluation rubrics 39

  40. Other Major Budget Issues www.capitoladvisors.org 40

  41. Funding for Common Core www.capitoladvisors.org • $1.25 billion in one-time funds • Distributed based upon prior year enrollment (approx. $200 per pupil) • Goes to school districts, COEs, charter schools • May be used for professional development, instructional materials, and technology enhancement • LEAs may encumber funds in 2013-14 or 2014-15 • Funds subject to annual audit • LEAs must: • Create plan for use of funds, describe and adopt at a public meeting • By July 1, 2015, report detailed expenditure information to CDE 41

  42. Proposition 39 www.capitoladvisors.org $2.5 billion over 5 years focused on K-14 exclusively Starting in 2013‐14 - $381 million for K‐12 CA Energy Commission (CEC)to develop guidelines, application “form,” and approve applications. CDE to distribute funding. Guidelines issues following “public input” Funds allocated 85% on a per pupil basis and 15% on the basis of the number of NSLP eligible pupils Goal to get funding out in the budget year. 42

  43. Proposition 39 www.capitoladvisors.org • Multi-year project approval being considered • Grantees receiving more than $1 million must spend at least 50% on projects of $250K or more • Energy Conservation Assistance Account – Revolving loan program with low/no interest loans - $28M in 2013-14 • Considerations for small LEAs • $15,000 minimum grant for small LEAs of 100 ADA or less • $50,000 minimum grant for ADA between 101 and 1,000 • $100,000 minimum grant for ADA between 1,001 and 1,999 • 2‐year advance on allocation available for districts with ADA 1,000 or less - August 1st Application to CDE 43

  44. Proposition 39 www.capitoladvisors.org Energy Commission Guidance Details To Come • Project Criteria Summary must: • Focus on energy efficiency & demand reduction first • Be cost-effective • Require contracts with specific project details (i.e. Energy calculations, specifications, & costs) • Submit annual financial audits • “Alternative energy generation projects and other innovative energy projects may be considered only if the LEA can document on their annual expenditure report that all other cost effective energy efficiency projects are already installed or have committed installation contracts.” 44

  45. Proposition 39 • Project Examples • Lighting Retrofits • Lighting Controls • Heating & Cooling Equipment • Heating & Cooling Controls • Water Heating • Building Envelope • Water Efficiency • Pool Equipment • Demand Response www.capitoladvisors.org • Project Design Recommendations • Benchmarking • Sequencing of facility priority • Surveys and assessments 45

  46. Child Nutrition www.capitoladvisors.org • COLA on state programs funded at 1.565% ($2.438 million) • Decrease in projected meals served led to “growth” funding decrease of -$1.331 million • Increased federal funds to CDE: • $1.0 million to increase the frequency of compliance reviews as a result of new federal requirements • $200,000 to increase technical assistance on new federal requirements under the Healthy, Hunger-Free Kids Act of 2010 46

  47. Special Education www.capitoladvisors.org 2013-14 COLA funded at 1.565% Protects Necessary Small Special Education Local Plan Areas Does not backfill $61 million federal sequestration cut Governor vetoes $30 million for equalization Debate over re-appropriation begins Consolidates various programs 47

  48. Child Care and Preschool www.capitoladvisors.org Backfills $15.9 million in sequestration cuts ($11.1 million-General Child Development; $4.2 million-Alternative Payment programs; $.6 million-Migrant Day Care) Authorizes transfer of unused CalWORKs Stage 2 funds to Stage 3, if needed Re-appropriates $10 million in unused 2012-13 funds to establish new slots ($7 million-General Child Development; $2.6 million-Alternative Payment programs; $.4 million-Migrant Day Care) 48

  49. School Facilities Changes www.capitoladvisors.org • Eliminates minimum contribution for routine restricted maintenance • Eliminates state funding for deferred maintenance, makes it a local discretion with no match • Allows LEAs to use proceeds from the sale of surplus property for any one-time general fund use through 2016 • Makes permanent the requirement that a school district give first call on surplus property to charter schools (sale or lease) • Revises to only apply to charters with at least 80 units in-district ADA for the following fiscal year 49

  50. School Facilities Program www.capitoladvisors.org • State facilities bond funds mostly exhausted • OPSC no longer processing applications for eligibility, modernization, and new construction • Applications are checked for appropriate state approval and indexed by date order • Expect OPSC to resume processing some applications as we get closer to state bond approval 50

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