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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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Capitoladvisors

www.capitoladvisors.org

1

www.capitoladvisors.org

1


Capitoladvisors

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


Workshops created and presented by

Workshops created and presented by:

Adonai Mack

Legislative Advocate

Dave Walrath

President, Murdock, Walrath & Holmes

www.capitoladvisors.org

3


Workshops sponsored by

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


Budget act

2013-14

Budget Act

www.capitoladvisors.org

5


Budget act themes and thoughts

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


How it came together

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


2013 14 budget agreement

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


State general fund revenues billions of dollars

State General Fund Revenues(Billions of Dollars)

www.capitoladvisors.org

9


State revenues

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


Prop 98 changes over time

Prop 98 Changes Over Time

www.capitoladvisors.org

11


Inter year cross year deferrals

Inter-Year (Cross-Year) Deferrals

www.capitoladvisors.org

12


Governor s plan to pay down debt

Governor’s Plan to Pay Down Debt

www.capitoladvisors.org

13


Lcff compromise

LCFF Compromise

www.capitoladvisors.org

14


Lcff compromise1

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


Lcff entitlement target

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


Lcff entitlement target1

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


Lcff excluded categoricals

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


Capitoladvisors

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


Economic recovery target

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


Economic recovery target1

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


Impact on small school districts

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


County offices of education

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


Budget act lcff data runs

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


Cte rocps

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


Adult education

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


Grades k 3 class size reduction

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


Lcff accountability

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


Expenditure of supplemental and concentration grant funds

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


Accountability state priorities

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


Accountability state priorities cont

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


Local control and accountability plans

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


Budget aligned to lcap

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


Updated lcaps

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


Evaluation and technical assistance

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


Oversight and intervention

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


Oversight and intervention1

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


Oversight and intervention2

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


Lcap timeline

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


Other major budget issues

Other Major Budget Issues

www.capitoladvisors.org

40


Funding for common core

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


Proposition 39

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


Proposition 391

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


Proposition 392

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


Proposition 393

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


Child nutrition

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


Special education

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


Child care and preschool

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


School facilities changes

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


School facilities program

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


Mandates

Mandates

www.capitoladvisors.org

County Office of Education

  • $28 per K-8 ADA

  • $56 per 9-12 ADA

  • $1 per countywide ADA

    School District

  • $28 per K-8 ADA

  • $56 per 9-12 ADA

    Charter School

  • $14 per K-8 ADA

  • $42 per 9-12 ADA

  • Block Grant increased by $50 million for inclusion of Graduation Requirements

  • No funds for filed claim reimbursement

  • Amends Behavioral Intervention Program to essentially define away the state mandate – CSBA remains concerned

  • Block Grant election - August 30

  • 51


    Governor s vetoes

    Governor’s Vetoes

    www.capitoladvisors.org

    • The Governor vetoed funding for

      • federal funds support ($225,000) by eliminating the requirement to develop a child care preschool plan for a universal preschool program

      • federal funds support ($225,000) by eliminating the requirement to translate parent notifications and templates

      • Prop 98 support ($30,000,000) of Special Education by deleting the proposed equalization of special education funding

      • Prop 98 support ($5,000,000) of State Preschool by deleting some of the proposed increase in preschool slots

    • The Governor sustained funding, but provided comments on the future of the California Collaborative for Educational Excellence, Specialized Secondary Programs, and the Agricultural Career Technical Education Incentive Program

    52


    Other issues

    2014 Policy and Budget

    Other Issues

    www.capitoladvisors.org

    53


    School facilities bond in 2014

    School Facilities Bond in 2014?

    www.capitoladvisors.org

    • Governor doesn’t support status quo, wants simplification and more local control

    • Potential conflict with 2014 water bond

    • Potential bond language being discussed

    • 2014 state bond probably $5-7 billion

    • Supported by SPI and education community

    54


    Parcel taxes

    Parcel Taxes

    www.capitoladvisors.org

    55

    Expect discussions in early 2014

    Dems control 2/3 needed to place Constitutional Amendment on ballot

    Lowering vote threshold from 2/3 to 55%

    Polling trending down

    Assembly working on alternative to allow school boards to levy different types of taxes


    Cabs legislation

    CABs Legislation

    www.capitoladvisors.org

    AB 182 (Buchanan)moving through Senate

    • Limiting CABs to Ed Code and financings to 25 years with max 8% interest rate

    • LEAs may use Gov. Code for standard bonds with financing at 30 years (down from 40)

    • Requiring a 4 to 1 repayment

    • All CABs must be callable

    • Requires two public presentations, financial analysis of the CAB, rationale for it, comparison with standard bond, and info about the underwriter

    56


    Local bond campaign reform

    Local Bond Campaign Reform

    www.capitoladvisors.org

    AB 621(Wagner) prohibits an LEA from entering into a financial advisory, legal advisory, underwriting, or other similar relationship with an individual or firm if that individual or firm provided, or will provide, bond campaign services to the bond campaign

    Would take effect January 1, 2014

    Bill pending in the Senate

    57


    Cost pressures

    Cost Pressures

    www.capitoladvisors.org

    Common Core Standards – Professional Development, Instructional Materials and Technology

    CalPERS Contributions

    CalSTRS Contributions

    Affordable Care Act

    Return to 180 Day

    Return to 24:1

    Employee Salaries and Benefits

    Energy Costs

    58


    Collective bargaining

    Collective Bargaining

    www.capitoladvisors.org

    Expenditure, program and accountability rules are yet to be developed, so do not go beyond 2013-14

    Maintenance of Effort requirements

    Make management decisions within new accountability framework

    Consider 2014-15 and following year obligations before finalizing agreements

    59


    The budget act and trailer bills

    The Budget Act and Trailer Bills

    www.capitoladvisors.org

    AB 110 - Budget Bill - The 2013‐14 State Budget

    SB 73 - Proposition 39 implementation- Implements the California Clean Energy Jobs Act (Proposition 39) by allocating energy efficiency funds, and providing grants to K‐12 and Community Colleges

    AB 86 - K‐12 Education – Main education trailer bill; includes retiring deferrals, $1.25 billion for Common Core, and $250 million for CTE grants

    AB 97 - Local Control Funding Formula - Implements the LCFF; includes LCFF grants, LCFF transition, ERT, LCFF accountability, and MOEs for ROCPs and adult education

    SB 91 - Local Control Funding Formula – Enacts amendments to AB 97

    60


    Thank you

    Thank You

    www.capitoladvisors.org

    We will send you this PowerPoint

    Please feel free to use the content as you wish

    Questions? Please contact Kristie Rucker at [email protected], or (916) 557-9745

    61


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