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Mr. Mack Keep'N You on Track

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  1. Mr. Mack Keep'N You on Track Every Child Counts Symposium January 17, 2013

  2. PowerPoint available at: www.acsa.org/advocacy

  3. Budget Themes & Thoughts Basking in Victory Erasing the Deficit Wall of Debt – Work in Progress Counting on Economic Growth Investing in Education – Over Time Centerpiece of Budget is “Local Control Funding Formula (LCFF)” 3

  4. Political Backdrop • Decisive win on Prop 30 = political capital for Brown • Getting voters to do the impossible – raise taxes • The low budget, late game strategy wins again • What Prop 30 really does vs. perception • The changing demographic of a major blue state • Rise of the Hispanic voters • Voters between 18 and 29 • Democrat supermajority • Potential to equalize power between Governor and Legislature • Budget & taxes • Urgency statutes • Veto override • Influence of organized labor • Unprecedented number of new lawmakers 877.954.4357 • www.sia-us.com 4

  5. Governor’s Budget • Governor declares that deficit is erased • Second budget in a decade without a projected deficit • Increases GF spending by 5 percent - going from $93 billion in 2012-13 to $97 billion in 2013-14 • Increases funding for K-12 schools & higher education • Expands Medi-Cal under state implementation of federal health care reform • Pays down $4.2 billion in budget-related borrowing • Establishes a $1 billion reserve 877.954.4357 • www.sia-us.com 5

  6. Governor’s Budget • Erases the LAO’s Projected deficit of $1.9 billion • $1 billion by repaying less of borrowing from special funds ($4.2 billion instead of $5.2 billion) • $300 million from a better economic forecast • Prop 39 Revenue accounting • Increased estimates of property taxes which offset general fund obligations • Extending health care-related taxes and fees • Use of State Highway Account Revenue to pay debt service 877.954.4357 • www.sia-us.com 6

  7. Voters to the Rescue - Ballot Measures Budget includes almost $6 billion for 2013-14 in new revenues from voter approval of Prop 30 and Prop 39 • Prop 30: • New tax rates on highest-income earners – married taxpayers at $500,000 or above beginning in 2012 through 2018 • Increases state’s sales tax rate by one-quarter cent beginning this year through 2016 • Prop 39: • Requires multistate corporations to use the “single sales factor” method of apportionment in calculating their taxable income • The measure ends an advantage signed into law under a previous budget deal allowing firms choosing the more favorable of two methods for determining their tax 877.954.4357 • www.sia-us.com 7

  8. Proposition 98 Prop 98 spending fell from $56.6 to $47.3 billion between 2007-08 and 2011-12 – A decline of 16.4%, not including manipulations Most devastating cuts to public education in memory 2013-14 Prop 98 funding is proposed to be $56.2 billion or $2.7 billion higher than the revised 2012-13 guarantee Increased GF revenues drive the guarantee upward - Prop 30 and Prop 39 have a positive impact on the guarantee Governor dedicates $400.5 million of Prop 39 to meeting the guarantee For 2012-13, the Administration estimates that Prop 98 is funded beyond the guarantee and thus credits those dollars toward future CTA v. Schwarzenegger settlement obligations 877.954.4357 • www.sia-us.com 8

  9. School Finance Reform • Governor’s criticisms of current system • State driven • Overly complex • Too much bureaucracy and administrative tasks • Inequitable • Not reflective of student needs • Goals for new funding system • Increase local control • Reduce state bureaucracy • Reduce inequities • Reflect student needs • Transparency 877.954.4357 • www.sia-us.com 9

  10. Local Control Funding Formula (LCFF) Basic Grant Supplemental (weighted) Grant Concentration (weighted) Grant Augmentations to the Base Grant Add-ons to formula Separately funded programs Hold-harmless and transition 877.954.4357 • www.sia-us.com 10

  11. Base Grant • Base Grant per ADA by grade span (no more revenue limit) K-3 = $6,342 7-8 = $6,628 4-6 = $6,437 9-12 = $7,680 • When LCFF fully implemented (estimated in 7 years), Base Grant should equal the undeficited statewide average revenue limit for the current year ($6,816) 877.954.4357 • www.sia-us.com 11

  12. Supplemental / Concentration Grants • Supplemental Grant • Equal to 35% of Base Grant for each English Learner (EL), Economically Disadvantaged (NSLP eligible), and/or foster student – unduplicated count • Concentration Grant • Equal to 35% of Base Grant For Each EL, Economically Disadvantaged, and foster student above 50% concentration threshold • EL students eligible for Supplemental and Concentration Grants for no more than 5 years 877.954.4357 • www.sia-us.com 12

  13. Augmentations and Add-ons • Augmentations to the Base Grant • K-3 Class Size Reduction funding augments the K-3 Grade Span Base Grant - 11.23% (approx. $712) • CTE funding augments the 9-12 Grade Span Base Grant - 2.8% (approx. $215) • Add-ons • Home-To-School Transportation and Targeted Instructional Improvement Grant (TIIG) funding permanently added to the entitlement for districts currently receiving those funds 877.954.4357 • www.sia-us.com 13

  14. LCFF Funding Entitlement Target TIIG Add-on Trans. Add-on CSR Augmentation CTE Augmentation Concentration Grant Supplemental Grant Base Grant 877.954.4357 • www.sia-us.com 14

  15. LCFF - Transition • An “Entitlement Target” will be calculated for each district • Equal to Base Grant + Supplemental Grant + Concentration Grant + Augmentations + Add-Ons • Entitlement Target adjusted each year for COLA, demographic changes, grade span changes • 2013-14: each LEA receives at least a hold-harmless amount equal to 2012-13 funding for revenue limits + included categoricals • Each FY thereafter: each LEA receives some amount of growth, added to the hold-harmless amount, that moves the LEA toward its Entitlement Target • Administration estimates 7 years to reach Entitlement Targets • 50% of Prop. 98 growth used to move LEAs toward Entitlement Targets (other 50% buys down deferrals) • Growth funding proportionally moves all LEAs toward the Entitlement Targets 15 877.954.4357 • www.sia-us.com

  16. LCFF Funding Hold Harmless Funding Entitlement Target TIIG Add-on Trans. Add-on 2012-13 TIIG CSR Augmentation CTE Augmentation 2012-13 Trans. Concentration Grant 2012-13 “Included” Categoricals Supplemental Grant Base Grant 2012-13 Revenue Limit 877.954.4357 • www.sia-us.com 16

  17. Separately Funded Programs • Federally funded programs • QEIA (for next two fiscal years only) • Special Education • After School Education and Safety • Child Nutrition • Preschool • Various programs not funded in all districts • e.g., High-Speed Internet Access, Indian Education Centers, FCMAT 877.954.4357 • www.sia-us.com 17

  18. Expenditure of LCFF Funds • Base Grant, CTE Augmentation to 9-12 Base Grant, and Add-ons are unrestricted and completely discretionary • Supplemental and Concentration Grants are “Available for any purpose that benefits the students generating the funding”, but funding need not strictly “follow the student” • Must hold average pupil-teacher ratio in K-3 to 24:1 (or locally bargained ratio) or risk loss of K-3 CSR Augmentation • 24:1 implemented in stages during transition 877.954.4357 • www.sia-us.com 18

  19. LCFF – County Offices of Education • County Offices of Education (COE) • New two-part formula for Base Grant • Per ADA funding for county community and court schools • Discretionary general fund based on total ADA within the county • COEs eligible for the Supplemental and Concentration Grants for EL and economically disadvantaged pupils • Same transition and hold-harmless provisions apply to COEs 877.954.4357 • www.sia-us.com 19

  20. New Accountability System • Governor proposes to redefine fiscal accountability for LEAs and charter schools • Eliminates most current programmatic and compliance requirements • Makes LEAs and governing boards accountable to the community with less emphasis on the State • Requires LEAs to create the District Plan for Student Achievement – to be concurrently adopted with the annual budget 877.954.4357 • www.sia-us.com 20

  21. New Accountability System • The District Plan must address at least the following: • Basic conditions for student achievement (qualified teachers, sufficient materials, school facilities - Williams type elements) • Programs or instruction for low-income and English language learners • Implementation of Common Core Standards (progress toward college and career readiness as measured by the API, graduation rates, completion of college-prep and CTE courses) • DOF suggests that no State agency would review the District Plans • Instead the K-12 Audit Guide would be revised to require independent auditors to verify the Plans contain all mandatory elements and related expenditures 877.954.4357 • www.sia-us.com 21

  22. Special Education $3.6 million for Special Ed growth 1.65% COLA Federal and state funding streams separated Several Special Education add-on programs added into the AB 602 base calculation or consolidated 877.954.4357 • www.sia-us.com 22

  23. AB 602 Funding • Consolidates funding for several special education program add‑ons into the base AB 602 formula • Budget mentions collapsing 15 funding streams • Only 9 have been identified so far • Approximately $94 million • Two appropriations ($88.7 million and $2.7 million) for regionalized services and program specialist services • $2.5 million for personnel development

  24. AB 602 Funding • The funding for these programs will be collapsed to reduce the number of add-ons • The two Workability funding streams • $13.2 million in low-incidence disability for specialized books, materials, and equipment with $1.7 million for specialized services • $1.1 million and $200k both used for personnel development

  25. Mental Health – AB 3632 • Maintains funding of shift of AB 3632 to education • Preserved - not included in program restructuring • $426 million to SELPAs • $69 million from federal special education funds • Increase of $40 million to backfill one-time support from First 5 Commission in 2012 budget

  26. Adult Ed Eliminates existing Adult Ed structure Folds $558.9 million in K-12 Adult Ed funding into the LCFF Shifts $15.7 million in K-12 Apprenticeship funding to Cal. Comm. Colleges (CCC) Provides an additional $300 million in Prop 98 funds to CCC for Adult Ed New $315.7 million Adult Ed Block Grant administered by CCC 877.954.4357 • www.sia-us.com 26

  27. Adult Ed • CCC Adult Ed Block Grant funding allocated based upon number of adults served • Only for core program (Elem and secondary ed, CTE, ESL, citizenship) • CCC encouraged to “leverage the capacity and expertise of currently available at K-12 district adult schools.” • K-12 districts may continue to operate Adult Ed programs 877.954.4357 • www.sia-us.com 27

  28. State Mandates • Increase the education mandate block grant by $100 million • Intends to add both the Behavior Intervention Plan mandate and the High School Science Graduation mandate into the block grant • Folds in ongoing BIP and Grad Requirements • MBG will not cover prior-year claims for both • Consistent with the motivation for establishing the MBG, inclusion of these added mandates creates savings to the State.

  29. Mandate Funding • 2012-13 claims will be the first year impacted by MBG – Decision already made • September 30, 2013 districts again have an option for claiming for 2013-14: continue filing or choose block grant • 77 percent of school districts and charter schools applied for block grant • Block grant funding proposed to be $300 million for K-14 mandates, or $47 per student for K-12 districts and COEs - $24 per pupil for charter schools 877.954.4357 • www.sia-us.com 29

  30. Mandate Funding • Two mandates approved for claims to be filed in 2013 • Charter Schools IV – Petition review for districts and COEs • Public Contracts – Requirements imposed on districts • Five pending mandates approved but pending Ps&Gs • Behavioral Intervention Plans • California Public Records Act • Uniform Complaint Procedures • Parental Involvement Programs • Williams Case Implementation I, II, III • Eight mandate test claims pending • For prior year claims on Graduation Requirements Mandate and Behavioral Intervention, districts need to file GR and BIP in Feb 2014 or lose that prior year funding • First Time Filing for BIP goes back to 1994/95 877.954.4357 • www.sia-us.com 30

  31. Technology-Based Learning • Intended to allow schools to more easily offer asynchronous online courses to students • Would create a “streamlined and outcome-focused independent study agreement” • Proposal to rewrite Independent Study law to fundamentally change how ADA is generated for all students enrolled in Independent Study 877.954.4357 • www.sia-us.com 31

  32. Technology-Based Learning • How it would work: • Would eliminate all current rules for Independent Study (including pupil/teacher ratios) • Parent, teacher and student develop new independent study agreement that outlines specific learning objectives • Teacher then determines if student met learning objectives • If yes = full ADA • If not = unclear (either no ADA or partial?) • Would not use testing data – would be teacher’s judgment • No bill language – details to emerge 877.954.4357 • www.sia-us.com 32

  33. Prop 39 – Energy Efficiency • Passed by voters in Nov 2012 • Bond for energy efficiency for K-12, higher ed, and local governments • Generates $2.5 billion over 5 years • Gov. proposes to use $450 million for K-14 with no funds going to higher ed or local governments • $550 million in each of next 4 years • CDE to develop guidelines for K-12 projects 877.954.4357 • www.sia-us.com 33

  34. Deferrals Governor stays true to commitment to eliminate deferrals over time. $2.2 billion buy out of inter-year deferrals stays in place with passage of Prop 30 Proposes to buy out an additional $1.8 billion in existing inter-year deferrals $5.6 billion in inter-year deferrals would remain, down from over $10 billion $3.5 billion in intra-year deferrals remain, in addition to 2012-13 “Cash Management Plan” 877.954.4357 • www.sia-us.com 34

  35. Key Education Components • K-12 Deferrals — $1.8 billion Prop 98 GF to reduce inter-year budgetary deferrals • New School Funding Formula — Additional $1.6 billion in Prop 98 GF for school districts, COEs and charter schools in 2013-14, an increase of 4.5 percent • New County Office of Education Funding Formula — Additional $28.2 million Prop 98 GF to support a new funding formula for COEs in 2013-14 • Energy Efficiency Investments — $400.5 million Prop 98 GF to support energy efficiency projects per Prop 39 • Charter Schools — $48.5 million Prop 98 GF to support projected charter school ADA growth  • Special Education — $3.6 million Prop 98 GF for Special Education ADA growth • K-12 Mandates Funding— Additional $100 million to the K-12 portion of the mandate block grant to support costs associated with the Graduation Requirements and Behavioral Intervention Plans mandates 877.954.4357 • www.sia-us.com 35

  36. Key Education Components • COLA – Select Programs— $62.8 million to support 1.65% COLA for select categorical programs, including: Special Education, Child Nutrition, American Indian Education Centers, and the American Indian Early Childhood Education Program • Emergency Repair Program — $9.7 million one-time Prop 98 GF Reversion Account for the Emergency Repair Program  • Average Daily Attendance (ADA) — An adjusted increase of $304.4 million in 2012-13 and an increase of $2.8 million for 2013-14 • Child Nutrition Program—$77 million in federal local assistance funds to reflect growth of nutrition programs at schools and other participating agencies • Prop 98 Adjustment – Credits over-appropriation of $162.8 million in the 2012-13 Prop 98 guarantee to retire future funding obligations of the CTA v. Schwarzenegger settlement 877.954.4357 • www.sia-us.com 36

  37. Federal Issues - Sequestration • Super committee failure to agree on $1.2 trillion in deficit reductions over 10 years triggered across-the-board spending cuts - 7.8% ($3.5 billion) Jan 1, 2013 • American Taxpayer Relief Act (fiscal cliff deal) – Jan 2, 2013 • Delayed automatic cuts to March 1, 2013 • Reduced cuts by $24 billion total • Education cuts reduced to 5.9% (approximately $2.9 billion) • Three upcoming battles: • Mid-February, when we reach the debt ceiling • March 1, the new effective date of sequestration • March 27, when the current Continuing Resolution expires 877.954.4357 • www.sia-us.com 37

  38. Federal Issues • ESEA Reauthorization • House and Senate continue to be deadlocked • Action towards reauthorization will be delayed until after Congress deals with Sequestration, the Debt Ceiling, and Appropriations – late 2013 or 2014 at the earliest • NCLB Waiver • SBE and the SPI pursued a state-defined waiver of the ESEA mandate to identify schools/LEAs in Program Improvement and of the specific sanctions imposed by ESEA on those identified • This waiver was denied in early January 2013 • SBE is considering this issue 877.954.4357 • www.sia-us.com 38

  39. Common Core…and more • Common Core implementation/relationship to LCFF • Next Generation Science Standards • 2014 adoption of math materials with ELD to follow • Reauthorization of assessment system • CAHSEE – to be or not to be? • Technology capacity • API revision • SARC reform 877.954.4357 • www.sia-us.com 39

  40. It’s a Proposed Budget Huge policy and fiscal decisions that will indeed be modified As economy shifts, proposals are impacted The Legislature gets a say The May Revision – opportunity to adjust to political and economic factors 877.954.4357 • www.sia-us.com 40

  41. Thank You! Adonai Mack Legislative Advocate amack@acsa.org (916) 444-3216