A-1 - Ventura County Office of Education

Report
Governor’s Proposals for the
2014-15 State Budget and K-12 Education
Presented by
School Services of California, Inc. Staff
Introduction
A-1
Themes for the 2014 Budget
© 2014 School Services of California, Inc.
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)
A-2
Fiscal Prudence and Policy Implications
© 2014 School Services of California, Inc.
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
A-3
Economics Still Rule
© 2014 School Services of California, Inc.
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
A-4
Education Is this Governor’s Top Priority
© 2014 School Services of California, Inc.
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!
7
A-5
Complete Mind Shift of Governance and Planning
© 2014 School Services of California, Inc.
Empowerment Model
Community Involvement
Policy
Funding
Local Board Sets Policy
State Provides Funding
Local Board Empowers Schools
Program Rules
Results Reported to Public
Local Board Implementation
Board
Revises Policy
School Site Performance
Focus on
Students
Audits and Compliance Reviews
Compliance Model
Student Achievement
A-6
Education Receives More But Our Needs Are High
© 2014 School Services of California, Inc.
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.
Overview of the State Budget
and the State Economy
B-1
U.S. Economic Outlook
© 2014 School Services of California, Inc.
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
U.S. Economic Outlook
B-2
© 2014 School Services of California, Inc.
U.S. Gross Domestic Product
4.1%
2.5%
1.1%
0.1%
2.8%
1.2%
3.7%
4.1%
-8.9%
-8.0%
-10.0%
1.3%
-6.7%
-3.7%
-2.0%
-6.0%
2.5%
0.1%
-0.3%
0.0%
-4.0%
2.4%
2.2%
2.0%
2.3%
4.0%
1.4%
4.0%
2.6%
(Percent Change)
6.0%
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2008
2009
2010
2011
2012
2013
B-3
Stock Market Has Recovered
© 2014 School Services of California, Inc.
Dow Jones Industrial Average
(Dow Jones Global Indexes: INDU)
Source: CNN Money
B-4
Sluggish Growth – Comparing Recent Recoveries
© 2014 School Services of California, Inc.
How the expansion that began in 2009 compares with the first four years of
other recoveries
Change in GDP*
1982
23.1%
Average
18.9%
2001
14.5%
1991
14.2%
2009
10.0%
25%
20%
15%
10%
5%
0%
1
2
Years into the Recovery
Note: Average is for recoveries after WWII, excluding the one that started in 2009
*Adjusted for inflation and the seasons
Source: Commerce Department
The Wall Street Journal, December 18, 2013
3
4
B-5
Job Shortfall
© 2014 School Services of California, Inc.
Recession has left a job shortfall of nearly 8 million
Payroll employment and the number of jobs needed to keep up with the growth in the potential labor force, 2000–2013
145,000
143,000
141,000
6.7 million
Jobs not gained
Number of jobs (thousands)
139,000
7.9 million
Job shortfall
1.2 million
Jobs lost
137,000
135,000
133,000
131,000
129,000
127,000
125,000
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-13
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
B-6
The California Economy
© 2014 School Services of California, Inc.
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
California’s Unemployment Rate
B-7
© 2014 School Services of California, Inc.
Unemployment Rate
14.0%
12.3% 12.4% 12.1%
11.9%
11.7%
12.0%
11.0%
10.6%
9.7%
10.0%
9.8%
8.7% 8.9% 8.7%
7.3%
8.0%
5.9%
6.0%
4.0%
2.0%
0.0%
Jan
July
2008
Jan
July
2009
Jan
July
2010
Source: Employment Development Department, 2014
Jan
July
2011
Jan
July
2012
Jan
July
Aug
2013
Oct
B-8
California’s Unemployment Rate vs. Other States
© 2014 School Services of California, Inc.
Highest State Unemployment Rates
(November 2013)
9.0%
9.0%
9.0%
8.8%
8.7%
8.5%
8.0%
National
Average
6.7%
7.0%
6.0%
Nevada
Rhode Island
Source: Bureau of Labor Statistics, November 2013
Michigan
Illinois
California
B-9
California – Employment Forecast
© 2014 School Services of California, Inc.
Employment Forecast
(Percent Change)
3.0%
2.7%
2.5%
2.1%
2.0%
2.2%
2.0%
1.7% 1.7%
1.8%
2013
2014
2.0%
2.2%
LAO, November 2013
UCLA, December 2013
2014-15 Governor's Budget
1.5%
1.0%
0.5%
0.0%
2015
B-10
California – Personal Income Forecast
© 2014 School Services of California, Inc.
Personal Income
(Percent Change)
6.0%
5.4%
5.5% 5.7%
5.3%
5.0%
5.0%
4.6%
4.0%
3.0%
2.1% 2.1%
LAO, November 2013
UCLA, December 2013
2014-15 Governor's Budget
2.5%
2.0%
1.0%
0.0%
2013
2014
2015
B-11
Inflation Forecast
© 2014 School Services of California, Inc.
Inflation Forecast
(Percent Change)
2.5%
2.5%
2.0%
2.0%
1.5%
1.8%
1.5% 1.5%
1.6%
1.6%
1.9%
1.7%
LAO, November 2013
UCLA, December 2013
2014-15 Governor's Budget
1.0%
0.5%
0.0%
2013
2014
2015
B-12
Forecast State Budget Surpluses
© 2014 School Services of California, Inc.
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
B-13
Adjusting State Expenditures for COLAs
© 2014 School Services of California, Inc.
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
B-14
State Budget Surplus Assuming COLAs
© 2014 School Services of California, Inc.
Forecast of Operating Surplus 2014-15 Through 2019-20
(In Billions)
$9.7
$10.0
$9.0
$9.8
$9.6
$8.3
$8.0
Limited COLAs
$7.0
$5.6
$6.0
$4.9
$5.0
$4.0
$3.0
$4.9
$3.5
$3.4
$3.2
COLAs for all
programs
$2.3
$2.1
$2.0
$1.0
$2014-15
2015-16
2016-17
2017-18
2018-19
Source: LAO, November 2013; School Services of California, Inc., January 2014
2019-20
B-15
Small Recovery Begins After Decade of Deficits
© 2014 School Services of California, Inc.
(Dollars in Billions)
$10.0
$0.0
-$10.0
-$20.0
-$30.0
-$40.0
-$50.0
Source: Governor’s Budget Summary, page 5
© 2014 School Services of California, Inc.
B-16
2014-15 Governor’s Budget
General Fund Budget Summary (In Millions)
© 2013 School Services of California, Inc.
2013-14
Prior-Year Balance
2014-15
$2,528
$4,212
Revenues and Transfers
$100,147
$104,503
Total Resources
$102,675
$108,715
$98,463
$106,793
$4,212
$1,922
$955
$955
$3,257
$967
$0
$1,591
$3,257
$2,558
Total Expenditures
Fund Balance
Budget Reserve:
Reserve for Encumbrance
Reserve for Economic
Uncertainties
Budget Stabilization Account
Total Available Reserve
Source: 2014-15 Governor’s Budget
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
B-17
What’s Proposed for the Rest of the Budget?
© 2014 School Services of California, Inc.
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
B-18
What’s Not in the Budget?
© 2014 School Services of California, Inc.
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
B-19
California’s Investment in Education
© 2014 School Services of California, Inc.
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?
California Invests in Education
B-20
© 2014 School Services of California, Inc.
Budget Continues to Invest in Education
(Proposition 98 Dollars in Billions)
$75.0
$69.6
$70.0
$67.0
$64.5
$65.0
$60.0
$61.6
$58.3
$56.6
$56.8
$55.0
$50.0
$47.2
$45.0
$40.0
2007-08
2011-12
2012-13
Source: Governor’s Budget Summary, page 5
2013-14
2014-15
2015-16
Proposed
Estimated
2016-17
2017-18
B-21
Per-ADA Funding Volatility
© 2014 School Services of California, Inc.
Per-Average Daily Attendance Revenue Change
15%
10%
5%
0%
-5%
-10%
-15%
B-22
Money Matters in Student Performance
© 2014 School Services of California, Inc.
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
Source: Education Week Quality Counts 2014 – January 9, 2014
B-23
Money Matters in Student Performance
© 2014 School Services of California, Inc.
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:
Guidance Counselors
Librarians
2009-10
2010-11
810:1
1,016:1
5,489:1
8,309:1
B-24
Current Expense of Education Per ADA
Ranking of the States – 2011-12
© 2014 School Services of California, Inc.
Ranking
State
(Adjusted for Regional Cost Differences)
Percentage of National
Average
Current Expense Per Student
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%
California
$8,341
70%
49
Source: Education Week Quality Counts 2014 – January 9, 2014
1United States Average includes the District of Columbia
B-25
National Rankings: Average Teacher Salaries and
Student/Teacher Ratio – 2011-12
© 2014 School Services of California, Inc.
Ranking
State
Average
Salaries of
Public School
Teachers
Ranking
State
Students Enrolled
Per Teacher in
Public K-12 Schools
1
New York
$73,398
1
California
25.6
2
Massachusetts
$71,721
2
Utah
21.9
3
Connecticut
$69,465
3
Oregon
20.2
4
District of Columbia
$68,720
4
Washington
19.7
5
California
$68,531
5
Michigan
18.4
6
New Jersey
$67,078
6 (tie)
Idaho
18.2
7
Maryland
$63,634
6 (tie)
Nevada
18.2
8
Alaska
$62,425
8
Arizona
18.0
9
Rhode Island
$62,186
9
Colorado
17.8
10
Pennsylvania
$61,934
10
Ohio
17.3
United States
$55,418
United States
16.0
Source: NEA Rankings and Estimates 2012
B-26
California Lags the Nation
© 2014 School Services of California, Inc.
California’s staffing ratios continue to grow, causing increased pressure on
staff and students
California’s Schools Lag Behind Other States on a Number of Measures
California
Rank
California
Rest
of U.S.
49
$8,341
$11,364
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
K-12 Spending Per Student (2011-12)*
Staffing
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
© 2014 School Services of California, Inc.
B-27
Education is the Great Homogenizer
© 2014 School Services of California, Inc.
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
B-28
Education, Unemployment, and Wages
© 2014 School Services of California, Inc.
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
Doctoral degree
2.5%
Professional degree
2.1%
Master's degree
Bachelor's degree
Associate's degree
Some college (no degree)
High school diploma
$1,624
$1,735
$1,300
3.5%
$1,066
4.5%
$785
6.2%
$727
7.7%
$652
8.3%
Less than high school
All
Median Weekly Earnings, 2012
12.4%
6.8%
$471
$815
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 Board
The Sacramento Bee, December 22, 2013
The Education Budget
and Challenges Ahead
C-1
Proposition 98: How Much in 2014-15?
© 2014 School Services of California, Inc.
$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
C-2
Proposition 98 Revenues
© 2014 School Services of California, Inc.
Proposition 98 (In Billions)
Enacted Budget
2014-15 Governor's Budget
$61.6
$58.3
$56.5
$56.6
$56.8
$55.3
$51.7
$49.7
$49.2
$47.2
'07-08
'08-09
'09-10
'10-11
'11-12
'12-13
'13-14
'14-15
C-3
State Revenue Growth vs. Proposition 98 Growth
© 2014 School Services of California, Inc.
Proposition 98 growth or decline closely tracks changes in state revenue
As the state goes, so goes education funding
Annual Percentage Change:
State Revenues Compared With Proposition 98
20%
10%
0%
-10%
-20%
'08-09
'09-10
'10-11
'11-12
State Revenue
'12-13
'13-14
Proposition 98
'14-15
C-4
Proposition 98 Revenues and Spending
© 2014 School Services of California, Inc.
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
Prop. 98 Revenues
K-14 Spending
Community Colleges
Special Education
Deferrals
QEIA/ASES*
Child Nutrition
Other Programs
LCFF
Constitutional Guarantee
* Quality Education Investment Act/After School Education and Safety Program
Statutory Programs
C-5
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
C-6
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
C-7
K-12 Education and Community Colleges
© 2014 School Services of California, Inc.
CCCs Proposition 98 percentage share mirrors statutory requirement
(Amount in Billions)
K-12
$60
89.07%
$50
$40
$30
CCCs
$20
$10
10.93%
$0
Proposition 98
C-8
Amendments to the “Rainy Day Fund”
© 2014 School Services of California, Inc.
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 58
The amendments are intended to address revenue volatility stemming from the
capital gains tax
The specific provisions include:
Establishing a Proposition 98 reserve in addition to the existing Rainy Day
Fund
Requiring contributions to these reserves when capital gains revenues
exceed 6.5% of General Fund tax revenues
Establishing 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 Fund
Limiting withdrawals to 50% of the balance in the first year of a recession
C-9
Proposition 98 Reserve
© 2014 School Services of California, Inc.
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
C-10
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
C-11
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
C-12
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
2013-14 Base Grant
per ADA
COLA @ 0.86%
Base grants – 2014-15
K-3
4-6
7-8
9-12
$6,952
$7,056
$7,266
$8,419
$60
$61
$62
$72
$7,012
$7,117
$7,328
$8,491
C-13
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
$729
-
-
$221
$7,741
$7,117
$7,328
$8,712
Adjustment amount
Adjusted grant per ADA
C-14
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
C-15
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
$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
Adjusted grant per ADA
C-16
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
$22,160,000
$15,075,650
Total – by grade span
$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)
© 2014 School Services of California, Inc.
C-17
Proportionality and Targeted Funds
© 2014 School Services of California, Inc.
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
C-18
State Board of Education Regulations
© 2014 School Services of California, Inc.
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
An Example of Gap Funding Per ADA
C-19
61
© 2014 School Services of California, Inc.
$9,000
Dollars per ADA
$1,100
$7,000
$300 EIA
$224 Supplementation
and Concentration Grants
$337 Base
$6,700
$7,561
$561
$3,787
Total Gap
$7,900
$300 EIA
Economic Impact Aid
$2,000 Total gap
x 28.05% $4.5 Billion
$561 14-15 Inc.
$1,100 Supp/Conc
-$300 EIA
$800 Net gap
$6,700
LCFF
Base
2013-14
$9,000 Target
- $7,000 2013-14
$2,000 Total gap
$800 Net gap
x 28.05% Closure
$224 Supp/Conc
share
2014-15
Funding
LCFF Increase
2014-15
Target
Supplemental and
Concentration Grants
2014-15
Target Base
C-20
LCFF – From 2013-14 to 2014-15
© 2014 School Services of California, Inc.
2013-14 base adjustments for 2014-15
Remember, the share of your base that came from 2012-13 categorical
funding is not adjusted for changes in ADA
The 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 $524
Calculate 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 $7,037
Minimum proportionality percentage of funding for eligible pupils as a
percentage of base funding equals 7.4% (= $524 ÷ 7,037)
C-21
Use of Supplemental/Concentration Grants
© 2014 School Services of California, Inc.
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 students
If 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 services
Describes 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 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
C-22
Use of Supplemental/Concentration Grants
© 2014 School Services of California, Inc.
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
C-23
Targeted Funds – Conclusion
© 2014 School Services of California, Inc.
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
C-24
What Are the Distributional Impacts of the LCFF?
© 2014 School Services of California, Inc.
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
C-25
LCFF Funding by District Size
© 2014 School Services of California, Inc.
Average Percent Increase per ADA in 2013-14
6.0%
5.1%
5.0%
5.4%
5.4%
4.0%
4.0%
3.0%
2.0%
1.7%
1.565%
(COLA)
1.0%
0.0%
1st Quintile
3-200
2nd Quintile
200-770
3rd Quintile
770-2,800
District Size (ADA)
4th Quintile
2,800-8,400
5th Quintile
8,400-550,000
C-26
LCFF Funding by District Type
© 2014 School Services of California, Inc.
Average Percent Increase by District Type in 2013-14
5.00%
4.00%
4.75%
4.11%
4.14%
3.00%
1.565%
(COLA)
2.00%
1.00%
0.00%
Elementary
High School
Unified
C-27
Range of LCFF Increases
© 2014 School Services of California, Inc.
District Average Percent Increase by Quintile in 2013-14
8.0%
7.4%
7.0%
6.0%
5.5%
5.0%
4.4%
4.0%
3.5%
3.0%
1.565%
(COLA)
2.0%
1.0%
0.0%
0.8%
1st Quintile
Lowest Increase
2nd Quintile
3rd Quintile
4th Quintile
5th Quintile
Highest Increase
C-28
LCFF Funding and High Needs Students
© 2014 School Services of California, Inc.
Average Percent Increase by Percent Eligible
for Supplemental/Concentration Grants
7.0%
6.4%
6.0%
4.9%
5.0%
4.0%
3.0%
3.0%
3.4%
3.8%
1.565%
(COLA)
2.0%
1.0%
0.0%
1st Quintile
0%-29%
2nd Quintile
29%-50%
3rd Quintile
50%-66%
4th Quintile
66%-82%
5th Quintile
82%-100%
C-29
Policy Conclusions for LCFF
© 2014 School Services of California, Inc.
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
C-30
Policy Conclusions for LCFF
© 2014 School Services of California, Inc.
Small districts experience little gain under LCFF, most likely because of
prior-year funding received under the necessary small schools adjustment
and 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
C-31
Apportionment Deferrals
© 2014 School Services of California, Inc.
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
C-32
LCFF “Categorical Programs” and the COLA
© 2014 School Services of California, Inc.
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
C-33
COLA for Categorical Programs Outside of the LCFF
© 2014 School Services of California, Inc.
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
C-34
Greater Certainty With a Continuous Appropriation
© 2014 School Services of California, Inc.
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
C-35
County Office of Education
© 2014 School Services of California, Inc.
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
C-36
Adult Education
© 2014 School Services of California, Inc.
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.”
C-37
Special Education
© 2014 School Services of California, Inc.
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 ADA
No 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 development
Education delivery models
Assessment and accountability
Early learning
Fiscal issues
C-38
Charter Schools
© 2014 School Services of California, Inc.
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
C-39
Child Care
© 2014 School Services of California, Inc.
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 increased
cost per case of eligible beneficiaries and a slight decrease in caseload
Base budget: $364.1 million
C-40
Child Care
© 2014 School Services of California, Inc.
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
C-41
Independent Study Proposal
© 2014 School Services of California, Inc.
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 quality
Equivalent total educational minutes
Maintenance of classroom-based equivalent pupil-to-teacher ratios unless
an alternative ratio is collectively bargained
Holding at least one meeting per week between the student and teacher to
verify that the student is working toward course completion
Not earning more than one unit of ADA for participating students
C-42
Common Core and Student Assessments
© 2014 School Services of California, Inc.
No proposed increase to the money received by LEAs – $1.25 billion in
one-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
C-43
Federal Programs
© 2014 School Services of California, Inc.
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
C-44
Federal Programs
© 2014 School Services of California, Inc.
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
Local Control Accountability Plan
D-1
The Local Control and Accountability Plan
© 2014 School Services of California, Inc.
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
D-2
Shift Happens!
© 2014 School Services of California, Inc.
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
D-3
Our Old Paradigm Focused on Input
© 2014 School Services of California, Inc.
What are we
allowed to use
it for?
How much money
do we have?
How do we comply
with state law?
What are the audit
requirements and
penalties?
D-4
A New Way of Thinking
© 2014 School Services of California, Inc.
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
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?
Program
Decisions
D-5
LCAP Requirements
© 2014 School Services of California, Inc.
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
D-6
LCAP Requirements
© 2014 School Services of California, Inc.
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
D-7
Where and How Do We Start?
© 2014 School Services of California, Inc.
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
D-8
Three Categories for Planning Purposes
© 2014 School Services of California, Inc.
The proposed LCAP template groups the eight state priorities into three
categories for planning purposes
1
2
Conditions of
Learning
Pupil Outcomes
3
Engagement
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
D-9
What Does the Data Tell Us About the Conditions of
Learning?
© 2014 School Services of California, Inc.
The first planning category groups together the
following state priorities:
1
Priority 1 – Basic Conditions
Conditions of
Learning
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
For County Offices Only:
Assess the coordination
of instruction of expelled
students and services to
foster youth (Priorities 9
and 10)
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
D-10
What Does the Data Tell Us About Pupil Outcomes?
© 2014 School Services of California, Inc.
2
The second planning
category groups
together the following
state priorities:
Priority 4 – Pupil
Achievement
Priority 8 – Other
Pupil Outcomes
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
D-11
What Does the Data Tell Us About Student and Parent
Engagement?
© 2014 School Services of California, Inc.
The third planning category groups together the
following state priorities:
Priority 3 – Parent Involvement
Priority 5 – Pupil Engagement
Priority 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
absenteeism
Dropout and graduation rates
Suspension and expulsion rates
The degree to which students feel safe and
connected to school
3
Engagement
D-12
So We Have the Data, Now What?
© 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
1
3
2
Stakeholder
Engagement
Goals and
Progress
Indicators
Actions,
Services, and
Expenditures
Once you’ve conducted your needs assessment, it is time to engage
stakeholders
You’ll be required to show evidence of stakeholder engagement in the first
section of the LCAP
D-13
LCAP Section 1
© 2014 School Services of California, Inc.
Meaningful engagement of parents, students, and
other stakeholders is not only important but it is a
statutory requirement
1
Stakeholder
Engagement
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?”
D-14
LCAP Section 2
© 2014 School Services of California, Inc.
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:
2
Goals and
Progress
Indicators
“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?”
D-15
LCAP Section 3
© 2014 School Services of California, Inc.
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
3
Actions,
Services, and
Expenditures
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
D-16
LCAP Planning
© 2014 School Services of California, Inc.
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 timeline
You 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?
D-17
Levels of Engagement in LCAP Development
© 2014 School Services of California, Inc.
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
Involve
Consult
Inform
Who will you involve in
developing a draft plan
based on your needs
assessment?
Who will you consult
in developing your
goals?
Who will you need to
keep informed and
offer opportunities for
input?
Levels of Engagement as Required by Statute
D-18
© 2014 School Services of California, Inc.
1
Consultation with:
Teachers
Principals
School personnel
Pupils
Local bargaining
units
2
3
4
Adoption of the plan:
Adopted
Opportunity for public
concurrent with the
input:
Present for review and
LEA’s budget
Notice of the
comment to:
Submitted to COE
opportunity to
Parent advisory
for approval
submit written
committee
Posted on district
comment
English learner parent
website
Public hearing
advisory committee
COE posts LCAP
The superintendent
The superintendent
for each
must respond in
must respond in
district/school or a
writing to comments
writing to comments
link to the LCAP
received
received
Adopting and Updating the LCAP
D-19
© 2014 School Services of California, Inc.
Level of Engagement
INVOLVE
1
Consultation with:
Teachers
Principals
School personnel
Pupils
Local bargaining units
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
D-20
Adopting and Updating the LCAP
© 2014 School Services of California, Inc.
Level of Engagement
Develop draft
plan in advance
of this level of
engagement
2
Present for review and
comment to:
Parent advisory
committee
English learner parent
advisory committee
The superintendent
must respond in
writing to comments
received
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
D-21
Adopting and Updating the LCAP
© 2014 School Services of California, Inc.
Level of Engagement
INFORM
3
Opportunity for public
input:
Notice of the
opportunity to submit
written comment
Public hearing
The superintendent
must respond in
writing to comments
received
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
D-22
Developing a Timeline for LCAP Development
© 2014 School Services of California, Inc.
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
D-23
A 12-month Planning and Adoption Process
© 2014 School Services of California, Inc.
Jul - Oct
Assess
and
Engage
Conduct needs
assessment and
involve parents,
community
members,
students, staff,
and bargaining
units in a
discussion of
goals.
Feb - Mar
Apr - Jun
Draft
and
Consult
Inform
and
Respond
Decide
and
Implement
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.
Nov - Jan
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.
A Sample Timeline for the Current Year
D-24
© 2014 School Services of California, Inc.
Begin needs
assessment
now!
1
2
By March 15
May – June
Complete your
LCAP draft
Commence public
comment period and
hold public hearing
3
4
5
By February 15
By April 15
By June 30
Involve parents,
school personnel,
pupils and bargaining
groups in plan
development
Inform parent
advisory groups
and other
stakeholders and
respond in writing
to comments
Adopt LCAP
and LEA budget
6
D-25
The Role of the Superintendent
© 2014 School Services of California, Inc.
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
D-26
The Role of the Board
© 2014 School Services of California, Inc.
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
D-27
Impact of LCAP on Negotiations
© 2014 School Services of California, Inc.
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 negotiated
But 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 day
And we have the data to define the areas where our students need
additional service
D-28
Impact of LCAP on Negotiations
© 2014 School Services of California, Inc.
The consultation period needs to be formal and data-driven
We have an eight-year LCFF implementation period, a three-year plan, and
defined actions for the first budget year
We do not have to do everything the first year, but we need to set the stage
for continuous improvement
What 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 future
But in other districts, parent involvement, teacher preparation, or
facilities may need to be addressed first
Many 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
D-29
Impact of LCAP on Negotiations
© 2014 School Services of California, Inc.
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
D-30
Impact of LCAP on Negotiations
© 2014 School Services of California, Inc.
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
D-31
Regular Regulatory Process: LCFF Spending
Requirements and LCAP Template
© 2014 School Services of California, Inc.
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
D-32
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
OAL has ten
calendar days to
approve
Emergency
Regulations
OAL approves
Emergency
Regulations
SBE submits Finding
of Emergency and
Regulations to OAL
Public comment can be
submitted for first five
calendar days
To become permanent,
regulations must go
through regular
rulemaking process
(In effect for
180 days)
Local Agency Operations
and the Budget
E-1
Overview
© 2014 School Services of California, Inc.
Temporary Flexibility – Current Law
Planning for 2014-15
Pension and Health Care Reform
Operational Efficiencies
Negotiations
E-2
Temporary Flexibility – Current Law
© 2014 School Services of California, Inc.
There are no proposed changes to the temporary flexibility expiration dates
This flexibility will expire in 2015 and 2016
Expires
E.C.
1240.3
17070.766
June 30, 2015
46201.2
60200.7
Description of Flexibility
Standards-aligned instructional materials sufficiency (Williams
compliance) – suspends required textbook adoptions
Routine restricted set-aside reduced to zero (except as necessary
for Williams compliance)
Reduction of school year by up to five days and/or equivalent in
instructional minutes (effective starting 2009-10)
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%.
Sale of surplus property to benefit General Fund (with significant
January 1, 2016
17463.7
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.
E-3
Managing Volatile Projections
© 2014 School Services of California, Inc.
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 all
well-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
E-4
The SSC Dartboard
© 2014 School Services of California, Inc.
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
E-5
SSC Financial Planning Dartboard
© 2014 School Services of California, Inc.
Factor
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
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%
LCFF Planning Factors
Reserves
State Reserve Requirement
District ADA Range
The greater of 5% or $50,000
0 to 300
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
Reserve Plan
SSC recommends one
year’s increment
of planned revenue growth
E-6
Multiyear Projections for the 2014-15 Budget
© 2014 School Services of California, Inc.
Chart Title 2014-15
2013-14
2015-16
2016-17
LCFF Target
$8,990
$9,066
$9,264
$9,484
Estimated DOF Projection
$6,650
$7,327
$7,688
$7,859*
SSC Recommends
$6,650
$7,327
$7,484
$7,654
Net Change per ADA
$313
$677
$157
$170
Net Percent Change
4.93%
10.18%
2.14%
2.27%
$8,000
$7,500
SSC Recommends
$7,000
DOF Forecast
$6,500
$6,000
2013-14
2014-15
2015-16
2016-17
*In the absence of a current projection for 2016-17 from the DOF, the purchasing power increase—the same as “SSC
recommends”—is used
E-7
Unrestricted Fund Balance – Statewide Averages
© 2014 School Services of California, Inc.
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
E-8
Education Protection Act 2014-15
© 2014 School Services of California, Inc.
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
© 2014 School Services of California, Inc.
E-9
Apportionment Deferrals and Cash Flow
© 2014 School Services of California, Inc.
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
E-10
Apportionment Deferrals and Cash Flow
© 2014 School Services of California, Inc.
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
E-11
School Facilities Issues – Sale of Surplus Property
© 2014 School Services of California, Inc.
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
E-12
School Facilities Issues – Sale of Surplus Property
© 2014 School Services of California, Inc.
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
E-13
School Facilities Issues – Deferred Maintenance
© 2014 School Services of California, Inc.
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
E-14
School Facilities Issues – Routine Restricted
Maintenance
© 2014 School Services of California, Inc.
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
E-15
School Facilities Issues – Routine Restricted
Maintenance
© 2014 School Services of California, Inc.
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
E-16
School Facilities Issues – Emergency Repair
Program
© 2014 School Services of California, Inc.
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)
E-17
School Facilities Issues – Proposition 39
© 2014 School Services of California, Inc.
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
E-18
School Facilities Issues – Proposition 39
© 2014 School Services of California, Inc.
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
E-19
School Facilities Issues – State Allocation Board
© 2014 School Services of California, Inc.
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
E-20
School Facilities Issues – State Allocation Board
© 2014 School Services of California, Inc.
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
E-21
School Facilities Issues – State Allocation Board
© 2014 School Services of California, Inc.
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
E-22
Local Bonds Pass at Record Rates
© 2014 School Services of California, Inc.
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 Elections
Two-Thirds General
Obligation (GO) Bonds
55% GO Bonds
55% School Facility
Improvement District
(SFID) GO Bonds
Total
Dollar Value of
Voter-Approved
Measures
(in Millions)
Total
Elections
on Ballot
Pass
Fail
Passage
Rate
2
1
1
50%
$40.0
100
81
19
81%
$12,525.6
4
4
0
100%
$227.1
106
86
20
81%
$12,792.7
E-23
Mandated Programs
© 2014 School Services of California, Inc.
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
E-24
Mandated Programs
© 2014 School Services of California, Inc.
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
E-25
Mandated Programs
© 2014 School Services of California, Inc.
LEAs that opt in to the MBG can plan for the rates in all three years of the
multiyear projection (MYP)
Grade Span
School Districts Charter Schools
COEs
K-8
$28
$14
$29
9-12
$56
$42
$57
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
E-26
Transportation in 2014-15
© 2014 School Services of California, Inc.
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
E-27
Transportation in 2014-15
© 2014 School Services of California, Inc.
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.
E-28
K-3 Grade Span Adjustment
© 2014 School Services of California, Inc.
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
E-29
K-3 Grade Span Adjustment
© 2014 School Services of California, Inc.
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
E-30
K-3 GSA – Sample Calculation
© 2013 School Services of California, Inc.
Example of school site calculation for relative progress for 2014-15 school
year, based on 28% revenue increase toward full implementation of LCFF
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)
Target for K-3 CSR at LCFF full implementation, 2020-21
Difference
Progress required in 2014-15 (28%)
Average class enrollment target progress for
2014-15 for XYZ Elementary School
* Average class enrollment for school site after the first year of the LCFF
28.4:1*
24:1
4.4
4.4 x .28 = 1.2
28.4 – 1.2 =
27.2:1
E-31
LCFF and Provisions 1, 2, and 3
© 2014 School Services of California, Inc.
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
E-32
LCFF and Provisions 1, 2, and 3
© 2014 School Services of California, Inc.
Special Assistance
Alternatives
Frequency of Student
Eligibility 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
The table displays the three Special Assistance Alternatives and how often
each alternative determines the students’ eligibility for FRPMs
E-33
LCFF and Provisions 1, 2, and 3
© 2014 School Services of California, Inc.
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
E-34
LCFF and Provisions 1, 2, and 3
© 2014 School Services of California, Inc.
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
E-35
State Board of Education Update
© 2014 School Services of California, Inc.
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
E-36
State Board of Education Update
© 2014 School Services of California, Inc.
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
E-37
CalSTRS
© 2014 School Services of California, Inc.
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
E-38
CalSTRS
© 2014 School Services of California, Inc.
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
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”
E-39
CalSTRS
© 2014 School Services of California, Inc.
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
E-40
CalSTRS
© 2014 School Services of California, Inc.
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
E-41
CalPERS
© 2014 School Services of California, Inc.
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
E-42
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
E-43
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
E-44
Gaining Operational Efficiency
© 2014 School Services of California, Inc.
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?
E-45
Gaining Operational Efficiency
© 2014 School Services of California, Inc.
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
E-46
Gaining Operational Efficiency
© 2014 School Services of California, Inc.
An example: custodial workload – square footage per custodian
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
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!
Source: ActPoint® KPI Performance Management System, www.actpoint.com/ca
E-47
Collective Bargaining Issues
© 2014 School Services of California, Inc.
This will likely be a very challenging year for collective bargaining
There 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 reform
Potential compensation increases
Professional development related to Common Core
The effects of the Affordable Care Act
Class-size reduction progress
Maintenance of Adult Education and Regional Occupational Program
programs
All of this on top of the time and energy needed to develop the LCAP
We suggest that you set aside plenty of time to prepare and conduct purposeful
negotiations
E-48
Restoration of Concessions
© 2014 School Services of California, Inc.
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
E-49
How Much Money is Available?
© 2014 School Services of California, Inc.
“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
E-50
How Do We Show a Nexus to Student Services?
© 2014 School Services of California, Inc.
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
E-51
Getting Started
© 2014 School Services of California, Inc.
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
The Road Ahead
F-1
The Road Ahead
© 2014 School Services of California, Inc.
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
F-2
Enacting the State Budget – The Official Process
© 2014 School Services of California, Inc.
SAUSAGE PRODUCTION
F-3
Enacting the State Budget – CliffsNotes™ Version
While the process is complicated and covers six months, here’s the
CliffsNotes™ version
January 10
Governor introduces
State Budget
Proposal
Budget Bill
introduced in both
houses shortly
thereafter
February
Budget Trailer Bills
are released,
providing critical
details to the
January proposal
Early Spring
Budget
Subcommittees
examine specific
details of the Proposal
Some policy decisions
made, most delayed
until May Revision
F-4
Enacting the State Budget – CliffsNotes™ Version
© 2014 School Services of California, Inc.
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
ASSEMBLY
VERSION
SENATE
VERSION
CONFERENCE COMMITTEE COMPROMISE
F-5
Enacting the State Budget – CliffsNotes™ Version
© 2014 School Services of California, Inc.
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!
F-6
Other Proposals Will Emerge
© 2014 School Services of California, Inc.
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”
F-7
Other Proposals Will Emerge
© 2014 School Services of California, Inc.
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
F-8
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 as
quickly unless there is a safety net
F-9
Final Thoughts
© 2014 School Services of California, Inc.
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!
Thanks you

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