An Overview of the Local Control Funding Formula

Updated: An Overview of the Local Control Funding Formula MAC TAYLOR • LEGISLATIVE ANALYST • UPDATED DECEMBER 2013 Executive Summary Legislation enacted in 2013‑14 made major changes both to the way the state allocates funding to school districts and the way the state supports and intervenes in underperforming districts. The legislation was the culmination of more than a decade of research and policy work on California’s K‑12 funding system. This report describes the major components of the legislation, with the first half of the report describing the state’s new funding formula and the second half describing the state’s new system of district support and intervention. Throughout the report, we focus primarily on how the legislation affects school districts, but we also mention some of the main effects on charter schools. (This report does not cover the new funding formula for county offices of education [COEs], which differs in significant ways from the new district formula.) The report answers many of the questions that have been raised in the aftermath of passage regarding the final decisions made by the Legislature and the Governor in crafting new K‑12 funding and accountability systems for California. CONTENTS The Formula .....................................................................................................................2 Components ...........................................................................................................................2 Spending Restrictions ............................................................................................................6 Cost of Formula ......................................................................................................................8 Distributional Effects of Formula ..........................................................................................8 Transparency and Accountability Under New System ..................................................10 District Development and Adoption of LCAPs ....................................................................10 COE Review of District LCAPs .............................................................................................13 Support and Intervention .....................................................................................................14 Major Decisions Ahead ..................................................................................................18 Conclusion ......................................................................................................................20 AN LAO REPORT THE FORMULA C omponents the target grade‑span rates reflect the differences among existing funding levels across the grade Chapter 47, Statutes of 2013 (AB 97, Committee spans. Specifically, the new base‑rate differentials on Budget) created the Local Control Funding are linked to the differentials in 2012‑13 statewide Formula (LCFF). Two subsequently enacted pieces average revenue limit rates by district type (the of legislation—Chapter 70, Statutes of 2013 (SB 91, same rates previously used to set charter school Committee on Budget) and Chapter 357, Statutes of grade‑span funding rates). These grade‑span 2013 (SB 97, Committee on Budget)—made minor differences are intended to recognize the generally changes to the formula. As set forth in this package higher costs of education at higher grade levels. of legislation, the LCFF has several components, Adjusts Early Elementary and High School described below. (Except where otherwise noted, Base Rates. The LCFF includes certain adjustments the components that apply to school districts also to the K‑3 and high school base rates. These apply to charter schools.) adjustments effectively increase the base rates Sets Uniform, Grade-Span Base Rates. Under for these two grade spans. The K‑3 adjustment the new formula, districts receive the bulk of increases the K‑3 base rate by 10.4 percent (or their funding based on average daily attendance initially $712 per ADA)—for an adjusted, initial (ADA) in four grade spans. Figure 1 displays the K‑3 base rate of $7,557. This adjustment is intended four LCFF grade‑span base rates as specified in to cover costs associated with class size reduction Chapter 47. Each year, beginning in 2013‑14, these (CSR) in the early grades. (The $712 per‑pupil target base rates are to be updated for cost‑of‑living adjustment reflects the average K‑3 CSR rate under adjustments (COLAs). The differences among the previous funding rules.) The high school Figure 1 Overview of Local Control Funding Formulaa Formula Component Rates/Rules Target base rates (per ADA)b • K-3: $6,845 • 4-6: $6,947 • 7-8: $7,154 • 9-12: $8,289 Base rate adjustments • K-3: 10.4 percent of base rate. • 9-12: 2.6 percent of base rate. Supplemental funding for certain student subgroups 20 percent of adjusted base rate. (per EL/LI student and foster youth) Concentration funding Each EL/LI student above 55 percent of enrollment generates an additional 50 percent of adjusted base rate. Add-ons Targeted Instructional Improvement Block Grant, Home- to-School Transportation, Economic Recovery Target. a Applies to school districts and charter schools. b Reflects target rates as specified in statute. Does not include 1.57 percent cost-of-living adjustment provided in 2013-14. ADA = average daily attendance; EL = English learner; and LI = low-income (defined as a student receiving a free or reduced-price meal). 2 Legislative Analyst’s Office www.lao.ca.gov AN LAO REPORT adjustment increases the grades 9‑12 base rate by kindergartener generates an additional $1,511 for 2.6 percent (or initially $216 per ADA)—for an the district, which is 20 percent of the adjusted adjusted, initial high school base rate of $8,505. K‑3 base rate of $7,557. (Because all foster youth This adjustment is not designated for any particular also meet the state’s LI definition, hereafter we do activity, but the genesis of the adjustment related not refer to them as a separate subgroup.) For the to the costs of providing career technical education purposes of generating this supplemental funding (CTE) in high school. The $216 adjustment (as well as the concentration funding discussed reflects the average total amount spent per pupil below), a district’s EL/LI count is based on a on Regional Occupational Centers and Programs three‑year rolling average of EL/LI enrollment. (ROCPs) under the old system. Moving forward, Students who are both EL and LI are counted the adjustment percentages will remain the same, only once. For more information regarding the though the dollar value of the adjustments will classification of EL/LI student groups, see the box increase as the base rates rise due to statutorily on page 4. authorized COLAs. Provides Concentration Funding for Districts Includes Supplemental Funding for English With Higher EL/LI Populations. Districts Learners and Low-Income (EL/LI) Students. The whose EL/LI populations exceed 55 percent of LCFF provides additional funds for particular their enrollment receive concentration funding. student groups. Under the formula, each EL/LI Specifically, as shown in Figure 2, these districts student and foster youth in a district generates an receive an additional 50 percent of the adjusted base additional 20 percent of the qualifying student’s grant for each EL/LI student above the 55 percent adjusted grade‑span base rate. For instance, an LI threshold. (A charter school cannot receive Figure 2 Illustration of How LCFF Works Elementary District Concentration Threshold (55 percent of enrollment) Funding Each Student Generates Student Base K-3 Rate K-3 Adjustment EL/LI Supplement EL/LI Concentration Total EL/LI $6,845 $712 $1,511 $9,068 EL/LI $6,845 $712 $1,511 $3,779 $12,847 Non-EL/LI $6,845 $712 $7,557 EL/LI = English learner/low-income. www.lao.ca.gov Legislative Analyst’s Office 3 ARTWORK #130435 AN LAO REPORT concentration funding for a greater proportion of and concentration factors are described in EL/LI students than the district in which it resides. per‑student terms. Alternatively, the supplement For instance, if a charter school has 80 percent EL/ and concentration factors can be viewed in LI enrollment but the district in which it resides per‑district terms. Thinking of the supplement and has only 60 percent EL/LI enrollment, the charter concentration factor in this latter way allows total school’s concentration funding is capped based on district funding allocations to be compared more 60 percent EL/LI enrollment. If a charter school easily. As seen in Figure 3, as a district’s proportion has multiple sites located in multiple districts, of EL/LI students increases, so does its total its concentration funding is capped based on the funding allocation. For instance, a district with encompassing district with the highest EL/LI 50 percent EL/LI students has a total allocation that concentration, or its own EL/LI concentration if is 10 percent higher than the same‑sized district lower.) with no EL/LI students. In Figure 3, the first section Effect of Supplemental and Concentration of the line (colored blue) shows percent increases in Funding on a District’s Total Allocation. a district’s funding allocation up to the 55 percent In the description above, the supplement EL/LI threshold, whereas the second section of Classification of English Learner/Low-Income (EL/LI) Students Classification of EL Students. For the purposes of the Local Control Funding Formula (LCFF), students are classified as EL based on a home language survey and the California English Language Development Test (CELDT). If a parent or guardian reports on the home language survey that a language other than English is the student’s initial language learned or the primary language used at home, the student is required to take the CELDT. If the student is determined by the school district not to be English proficient based on CELDT results, then the student is classified as EL. Each year thereafter, an EL student is reassessed using the CELDT. Once a student is determined to be English proficient—based on CELDT results, performance on other state assessments, teacher input, and local criteria—the student is reclassified as Fluent English Proficient (FEP). Each school district can use its own criteria for reclassifying EL students as FEP. Under the LCFF, no time limit is placed on how long an EL student can generate supplemental and concentration funding for a district, but a student reclassified as FEP who is not also LI will no longer generate additional funding. Classification of LI Students. For the purposes of the LCFF, LI students are those that qualify for free or reduced‑price meals (FRPM). Eligibility for FRPM is determined by school districts through a variety of means. In many cases, students are determined FRPM‑eligible through an application process sent to students’ households. If a household’s income is below 185 percent of the federal poverty line ($43,568 for a family of four), the student is eligible for FRPM. In other cases, students are directly certified as FRPM‑eligible due to participation in other social service programs, such as the California Work Opportunity and Responsibility to Kids program. Foster youth automatically are eligible for FRPM, therefore the foster family’s income has no bearing on the foster student’s FRPM eligibility. An LI student will generate supplemental and concentration funding for a district until the student is no longer FRPM‑eligible. 4 Legislative Analyst’s Office www.lao.ca.gov AN LAO REPORT the line (colored red) shows funding increases Districts that did not receive funds from these once a district passes the 55 percent concentration programs in 2012‑13 do not receive these add‑ons threshold and begins receiving concentration moving forward. funding in addition to supplemental funding. Also Provides New Economic Recovery As shown in the figure, a district in which every Target (ERT) Add-On to Some Districts. Had Graphic Sign Off student is EL/LI has a total funding allocation the revenue limit deficit factor been retired and 42.5 percent greater than the same‑sized district categorical program funding been restored, the Secretary with no EL/LI students. previous funding system would have generated Analyst Treats Two Existing Categorical Funding greater levels of funding than the LCFF for Director Streams as Add-Ons. Funds from two approximately 230 districts (about 20 percent of Deputy existing programs—the Targeted Instructional districts). To address this issue, the new funding Improvement Block Grant and Home‑to‑School system provides an ERT add‑on to a subset of these (HTS) Transportation program—are treated districts. As shown in Figure 4 (see next page), the as add‑ons to the LCFF. Districts that received ERT add‑on amount equals the difference between funding from these programs in 2012‑13 will the amount a district would have received under continue to receive that same amount of funding the old system and the amount a district would in addition to what the LCFF provides each year. receive based on the LCFF in 2020‑21. To derive Figure 3 How a District’s EL/LI Concentration Affects its LCFF Allocation Percent Increase in District Funding Allocation 42% 38 Due to Supplemental Funding 34 Due to Supplemental and Concentration Funding 30 26 22 18 14 10 6 2 10 20 30 40 50 55 60 70 80 90 100% Percent of EL/LI Students in District EL/LI = English learner/low-income. www.lao.ca.gov Legislative Analyst’s Office 5 ARTWORK #130435 Graphic Sign Off Secretary Analyst Director Deputy AN LAO REPORT the amount a district Figure 4 would have received Calculating Economic Recovery Target (ERT) under the old system in 2020‑21, assumptions are Total District Funding Allotment made that the revenue limit deficit factor would have been retired, a Categorical ERT Funding 1.94 percent COLA would have been applied to revenue limits every year LCFF from 2013‑14 through Revenue 2020‑21, and categorical Limit Funding funding would be increased to the district’s 2007‑08 level (reflecting an increase of 24 percent Old System New System over the 2012‑13 level). Approximately 130 the majority of categorical spending restrictions districts are eligible that districts faced under the old system were to receive the ERT add‑on. The 100 remaining eliminated. Under the new system, 14 categorical districts are not eligible for the add‑on because of ARTWORK#130435 programs remain. Figure 5 lists those categorical their exceptionally high per‑pupil funding rates. programs that were eliminated and those that are Specifically, a provision disallows a district from retained under the new system. receiving an ERT add‑on if its funding exceeds the Districts Eventually Must Ensure 90th percentile of per‑pupil funding rates under the “Proportionality” When Spending EL/LI old system (estimated to be approximately $14,500 Funds. Under the LCFF, districts will have to use per pupil in 2020‑21). supplemental and concentration funds to “increase s R pending estRiCtions or improve services for EL/LI pupils in proportion to the increase in supplemental and concentration The LCFF eliminates the vast majority of funds.” The exact meaning and regulatory effect of categorical spending restrictions. In their place, the this proportionality clause is currently unknown. LCFF establishes a more limited set of spending On or before January 31, 2014, the State Board of restrictions, some of which apply over the long Education (SBE) is required to adopt regulations term and some of which are applicable only during regarding how this clause will be operationalized. the initial transition period. These regulations also may include the conditions Long-Term Spending Requirements under which districts can use supplemental and concentration funds on a school‑wide basis. Many Existing Categorical Spending Districts Encouraged to Have K-3 Class Requirements Removed. Approximately three‑ Sizes No More Than 24 Students. Under full quarters of categorical programs were eliminated in implementation of the LCFF, as a condition of tandem with the creation of the LCFF. As a result, 6 Legislative Analyst’s Office www.lao.ca.gov AN LAO REPORT receiving the K‑3 base‑rate adjustment, districts do not have similar transportation spending must maintain a K‑3 school‑site average class size of requirements. 24 or fewer students, unless collectively bargained Short-Term Requirements otherwise. If a district negotiates a different class size for those grades, the district is not subject Specific Maintenance-of-Effort (MOE) to this provision and will continue to receive the Requirements Imposed During First Two Years adjustment. Absent a related collective bargaining of Implementation. Of the state categorical funds provision, were a particular school site in a district to they received, school districts are required to exceed an average class size of 24, the district would spend no less in 2013‑14 and 2014‑15 than they lose the K‑3 adjustment for all its K‑3 school sites. did in 2012‑13 on ROCPs and Adult Education. If Restrictions on HTS Transportation Funding districts received funding for ROCPs and/or HTS Maintained. Starting in 2013‑14, districts receiving Transportation through a joint powers authority the HTS Transportation add‑on must spend the (JPA), they must continue to pass through those same amount of state HTS Transportation funds as funds to the JPA in 2013‑14 and 2014‑15. Funds they spent in 2012‑13. Districts that did not receive used to satisfy these MOE requirements count HTS Transportation funds in 2012‑13 and therefore towards a district’s LCFF allocation. Consequently, are not eligible for the add‑on moving forward, districts subject to these MOE requirements will Figure 5 Treatment of Categorical Programs Under LCFF Retained Programs Adults in Correctional Facilities Foster Youth Services After School Education and Safety Mandates Block Grant Agricultural Vocational Education Partnership Academies American Indian Education Centers and Quality Education Improvement Act Early Childhood Education Program Special Education Assessments Specialized Secondary Programs Child Nutrition State Preschool Eliminated Programs Advanced Placement Fee Waiver Instructional Materials Block Grant Alternative Credentialing International Baccalaureate Diploma Program California High School Exit Exam Tutoring National Board Certification Incentives California School Age Families Oral Health Assessments Categorical Programs for New Schools Physical Education Block Grant Certificated Staff Mentoring Principal Training Charter School Block Grant Professional Development Block Grant Civic Education Professional Development for Math and English Community-Based English Tutoring School and Library Improvement Block Grant Community Day School (extra hours) School Safety Deferred Maintenance School Safety Competitive Grant Economic Impact Aid Staff Development Educational Technology Student Councils Gifted and Talented Education Summer School Programs Grade 7-12 Counseling Teacher Credentialing Block Grant High School Class Size Reduction Teacher Dismissal www.lao.ca.gov Legislative Analyst’s Office 7 AN LAO REPORT have relatively less general purpose funding over demographics, and growth in property tax revenue. this two‑year period. (A district that already shifted Additional LCFF Funding to Be Allocated all funds away from these programs as part of its Based on Funding “Gap.” Over the course of response to categorical flexibility is not subject to implementation, districts will receive new funding these MOE requirements.) based on the difference (or gap) between their Districts Must Make Progress Toward Meeting prior‑year funding level and their target LCFF CSR Goal During Transition Period. As mentioned funding level. Every district will see the same earlier, to receive the K‑3 base‑rate adjustment, proportion of their gap closed, but the dollar districts by full LCFF implementation must reduce amount they receive will vary depending on the K‑3 class size to no more than 24 students, unless size of their gap. For example, in 2013‑14, districts collectively bargained otherwise. Over the phase‑in (in most cases) will have 12 percent of their gap period (discussed later in more detail), districts filled. For a district whose gap is $100 million, this must make progress toward this goal in proportion corresponds to $12 million in additional funding. to the growth in their funding. For example, if a For a district whose gap is $10 million, this district started with an average K‑3 class size of corresponds to $1.2 million in additional funding. 28 students, and it received new funding equivalent Figure 6 depicts transition funding for years one, to 10 percent of its LCFF funding gap, that district four, and eight for a non‑ERT district as well as an would have to reduce average K‑3 class size to ERT district (discussed below). 27.6 students (10 percent of the difference between Funding for ERT Add-On to Be Allocated 28 and 24). Similar to the CSR requirement under in Equal Increments Over Eight-Year Period. full implementation, this interim requirement does Districts eligible to receive the ERT add‑on not apply to districts that collectively bargain K‑3 will receive incremental ERT funding over the class sizes. course of implementation in addition to their gap funding discussed above. As depicted in Figure 6, C f ostof oRmula an ERT district will receive the same proportion As explained below, the LCFF costs of gap funding towards its LCFF target as other significantly more than the previous funding non‑ERT districts, as well as a portion of its ERT system. As a result, it will take several years to fully add‑on. In 2013‑14, an ERT district will receive transition to the new funding formula. one‑eighth of its add‑on, in year two two‑eighths, Fully Implementing LCFF and ERT Add-On in year three three‑eighths, etcetera. In year eight Estimated to Cost an Additional $18 Billion. Were (the estimated year of full implementation), ERT the state to fully implement the LCFF in 2013‑14, districts will receive their full ERT add‑on (as the costs would be $18 billion more than the state calculated in 2013‑14) and will continue to receive spent on K‑12 education in 2012‑13. (This assumes this add‑on amount in perpetuity. Changes in the current levels of ADA, EL/LI enrollment, and implementation timeline for LCFF will not affect property tax revenue.) Given the cost, coupled with the ERT funding schedule. projected growth in Proposition 98 funding, fully d e f istRibutional ffeCtsof oRmula implementing the new system is anticipated to take eight years. Each year the total General Fund cost Vast Majority of Districts to Receive More of the new system will change somewhat due to State Aid, No District to Get Less State Aid. providing COLAs, fluctuations in ADA and student The vast majority of districts will see significant 8 Legislative Analyst’s Office www.lao.ca.gov AN LAO REPORT increases in funding under the LCFF. That described above.) Three types of districts are notwithstanding, statute further includes a “hold unlikely to receive additional funding. harmless” provision that specifies no district is to • Basic Aid Districts. Most basic aid receive less state aid than it received in 2012‑13. districts currently have more per‑pupil Graphic Sign Off Specifically, no district is to receive less moving funding than needed to meet their LCFF forward than it received last year for revenue limits Secretary targets and their ERT. As a result, they will (calculated on a per‑ADA basis) and categorical continue to receive the same amouAntn oaf lyst programs (calculated based on the district’s total state aid they received in 2012‑13 (tDhoiruegcht,o r entitlement). as discussed below, a few districts wDiell pfaultl y A Few Districts Will Not Receive Additional out of basic‑aid status and begin receiving Funds. Though most districts will see funding state aid as a result of the LCFF). increases under the new formula, approximately 15 percent of districts will not receive additional • Non-Isolated, Single-School Districts. funding. (These districts, which have particularly Prior to 2012‑13, these types of districts high existing per‑pupil funding rates, are the ones were eligible to receive additional funding that benefit from the hold harmless provision if the school met the necessary small Figure 6 Illustration of How Transition Works for Two Types of Districtsa Year 1 Year 4b Year 8b,c (2013-14) (2016-17) (2020-21) Non-ERT ERT Non-ERT ERT Non-ERT ERT District District District District District District ERT a This illustration assumes that the two districts have the same average daily attendance and ERT Add-On student demographics. As a result, both districts have the same LCFF target. The only difference between the districts is that one is eligible for an ERT add-on due to historical LCFF Target funding levels. b Each year, target base rates will be provided a cost-of-living adjustment. As a result, over Growth to LCFF Target the course of the phase in, districts’ LCFF targets will be increasing. c Based on current projections, LCFF will take eight years to fully implement. 2012-13 Allocation ERT = Economic Recovery Target. www.lao.ca.gov Legislative Analyst’s Office 9 ARTWORK #130435 AN LAO REPORT school (NSS) ADA requirements. Starting A Few Districts Likely to Fall Out of Basic in 2013‑14, schools that are not geographi‑ Aid Status and Begin Receiving State Aid. cally isolated are no longer eligible for NSS Under the previous funding system, property tax funding. As a result, these districts’ 2012‑13 revenue counted only against a district’s revenue funding levels exceed their LCFF targets limits. Consequently, basic aid districts were and they will continue receiving their those districts whose revenue limit entitlements 2012‑13 amounts until those amounts drop were equal to or less than their local property below their LCFF targets. tax revenue. Under the LCFF, local property tax revenue counts against a district’s entire LCFF • Anomalous Districts. Some districts had allocation (which has base rates higher than old funding levels under the old system that revenue limit rates and greater funding for EL/ were abnormally high either because of LI students). As a result, the threshold for basic peculiar categorical rules (such as receiving aid status is significantly higher under the LCFF. an extremely high meals‑for‑needy‑pupils Moreover, some districts recently entered basic aid add‑on) or peculiar charter‑school conversion status as a result of state cuts in revenue limit rates. rules (used by a few districts to receive These districts are most likely to fall out of basic aid significant fiscal benefit from conversions). status under the new system, but a few other basic These districts also will continue to receive aid districts also might fall out of basic aid status their 2012‑13 funding amounts until those due to increased funding levels under the LCFF. amounts drop below their LCFF targets. TRANSPARENCY AND ACCOUNTABILITY UNDER NEW SYSTEM In addition to creating a new funding formula, district’s annual goals in each of the eight areas the 2013‑14 package of legislation establishes a set shown in Figure 7. These eight areas of specified of new rules relating to school district transparency state priorities are intended to encompass the and accountability. Specifically, under the new key ingredients of high‑quality educational rules, districts are required to adopt Local Control programs. Figure 8 (see page 12) identifies how and Accountability Plans (LCAPs). Districts that districts are to measure success in each of the do not meet the goals specified in their LCAPs and eight areas, with districts required to include fail to improve educational outcomes are to receive associated data in their LCAPs. The plans must assistance through a new system of support and include both district‑wide goals and goals for each intervention. We describe this new system in more numerically significant student subgroup in the detail below. district. (To be numerically significant, a district must have at least 30 students in a subgroup, with d d istRiCt evelopmentand the exception of foster youth, for which districts a lCap doptionof s must have at least 15 students.) The student Districts Must Set Annual Goals in Eight subgroups that must be addressed in the LCAPs Specified Areas. Each LCAP must include a school are listed in Figure 9 (see page 12). (In addition 10 Legislative Analyst’s Office www.lao.ca.gov AN LAO REPORT to specified state priorities, districts’ LCAPs can LCAPs across the state and assist school districts in include annual goals in self‑selected areas of local developing their plans. The SBE is required to adopt priority.) the LCAP template by March 31, 2014. Districts Must Specify Actions They Will Take Districts Must Solicit Input From Various to Achieve Goals. A district’s LCAP must specify Stakeholders in Developing Plan. Figure 10 the actions the district plans to take to achieve (see page 13) outlines the process a district must its annual goals. The specified actions must be follow in adopting its LCAP. One of the main aligned with the school district’s adopted budget. procedural requirements is that a district cGonrsauplths ic Sign Off For example, a school district could specify that it with its school employees, local bargaining units, Secretary intends to provide tutors to all EL students reading parents, and students. As part of this consultation Analyst below grade level to improve its EL reclassification process, districts must present their proposed rate. To ensure the LCAP and adopted budget plans to a parent advisory committee and, Dini rseocmtoe r were aligned, the school district would be required cases, a separate EL parent advisory commDitteepe.u ty to include sufficient funding for EL tutors in its (EL parent advisory committees are required only adopted budget plan. if ELs comprise at least 15 percent of the district’s Districts Must Use SBE-Adopted LCAP enrollment and the district has at least 50 EL Template. In preparing their LCAP, districts students.) The advisory committees can review are required to use a template developed by SBE. and comment on the proposed plan. Districts The template is intended to create consistency in must respond in writing to the comments of the Figure 7 Eight Areas of State Priority Must Be Addressed in LCAPs Student Achievement Student Engagement Other Student Outcomes School Climate Areas of State Priority Parental Involvement Course Access Basic Services Implementation of Common Core State Standards LCAP = Local Control and Accountability Plan. AARRTTWWOORRKK ##113300443355 www.lao.ca.gov Legislative Analyst’s Office 11 Graphic Sign Off Secretary Analyst Director Deputy AN LAO REPORT Figure 8 Required Data for Each of Eight State Priority Areas Student Achievement Parental Involvement (cid:127) Performance on standardized tests. (cid:127) Efforts to seek parent input. (cid:127) Score on Academic Performance Index. (cid:127) Promotion of parental participation. (cid:127) Share of students that are college and career ready. (cid:127) Share of ELs that become English proficient. (cid:127) EL reclassification rate. (cid:127) Share of students that pass Advanced Placement exams with 3 or higher. Basic Services (cid:127) Share of students determined prepared for college (cid:127) Rate of teacher misassignment. by the Early Assessment Program. (cid:127) Student access to standards-aligned instructional materials. (cid:127) Facilities in good repair. Student Engagement (cid:127) School attendance rates. (cid:127) Chronic absenteeism rates. (cid:127) Middle school dropout rates. Implementation of Common Core (cid:127) High school dropout rates. State Standards (CCSS) (cid:127) High school graduation rates. (cid:127) Implementation of CCSS for all students, including EL. Other Student Outcomes (cid:127) Other indicators of student performance in required areas of study. May include performance Course Access on other exams. (cid:127) Student access and enrollment in all required areas of study. School Climate (cid:127) Student suspension rates. (cid:127) Student expulsion rates. (cid:127) Other local measures. EL = English learner. advisory committees. Districts also are required to Figure 9 notify members of the public that they may submit Student Subgroups to Be Included in written comments regarding the specific actions Local Control and AccountabilitAy RPTlaWnsORK #130435 and expenditures proposed in the LCAP. Racial/Ethnic Subgroups: LCAP to Be Adopted Every Three Years And Black or African American Updated Annually. Districts are required to adopt American Indian or Alaska Native an LCAP by July 1, 2014 and every three years Asian Filipino thereafter. In the interim years between adoptions, Hispanic or Latino districts are required annually to update their Native Hawaiian or Pacific Islander LCAPs using the SBE template. Each year, districts White Two or more races must adopt (or update) their LCAPs prior to the adoption of their budget plans. Annual updates Other Subgroups: must review a school district’s progress towards Socioeconomically disadvantaged students meeting the goals set forth in its LCAP, assess the English learners Students with disabilities effectiveness of the specific actions taken toward Foster youth achieving these goals, and describe any changes the district will make as a result of this review and 12 Legislative Analyst’s Office www.lao.ca.gov AN LAO REPORT assessment. The school district also must specify from the district about the contents of its LCAP. the expenditures for the next fiscal year that will be The district must respond to these requests used to support EL/LI and foster youth students, within 15 days. Then, within 15 days of receiving as well as former ELs redesignated as English the district’s response, the COE can submit proficient. Districts also are required to hold at recommendations for amendments to the LCAP least two public hearings to discuss and adopt (or back to the district. The district must consider the update) their LCAPs. The district must first hold at COE recommendations at a public hearing within least one hearing to solicit recommendations and 15 days, but the district is not required to make Graphic Sign Off comments from the public regarding expenditures changes to its plan. proposed in the plan. It then must adopt (or COE Must Approve LCAP if Three ConSdeictiroentsa ry officially update) the LCAP at a subsequent hearing. Are Met. The COE must approve a district’As nalyst LCAP by October 8 if it determines that (1)D tihree ctor Coe R d lCap eviewof istRiCt s plan adheres to the SBE template, (2) the diDsteripcut’st y COE Can Ask for Clarification, Make budgeted expenditures are sufficient to implement Recommendations Regarding District LCAPs. the strategies outlined in its LCAP, and (3) the Within five days of adopting (or updating) its LCAP adheres to the expenditure requirements for LCAP, a district must submit its plan to its COE supplemental and concentration funding. As we for review. Figure 11 (see next page) displays the discuss in the next section, districts whose LCAPs process of COE review. Before August 15 of each are not approved by the COE are required to receive year, the COE can seek clarification in writing additional support. Figure 10 School District LCAP Adoption Process Solicit written comments on proposed plan from public. Present proposed plan to parent Respond in writing Develop proposed plan. advisory committees for review to comments of parent Adopt plan in public hearing. and comment. advisory committees. Solicit recommendations and comments from the public in hearing. Consult with school employees, local bargaining units, parents, and students. LCAP = Local Control and Accountability Plan. AARRTTWWOORRKK w##w1133w00.44la33o55.ca.gov Legislative Analyst’s Office 13 Graphic Sign Off Secretary Analyst Director Deputy AN LAO REPORT Figure 11 COE Review of Local Control and Accountability Plans District Actions: COE Actions: Submits locally approved plan Seeks clarification about contents to COE five days after adoption. of plan from district by August 15. Responds to COE request for Submits recommended amendments clarification within 15 days. to plan back to district within 15 days. Considers COE recommendations Reviews plan to determine if it meets in a public hearing within 15 days. requirements (adheres to SBE template and aligns with district budget). If plan meets requirements, If plan does not meet approves plan by October 8. requirements, does not approve plan, provides support. COE = County Office of Education and SBE = State Board of Education. s uppoRt and i nteRvention well as set expectations for improvement for each numerically significant subgroup in each of the Chapter 47 also establishes a system of support eight state priority areas. and intervention for school districts that do not meet performance expectations for the eight state Support for Struggling School Districts priority areas identified in the LCAP. BeAloRw,T wWe ORK #130435 Three Reasons Districts Can Be Flagged for discuss this new system in greater detail. (This Additional Support. School districts are required system works somewhat differently for charter to receive additional support in the following three schools. We discuss the major differences in the instances. box on page 16.) • LCAP Not Approved by COE. A district New Rubrics to Determine if Districts is required to receive support if its LCAP Need Support or Intervention is not approved by the COE because it COE Must Assess School District Performance does not follow the SBE template or is not Based on SBE-Adopted Rubrics. As shown in aligned with the district’s budget plan. Figure 12, SBE must develop three new rubrics for • District Requests Assistance. A district assessing a school district’s performance. The SBE may specifically request additional support. is to adopt all three rubrics by October 1, 2015. The rubrics are to be holistic and consider multiple • District Not Improving Student measures of district and school performance as Outcomes. A district must receive support 14 Legislative Analyst’s Office www.lao.ca.gov AN LAO REPORT Figure 12 State Board of Education (SBE) Required to Adopt Three New Rubrics Chapter 47, Statutes of 2013 (AB 97, Committee on Budget) requires SBE to develop and adopt the following three evaluation rubrics by October 1, 2015. 9 Self-Assessment Rubric. This rubric is to assist districts in evaluating their strengths and weaknesses. 9 Support Rubric. This rubric is to be used by COEs to determine if a school district does not improve outcomes in more than one state priority for at least one subgroup, and thus is required to receive some form of support. Graphic Sign Off 9 Intervention Rubric. This rubric is to be used by the SPI to determine if a district does not improve outcomes in three ouSt oef cretary four consecutive school years for three or more subgroups in more than one state or local priority, and thus is considered to be Analyst persistently failing. COE = County Office of Education and SPI = Superintendent of Public Instruction. Director Deputy if, based on the support rubric, it does not districts with certain types of support. As Figure 13 improve outcomes in more than one state shows, COEs can provide three types of support. priority area for at least one subgroup. • COE Review of Strengths and Three Forms of Support. Under the new Weaknesses. The COE can deliver system, COEs are responsible for providing school assistance by providing a written review of the district’s strengths and weaknesses Figure 13 New System of School District Support and Intervention COE Options for Providing District Support COE review of strengths a Assignment of academic expert. Assistance from CCEE. and weaknesses. SPI Options for District Intervention Stay or rescind any action Change district LCAP. Impose budget revision aligned to LCAP changes. by district governing board that would prevent student improvement. a In addition to a COE assigning CCEE, the SPI at any time may assign CCEE to help any district. COE = County Office of Education; CCEE = California Collaborative for Educational Excellence; SPI = Superintendent of Public Instruction; and LCAP = Local Control and Accountability Plan. www.lao.ca.gov Legislative Analyst’s Office 15 AARRTTWWOORRKK ##113300443355 AN LAO REPORT in the eight state priority areas. The COE Collaborative for Educational Excellence review also must identify evidence‑based (CCEE), a newly established agency, to programs that could be used by the school provide assistance to the school district. district to meet its annual goals. (We discuss the role of the CCEE in more detail in the box on page 18.) • Assign an Academic Expert. The COE can assign an academic expert or Intervention in Persistently team of experts to assist the district in Failing School Districts implementing effective programs that are SPI Can Intervene in Select Cases. For a likely to improve outcomes in the eight persistently underperforming school district, areas of state priority. The COE also can the SPI can intervene to assist the district in assign another school district within the improving its education outcomes. The SPI can county to serve as a partner for the school intervene, however, only if all three of the following district in need of assistance. conditions are met. • Request Assistance From Newly • Persistent Failure for Several Years. Established Agency. The COE can The SPI can intervene if, based on the request that the SPI assign the California New System Works Somewhat Differently for Charter Schools Chapter 47, Statutes of 2013 (AB 97, Committee on Budget) requires charter schools to adopt Local Control and Accountability Plans (LCAPs), have their performance assessed using rubrics adopted by the State Board of Education (SBE), and receive support from its authorizer or the California Collaborative for Education Excellence (CCEE). The charter school process, however, works somewhat differently from the school district process. We describe the major differences below. Charter School LCAP Adoption Process Different in Two Ways. Chapter 47 requires the petition for a charter school to include an LCAP that establishes goals for each of the eight state priorities (and any identified local priorities) and specifies the actions the charter school will take to meet these goals. The LCAP must be updated annually by the charter school’s governing board. Like school districts, charter schools are required to consult with school employees, parents, and students when developing their annual updates. The LCAP adoption process is different, however, in that charter schools are exempt from the specific requirements to solicit public comment and hold public hearings that apply to school districts. Charter schools also are not required to have their plans approved by the County Office of Education (COE). Support Required for Persistently Failing Charter Schools. Like school districts, charter schools must have their performance assessed based on the new SBE rubrics. For charter schools, however, this assessment is to be conducted by the charter authorizer rather than the COE. A charter school is required to receive support from its authorizer if, based on the intervention rubric, it does not improve outcomes in three out of four consecutive school years for three or more 16 Legislative Analyst’s Office www.lao.ca.gov AN LAO REPORT intervention rubric, the district does not Provides Three New Powers to SPI. If the above improve outcomes in three out of four conditions are met, the SPI can intervene directly consecutive school years for three or more or assign an academic trustee to work on his or her subgroups in more than one state or local behalf. The SPI can intervene in the following three priority area. ways. • Change District LCAP. The SPI can change • CCEE Determines Intervention Is the district’s LCAP to modify the district’s Necessary. The SPI can intervene if the annual goals or the specific actions the CCEE has provided assistance and deter‑ district will take to achieve its goals. mines both that (1) the district has not been able or will not be able to implement CCEE • Impose Budget Revision in Conjunction recommendations and (2) the district’s With LCAP Changes. The SPI can impose performance is so persistently or severely a revision to the district’s budget to align poor that SPI intervention is necessary. the district’s spending plan with the changes made to the LCAP. These changes • SBE Approves Intervention. The SPI can only can be made if the SPI determines intervene only with approval of SBE. they will allow the district to improve subgroups in more than one state or local priority area—the same standard applied for determining whether the Superintendent of Public Instruction (SPI) intervention is necessary in a school district. (Unlike school districts, a charter school that is determined to be struggling based on the support rubric is not required to receive support.) In addition to the support from the charter authorizer, the SPI may assign the CCEE to provide the charter school with support if the authorizer requests and SBE approves the assistance. (If a charter school requests support but is not underperforming based on the intervention rubric, the charter authorizer and CCEE are not required to provide support.) Instead of SPI Intervention, Charter Can Be Revoked by Authorizer. The charter authorizer can consider revoking a charter if the CCEE provides a charter school with support and determines that (1) the charter school has not been able or will not be able to implement CCEE recommenda‑ tions and (2) the charter school’s performance is so persistently or severely poor that revocation is necessary. If the authorizer revokes a charter for one of these reasons, the decision is not subject to appeal. Consistent with current law, the authorizer must consider student academic achievement as the most important factor in determining whether to revoke the charter. The SBE Also Can Revoke Charter or Take Other Actions Based on Poor Academic Performance. The SBE—based upon a recommendation from the SPI—also can revoke a charter or take other appropriate actions if the charter school fails to improve student outcomes across multiple state and local priority areas. (Prior to the adoption of Chapter 47, SBE could take similar action for charter schools only if the schools were (1) engaging in gross financial mismanagement, (2) illegally or improperly using funds, or (3) implementing instructional practices that substantially departed from measurably successful practices and jeopardized the educational development of students.) www.lao.ca.gov Legislative Analyst’s Office 17 AN LAO REPORT outcomes for all student subgroups in one would make improving student outcomes or more of the eight state priorities. in the eight state priority areas, or in any of the district’s local priority areas, more • Stay or Rescind an Action of the Local difficult. The SPI, however, cannot stay or Governing Board. The SPI also can stay or rescind an action that is required by a local rescind an action of the district governing collective bargaining agreement. board if he or she determines the action MAJOR DECISIONS AHEAD Graphic Sign Off Secretary Many important state and district decisions adopt regulations to implement the proportionality Analyst relating to the new formula and the new system clause relating to LCFF supplemental and Director of support and intervention will be made over the concentration funds. Two months later, by Deputy next several years. Figure 14 identifies the major March 31, 2014, it must adopt LCAP templates for milestones ahead. Below, we discuss some of these districts to use in developing their 2014‑15 LCAPs. major decisions in more detail. By October 1, 2015, SBE must adopt the three Many Major Regulations to Be Adopted by rubrics that will be used to assess school districts’ SBE. Over the next several years, SBE must adopt performance. The details of these regulations will numerous regulations relating to the LCFF and significantly affect the manner in which these new the new system of support and intervention. As provisions are ultimately implemented. the timeline shows, by January 31, 2014, SBE must Figure 14 Major Milestones for Implementation of LCFF and LCAPs July 1: Oct 1: Districts must adopt LCAP for 2014-15. SBE must adopt evaluation rubrics. Jan. 31: SBE must adopt regulations July 1: for use of supplemental and Districts must adopt July 1: concentration funds. LCAP annual update. Districts adopt LCAP annual update. 2013-14 2014-15 2015-16 2016-17 Mar. 31: SBE must adopt LCAP template. July 1: Restrictions on spending for Adult Education, ROCPs, and JPAs expire. Oct. 8: . COEs must approve or reject district LCAPs. LCAP = Local Control and Accountability Plan; SBE = State Board of Education; COE = County Office of Education; ROCP = Regional Occupational Centers/Programs; and JPA = Joint Powers Authority. 18 Legislative Analyst’s Office www.lao.ca.gov ARTWORK #130435 AN LAO REPORT CCEE’s Larger Role in New System Remains a record of success in the CCEE’s assigned areas Unclear. Although Chapter 357 clarifies the of responsibility. The legislation, however, does governance structure of the CCEE, its larger role not specify the process the CCEE should take to within the state’s accountability system remains identify agencies with expertise or how the role unclear. As we discuss in the nearby box, the CCEE of these agencies would differ from the role of fiscal agent has the authority to contract with other agencies, including District Assistance and individuals and organizations with expertise and Intervention Teams and the Statewide System of New Agency to Support Struggling Districts Legislation Establishes California Collaborative for Educational Excellence. Chapter 47, Statutes of 2013 (AB 97, Committee on Budget), creates a new agency, the California Collaborative for Educational Excellence (CCEE), to advise and assist school districts in improving performance. Chapter 357, Statutes of 2013 (SB 97, Committee on Budget), establishes a CCEE governing board consisting of five members: (1) the Superintendent of Public Instruction (SPI), (2) the president of the State Board of Education (SBE), (3) a county superintendent of schools appointed by the Senate Committee on Rules, (4) a teacher appointed by the Speaker of the Assembly, and (5) a school district superintendent appointed by the Governor. The SPI, with approval from the SBE, is required to contract with a local education agency (LEA) or consortium of LEAs to serve as the fiscal agent for the CCEE. The fiscal agent, under the direction of the CCEE board, is to subcontract with individuals, LEAs, and other organizations to provide direct support to districts. CCEE Charged With Helping Districts Improve Performance. Statute requires the CCEE to serve as a statewide expert to help districts: (1) improve their achievement in the eight state priority areas, (2) enhance the quality of teaching, (3) improve district/school‑site leadership, and (4) address the needs of special student populations (such as English learner, low‑income, foster youth, and special education students). In particular, the CCEE is intended to help districts achieve the goals set forth in their Local Control and Accountability Plan (LCAPs). CCEE Can Intervene in Specific Cases. The CCEE is involved in turnaround efforts in three ways: • A county office of education (COE) can assign the CCEE to provide assistance to school districts that have an LCAP rejected, request assistance, or are determined in need of assistance based on the COE’s assessment using the support rubric. • The SPI can assign the CCEE to provide assistance to any school district that the SPI determines needs help to accomplish the goals set forth in its LCAP. • The CCEE also is required to play a critical role in determining when the state will intervene in a persistently failing school district. If the SPI, with approval of the SBE, would like to intervene in a persistently failing school district, he or she cannot do so unless the CCEE has provided assistance to the district and determined that intervention is necessary to improve the district’s performance. www.lao.ca.gov Legislative Analyst’s Office 19 AN LAO B R I E F School Support, that currently provide assistance to as a statewide expert in improving educational low‑performing schools and districts. programs. To the extent that districts, COEs, and New Agency’s Prominence and Workload the SPI consider the CCEE a key agency for helping Uncertain. Given the many elements of the new to improve school performance, the agency will system of support and intervention that are yet have a more prominent role advising districts. to be developed and implemented, the CCEE’s Cost of CCEE Also Unclear. Because of workload also remains unclear. The CCEE’s the significant uncertainty regarding the level of workload will be driven partly by the number workload of the CCEE, its associated costs are of districts determined in need of support or unknown at this time. The 2013‑14 budget provides assistance. The number of districts that will need $10 million for the CCEE but includes little detail such support, however, will not be known until the on how and when the funds are to be spent. The SBE rubrics are adopted and districts are evaluated annual cost of the CCEE ultimately will depend based on these rubrics. Because under state law on the composition of the CCEE; the number of most of the CCEE’s activities will be driven by school districts determined to need support or specific requests from school districts, COEs, and intervention; and the frequency with which school the SPI, the CCEE’s role in the new system also districts, COEs, and the SPI request assistance from will be determined by the agency’s reputation the CCEE. CONCLUSION The creation of the LCFF addresses many of academic plans designed to improve performance the flaws of the state’s prior K‑12 funding system, in their local context. As evident throughout this which was widely believed to be overly complex, report, both the LCFF and the new system of inefficient, and outdated. The LCFF, for instance, support and intervention represent major state is much simpler when compared with the dozens policy changes. Moreover, in the coming months of categorical funding formulas that were part and years, the Legislature, SBE, and school districts of the state’s previous funding system. The new will face many decisions that ultimately will shape system of funding and accountability, including the how the formula and new accountability system are provisions dealing with the LCAPs, also is intended implemented, which, in turn, will determine the to reduce some spending requirements while giving effectiveness of the legislation. districts more guidance in developing fiscal and LAO Publications This brief was prepared by Edgar Cabral and Carolyn Chu, and reviewed by Jennifer Kuhn. The Legislative Analyst’s Office (LAO) is a nonpartisan office that provides fiscal and policy information and advice to the Legislature. To request publications call (916) 445-4656. This brief and others, as well as an e-mail subscription service, are available on the LAO’s website at www.lao.ca.gov. The LAO is located at 925 L Street, Suite 1000, Sacramento, CA 95814. 20 Legislative Analyst’s Office www.lao.ca.gov