The 2025-26 Budget: Expanded Learning Opportunities Program

2025-26 BUDGET The 2025-26 Budget: Expanded Learning Opportunities Program GABRIEL PETEK | LEGISLATIVE ANALYST | FEBRUARY 2025 SUMMARY The state has three expanded learning programs that provide students with academic and enrichment activities outside of normal school hours. The vast majority of funding is provided through the Expanded Learning Opportunities Program (ELOP). ELOP funding is provided to school districts and charter schools through two funding rates that are based on the proportion of total transitional kindergarten (TK)-6 attendance from students who are English learners or from low-income families (EL/LI). (Throughout this brief, we use the term “districts” to refer to school districts and charter schools.) Districts with a student body that is 75 percent or more EL/LI receive a rate per EL/LI student that is set in statute. We refer to these as the “Tier 1” rates. For districts below this threshold, the rate will vary based on the amount of funding remaining after accounting for Tier 1 allotments. Estimated Cost of Proposal Is Reasonable, but Recommend Delaying Changes at Least One Year. The Governor’s budget increases ELOP funding by $435 million and makes all districts with EL/LI shares of 55 percent or more eligible for the higher Tier 1 funding rate. Districts that shift to the higher funding rate would be required to offer the program to all students, not only their EL/LI students. The amount of funding proposed is a reasonable estimate of the costs associated with the proposed change. If the Legislature adopts the Governor’s proposal, we recommend delaying the requirements and associated funding for at least a year. Districts would have little time after the state budget is enacted in June to make the staffing and facilities changes necessary to meet the new requirements in 2025-26. Recommend Revisiting Overall Structure. Given the Governor’s proposed increase in funding for ELOP, we think this is a good opportunity for the Legislature to revisit the overall structure for expanded learning programs. We identify several key problems the Legislature might want to address before expanding the program. Specifically, we make the following recommendations: • Align Funding for ELOP and the After School Education and Safety (ASES) Program. Currently, many of the students required to be served with ELOP already have access to expanded learning through ASES. As a result, districts effectively receive two different streams of funding to serve some of the same students. One way to address this issue would be to reduce ELOP funding by the amount of ASES funding districts receive. This would mean districts have less ELOP funding for programming beyond the minimum requirements, but would free up several hundreds of millions of dollars that could be redirected to other education priorities. • Over the Long Run, Fund ELOP Based on Actual Program Participation. Current ELOP funding is based on the amount of EL/LI elementary school students in a district rather than the amount participating in the program. This results in districts with high demand for the program receiving less funding per participating student than districts with lower demand. We recommend the state fund ELOP based on the number of students participating in ELOP programming as program participation data starts becoming available (beginning 2026-27). • Consider Setting a Fixed Rate for Lower Funding Tier. The current funding rate for Tier 2 districts changes each year based on the amount of funding remaining after Tier 1 districts have been funded. This makes planning in these districts challenging. The state could set a fixed ELOP rate to reduce uncertainty in these districts, although this would shift some of the fiscal risks and uncertainties to the state. www.lao.ca.gov 1 2025-26 BUDGET Background and enrichment components, with maximum staffing ratios of 20:1. ELOP’s funding structure is State Has Three Expanded Learning different from ASES in three key ways: Programs. The state has three expanded learning programs that provide students with academic • Funding goes to districts, who have flexibility and enrichment activities outside of normal school over how programs are allocated across hours. Two of these programs, the ASES program school sites. and 21st Century Community Learning Centers • Funding is apportioned by formula to all (21st Century program), are longstanding. In 2002, districts with TK-6 enrollment rather than voters approved Proposition 49, which requires through a competitive grant process requiring the state to provide at least $550 million annually districts to proactively apply for funds. to the ASES program. The 21st Century program • Funding amounts are based on a district’s is primarily federally funded. In 2021-22, the state number of EL/LI students in grades created ELOP with plans to ramp up funding TK through grade 6, not student participation through 2025-26. This program now represents in the program. the vast majority of funding schools receive for expanded learning (Figure 1). ELOP Funds Allocated Through a Two-Tiered Funding Structure. The ELOP implementing ELOP and ASES Have Similar Programmatic legislation established two funding rates that Requirements but Different Funding Structures. account for a district’s TK-6 attendance and vary ELOP provides funding to districts to provide based on the proportion of a district’s students in-person expanded learning opportunities to who are EL/LI (Figure 3). Since 2022-23, districts students in TK through grade 6. Under ELOP, with a student body that is 75 percent or more funded programs are required to provide at EL/LI receive a rate per EL/LI student that is set least nine hours per day of combined in-person in statute. We refer to these as the Tier 1 rates. instructional time and expanded learning For other districts, also known as Tier 2 districts, opportunities during the school year and for statute specifies that the rate will vary based on 30 days during the summer. Figure 2 compares the the amount of funding remaining after accounting ELOP and ASES program requirements. Similar to for Tier 1 allotments. From 2022-23 through ASES, ELOP programs must include educational 2024-25, the state appropriation has remained at $4 billion, while the Tier 1 rate and Figure 1 overall Tier 1 TK-6 attendance has increased. As a result, funding Funding for California’s Expanded Learning Programs available for Tier 2 districts (In Millions) has decreased. ELOP Tiers Have Different $4,500 Programmatic Requirements. 4,000 21st Century Program Beginning in 2022-23, Tier 1 3,500 ASES districts have been subject to ELOP higher requirements. Specifically, 3,000 these programs must offer the 2,500 program to all TK through grade 2,000 6 students in classroom-based 1,500 settings and provide access 1,000 to all students whose parent or 500 guardian requests their placement in a program. By contrast, 2020-21 2021-22 2022-23 2023-24 2024-25 Tier 2 districts are only required to 21st Century Program = 21st Century Community Learning Centers; ASES = After School Education; and Safety Program; and ELOP = Expanded Learning Opportunities Program. provide access to EL/LI students who are interested in the program. 2 LEGISLATIVE ANALYST’S OFFICE 2025-26 BUDGET Tier 2 districts can opt to serve Figure 2 non-EL/LI students, and may Key Components of California’s Two Largest choose to cover the additional Expanded Learning Programs costs above their apportionment by assessing family fees. Districts that ASES ELOP are found to be out of compliance Funding Competitive grant process that Two-tier funding formula Allocation prioritizes high-poverty schools. based on the number with these requirements lose Funded using a daily per-student of EL/LI students in the part of their ELOP apportionment rate (10.18 in 2024-25). district or charter school. proportional to the infraction. Hours of Must operate an after school Must operate for at least California’s Programs Operation program. Grantees can apply 9 hours every school day for additional funding for before including normal instruction Have Different Reporting school or summer programs. hours and for at least Requirements. Districts with Must begin immediately after the 30 days over the summer. schools participating in ASES are school day ends and operate until at least 6 pm every school day. required to report attendance Grade Levels TK-8th grade. Formula is based on TK-6th semiannually. Currently, districts grade attendance, but can are not required to report their be used for other grades. ELOP enrollment or participation. Curriculum Must include an educational Same as ASES. (One exception: districts are and literacy element and an educational enrichment element. required to report the number of students enrolled in ELOP Staffing For TK and kindergarten, maintain Same as ASES. a student to staff ratio of no more programs that are served at than 10 to 1. third-party, off-site locations.) For other grades, maintain a Chapter 1003 of 2024 (AB 1113, student to staff ratio of no more than 20 to 1. McCarty) requires the California Parent Fees Optional. Programs that charge Same as ASES. Department of Education to collect, fees must waive them for starting in 2025-26, enrollment in low-income students, homeless youth, and foster youth. each of the state’s three expanded Fees must be based on a sliding learning programs. This collection scale that considers family would be made through the state’s income and ability to pay. longitudinal data system. Local Match Local match of $1 (cash or in-kind Not required. services) for every $3 in state Staffing and Facilities Are funding. Key Challenges in Growing ASES = After School Education and Safety Program; ELOP = Expanded Learning Opportunities Expanded Learning Programs. Program; TK = transitional kindergarten; and EL/LI = English learner or low-income. The rapid increase in funding for ELOP has required districts to significantly increase the size of Figure 3 their expanded learning programs. ELOP Funding Tiers and Rates Over Time Districts have indicated two key obstacles to increasing programs. Tier 1 Tier 1 Rate Per Tier 2 Rate Per EL/LI Threshold EL/LI Student EL/LI Student Some districts find it challenging 2021-22 80% $1,170 $672 to hire additional qualified staff 2022-23 75 2,500 2,054 for their expanded learning 2023-24 75 2,750 1,803 programs. Districts also have 2024-25 75 2,750 1,580 facility constraints that make it ELOP = Expanded Learning Opportunities Program and EL/LI = English learner or low-income. difficult to increase the number of children they serve in expanded learning programs. www.lao.ca.gov 3 2025-26 BUDGET Governor’s Proposal Districts have also historically received ASES funding to provide expanded learning programs, Increases Number of Districts Eligible for primarily at low-income schools. We estimate Tier 1 Rates. The Governor proposes to lower the that, on average, Tier 1 districts received about threshold for Tier 1 funding from 75 percent EL/LI $450 per EL/LI student from ASES in 2023-24. students to 55 percent, while keeping the Tier 1 rate For Tier 2 districts, we estimate they received, on at $2,750 per EL/LI student. The budget includes average, $280 per EL/LI student. (The specific an associated $435 million Proposition 98 General amounts will vary based on historical participation Fund increase to ELOP, which is intended to pay for in ASES. Some ASES funds may also go to middle the increased Tier 1 costs without reducing the rate schools.) Since ELOP and ASES programmatic for districts in Tier 2. The administration indicates requirements are so similar, districts are largely it does not plan to make any changes to ELOP able to use funding from both sources to operate moving forward. the same program across different school Assessment sites. Given districts are required to provide In this section, we provide our assessment comprehensive expanded learning programs as of the Governor’s proposal to provide additional a condition of receiving ELOP funding, there is no ELOP funding. Given the Governor’s proposed clear rationale for districts to continue to receive increase in funding for the program, we think this is this additional funding from ASES. a good opportunity for the Legislature to revisit the ELOP Funding Is Not Based on Program overall structure for expanded learning programs. Participation. The ELOP funding formula is based We identify several key problems with ELOP that the on TK-6 attendance in the regular school day Legislature might want to address before expanding across the entire district, not how many of those the program. students are enrolled in or participate in expanded Proposal Would Affect Districts That Enroll learning programs. This differs from ASES, which About One-Quarter of California’s Students. reimburses districts based on program attendance. A significant number of districts, including some of The disconnect between funding and participation the state’s largest, have EL/LI proportions between means that districts with relatively low participation 55 percent and 75 percent. Based on our analysis, in ELOP will effectively have higher levels of funding districts representing 27 percent of California’s per student participating in the program. total attendance would shift from Tier 2 to Tier 1 Existing ELOP Rates Effectively Higher Than funding rates. ASES Rates. Without comprehensive data on Proposed $435 Million Is a Reasonable program participation, it is not possible to estimate Estimate of Increased Costs. Based on 2023-24 with precision the current funding rates per EL/LI attendance—the data used to calculate 2024-25 student participating in ELOP programs. However, allocations—the proposed $435 million in additional based on our analysis of ELOP and ASES funding funding would allow for increasing the number of rates, we find that ELOP funding per participating Tier 1 districts without affecting Tier 2 rates. By the student is likely significantly higher than ASES. To spring, the state will have preliminary 2024-25 data compare funding rates for the two programs, we that it can use to update this estimate. Increases in converted the ASES daily rates into an annual rate attendance or the share of EL/LI students for Tier 1 consistent with ELOP requirements. Using 2023-24 districts would require additional funding to avoid attendance and rates, the ASES daily rate would be reductions to the Tier 2 rates. equivalent to $2,900 per participating ELOP student per year. This is somewhat higher than the Tier 1 ELOP Funding Often Duplicative of ASES and Tier 2 rates. When accounting for participation, Funding. The state provided ELOP funding with however, both tiers of ELOP rates are likely the intent that districts operate comprehensive providing districts with substantially more funding expanded learning programs for TK-6 students— per participating student than ASES. either for all students (Tier 1 districts) or only EL/LI students (Tier 2 districts). 4 LEGISLATIVE ANALYST’S OFFICE 2025-26 BUDGET Changing ASES Program More Difficult Than and developing new programs. Making these Changing ELOP. Although the Legislature has changes would be challenging by next school complete flexibility to modify ELOP, it has more year. In addition, districts would need to notify limited flexibility to change ASES. Most notably, families of the broader eligibility for the program. as required by Proposition 49, shifting substantial Districts commonly notify families of enrollment in portions of funding from ASES into ELOP—such the spring before the next school year. As a result, that ASES funding dips below $550 million—would any changes for the 2025-26 school year typically require approval of the voters. Furthermore, would require some notifications to occur in the modifying the programmatic aspects of ASES next few months—before the Legislature typically would require a two-thirds vote of the Legislature. passes the annual budget. New Reporting Requirement Only Partially Recommendations Captures Level of Participation in Expanded Learning Programs. Data on the number of Align ELOP and ASES. We recommend the Legislature take action to better align ELOP and students enrolled in expanded learning programs ASES funding to ensure state resources are will be collected starting in 2025-26. While being used for the Legislature’s highest priorities. collecting enrollment data will significantly improve One way to accomplish this would be for the the Legislature’s ability for program oversight, it Legislature to reduce a district’s ELOP funding may not provide a sense of day-to-day participation dollar for dollar based on the amount of ASES in the program. Collecting attendance data, as is funding they use for programs in TK through currently required for ASES, would likely provide grade 6. This would mean districts have less better information about program use. ELOP funding for programming beyond the Tier 2 Rate Is Unstable. The Tier 2 ELOP minimum requirements, but free up several rate is effectively determined by whatever ELOP hundreds of millions of dollars that could be funding is left over after Tier 1 districts have been redirected to other education priorities. As part funded. This structure provides a great degree of of this option, if serving additional students in predictability for Tier 1 districts and for state costs, expanded learning programs was a priority, the but results in a highly variable Tier 2 rate. In the Legislature could allow districts to retain at least last three years, the Tier 2 rate has decreased a portion of their funding if they agreed to use 23 percent (from $2,054 to $1,580). This variability their ASES funding for students in grades 7 and 8. makes it difficult for districts to make long-term Allowing districts to keep these funds would decisions about what level of staffing and reduce the amount of savings generated, but could programming they will be able to afford, even if they increase the number of middle school students with can accurately predict how many EL/LI students access to expanded learning programs. they are likely to serve. Going forward, there are a few factors that contribute to this uncertainty. Over the Long Run, Fund ELOP Based on For example, the Tier 2 rate is likely to continue Actual Program Participation. Funding ELOP based on a district’s overall TK-6 attendance declining over the next couple of years as the state may have been reasonable as schools were implements universal TK and enrollment expands. ramping up their programs. After several years On the other hand, in subsequent years, the rate of implementation, however, we recommend may increase as the state continues to experience the Legislature revisit this approach. Funding projected declines in overall student enrollment. ELOP based on local program participation more Districts Likely Need Time to Scale Programs effectively distributes funding based on need and and Notify Families. Under the Governor’s interest from families. One option would be for the proposal, districts shifting from Tier 2 to Tier 1 state to use the program enrollment data it will rates may need to significantly expand program start collecting in 2025-26 to determine program capacity to serve all students who request funding. Alternatively, the Legislature could require access beginning next school year. This may that daily attendance be collected and used to require hiring qualified staff, modifying facilities, www.lao.ca.gov 5 2025-26 BUDGET determine funding levels, as it likely best reflects for the state after the phase in of TK, and could the day-to-day demand for expanded learning potentially reduce state costs over the long term. programs. While there are trade-offs to using Delay Funding Increases and Associated enrollment or attendance funding, either option Programmatic Changes Until 2026-27 or Later. better aligns funding with demand for the program If the Legislature adopts the Governor’s proposal compared with the current approach. Given the or enacts other changes to the number of students state will not begin collecting enrollment data until that districts must serve, we recommend delaying 2025-26, this change could not be implemented these programmatic requirements for at least a until, at the earliest, the 2026-27 school year. year. As discussed above, the shift from Tier 2 to Consider Setting a Fixed Tier 2 Rate. A fixed Tier 1 comes with increased obligations for the Tier 2 rate that does not change based on the costs number of students served. Tier 2 districts are of funding Tier 1 programs would eliminate much of obligated to serve only EL/LI students, while Tier 1 the uncertainty that Tier 2 districts face each year districts must serve all students whose parents when making program decisions. This approach request placement in the program. Districts would come with trade-offs though, as it would shift would have little time after the state budget is some of the fiscal risks and uncertainties related to enacted in June to make the staffing and facilities enrollment to the state. Although total public school changes necessary to meet the new requirements. enrollment may grow somewhat with the continued Delaying the changes for at least a year would phase in of TK in coming years (currently projected give districts time to thoughtfully expand their at 1.1 percent between 2023-24 and 2025-26), programs. In tandem with delaying programmatic enrollment is projected to decrease over the long requirements, we recommend the Legislature also term. As a result, additional district enrollment is delay any scheduled funding increases. unlikely to create significant future cost pressure 6 LEGISLATIVE ANALYST’S OFFICE 2025-26 BUDGET www.lao.ca.gov 7 2025-26 BUDGET LAO PUBLICATIONS This report was prepared by Dylan Hawksworth-Lutzow, and reviewed by Edgar Cabral and Ross Brown 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 report 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, California 95814. 8 LEGISLATIVE ANALYST’S OFFICE