Legislative Analyst's Office

Analysis of the 2002-03 Budget Bill

Accountability and Low-Performing Schools

In this section we discuss the state's school accountability system. Although the system involves all schools throughout the state, this discussion places emphasis on aspects of the system concerned with improving performance at so-called "low-performing" schools, as well as challenges posed for the state's accountability efforts by recent changes in federal Elementary and Secondary Education Act (ESEA) reauthorization.

Public Schools Accountability Act and Related Programs

The Public Schools Accountability Act (PSAA)—Chapter 3x , Statutes of 1999, (SB 1x, Alpert)—created a statewide school-level accountability system which (1) rewards schools for academic improvement, (2) provides external intervention for lower-performing schools, and (3) potentially sanctions schools which continue to fail after receiving external assistance. Figure 1 shows the major features of the PSAA.

Figure 1

Major Features of the Public Schools Accountability Act



ü  Academic Performance Index (API)


·   Ranks schools in deciles 1 through 10 based on results from student assessments.

ü  Governor’s Performance Awards


·   Provides rewards to schools that improve their API scores annually.

ü  Intervention Programs


·   Immediate Intervention for Underperforming Schools Program (II/USP).


·   High Priority Grant Program for Low-Performing Schools (HP).

ü  Sanctions


·   Sanctions schools in the II/USP or HP program that do not make their API growth targets.


·   Sanctions range from an intervention team being sent to the school to closing the school down.


The Academic Performance Index (API) is the cornerstone of the PSAA. Its purpose is to measure a school's academic performance and the growth in performance over time. The API is still a work in progress and is likely to change annually for the next several years. Starting with the 2002 API, the State Department of Education (SDE) will include the English-language arts California Standards Test in the API for the first time. Soon other California Standards Tests in mathematics, science, and social science will be added to the API.

Some programs—such as the Governor's Performance Awards—were created as part of the PSAA. Other programs we discuss below—such as the Certificated Staff Performance Awards—while not formally part of the PSAA, are part of the state's overall accountability efforts and are linked to the PSAA by using the API as a determining measure.

API Reward Programs

The SDE provides rewards to schools and teachers based on a school's ability to annually improve its API score. Under the Governor's Performance Awards, schools that make their schoolwide and "significant sub-group" API growth targets receive awards on a per-pupil basis. The Governor's budget provides $157 million for the Governor's Performance Awards—the same amount appropriated in the 2001-02 Budget Act. (In the Third Extraordinary Session, the Legislature reduced the current-year amount of funding to $144.3 million.)

The second reward program, the Certificated Staff Performance Awards, provides awards of $5,000, $10,000, or $25,000 to certificated staff at low performing schools which increased API scores the most over a one-year period. In 2000-01, teachers and principals at 304 schools received awards. The Governor's November Revision proposed to reduce funding for the Certificated Staff Performance Awards program from $100 million to $50 million, keeping the size of the rewards the same but reducing the number of staff receiving awards by one-half. In the Third Extraordinary Session, the Legislature deleted all current-year funding for the Certificated Staff Performance Awards. The Governor's budget proposes $50 million for the program for 2002-03. (Below, we discuss whether the Legislature should consider eliminating the Certificated Staff Performance Awards for the budget year.)

Programs Based on the API and Targeted to Low Performing Schools

As shown in Figure 2, the Governor's budget proposes $641 million for programs targeted at assisting low-performing schools (as identified by their low API scores). Generally, the goals of these programs are either to (1) intervene in low-performing schools to initiate a schoolwide reform effort or (2) improve the quality or supply of teachers at lower performing schools. (Later, we discuss the low-performing school intervention programs in detail, and propose changes the Legislature could make to develop a comprehensive system to address school intervention and sanctions for low-performing schools.)

Figure 2

Programs For Low-Performing Schools

(In Millions)




High Priority Schools Grant Program



Immediate Intervention/Underperforming Schools



Teaching as a Priority


Comprehensive School Reform Demonstration



California Subject Matter Projects



Assumption of Loans for Education



Governor's Teaching Fellows



National Board Certification



Cal Grant T






a   $20 million of this amount would be expended in 2002-03.

b   $8 million of this amount would be expended in the 2002-03.

c   Federal funds.

d   The Subject Matter Projects require 75 percent of slots go to teachers in the bottom four deciles of schools.


Eliminate the Certificated Staff Performance Award Program

We recommend that the Legislature eliminate the Certificated Staff Performance Award Program because the program may reward short-term fluctuations in test scores, and it does not provide additional services to students. (Reduce Item 6110-133-0001 by $50 million.)

Chapter 52, Statutes of 1999 (AB 1114, Steinberg), created the Certificated Staff Performance Incentive Act to provide annual rewards of $5,000 to $25,000 to certificated staff at schools meeting two criteria:

The Governor's budget provides $50 million for the program for 2002-03. In the November Revision, the Governor proposed reducing the cur rent-year appropriation for this program from $100 million to $50 million by cutting the number of rewards in half. In the Third Extraordinary Session, the Legislature suspended this program on a one-time basis, eliminating program funding for 2001-02.


In summer 2001, certificated staff at schools that had the highest percentage growth in their 2000 API received awards ranging from $5,000 to $25,000 per person. Since the monetary value of rewards is so high, it is even more important for awards to be distributed to schools based on "real" academic improvement rather than short-term fluctuations in test scores. We have several concerns with this program.

Questionable Ongoing Impact. We tracked the year 2000 Certificated Staff Performance Award schools to assess their results in 2001. Figure 3 summarizes the performance of award schools compared to all other schools in the state. It shows that 43 percent of Certificated Staff Performance Award schools met their API growth targets in 2001, and, one-third of the schools had declining API scores. In comparison, 58 percent of non-Certificated Staff Performance Award schools made their API growth targets, and one-quarter of schools had declining API scores. The data reveal that Certificated Staff Performance Award schools performed worse in 2001 than schools not in the program. In 2001, the data suggest that many of the school staff receiving Certificated Staff Performance Awards did so based on short-term fluctuations in their school's test scores, rather than substantial academic improvement.

Figure 3

How Certificated Staff Performance
Awards Schools Compare One Year Later

2001 Academic Performance Index (API)


Percent of Schools Making API Growth

Percent of
Schools with
Declining API

Average API Growth

Certificated Staff Award Schools




Non-Certificated Staff Award Schools





Minimal Incentive. The incentive effect of the Certificated Staff Performance Awards may be minimal because the probability of receiving an award is so small. Teachers may view receiving a Certificated Staff Performance Award like winning the lottery, and not as a reward for their hard work because there is so little direct connection between the reward and their actions.

Inadequate Discretion. The Certificated Staff Performance Awards can only be used for teacher bonuses, and cannot be used at the school site for other improvements in educational services. In contrast, the Governor's Performance Awards (GPA) provides funding to more schools, and schools can focus the funds on a variety of improvements in educational services to students. Schools know the exact level of achievement gain necessary to receive an award. The local school-site council can then direct the funds to uses that will continue to improve the quality of education at the school site.

We recommend eliminating the Certificated Staff Performance Award program, and saving $50 million for other education purposes because:

Accordingly, we recommend reducing Item 6110-133-0001 by $50 million.

Aligning State and Federal Accountability Systems

In addition to the accountability requirements of state law, SDE is required by federal law to administer a federal accountability system for schools receiving federal Title I funds. The major differences between the PSAA and reauthorized federal Title I accountability include:

Below, we discuss challenges for the state posed by recent federal changes and ways the state can harmonize its accountability system with the new requirements.

New Federal Title I Accountability Requirements

Recently, the federal government reauthorized the ESEA. For 2002-03, the federal government provides California with $1.78 billion of Title I program funds that focus on improving the quality of education for socio-economically disadvantaged students. This represents an increase of $411 million (30 percent) from 2001-02. (The Governor's budget does not reflect the higher funding level provided by reauthorization, and only assumes a $60 million increase for Title I.)

The reauthorization makes major changes to the federal government's Title I school accountability system. The SDE is required to develop a statewide Title I plan in which it addresses how California will implement the major provisions of the reauthorized Title I. We encourage the Legislature to play an active role in making policy decisions that will be required in writing the state plan. Below are some of the major accountability provisions, and how they affect California:

Figure 4

Student Achievement on California
Standards Test—Language Arts


Grade 4


Grade 8



Economically Disadvantaged 



Economically Disadvantaged 



















Below Basic






Far Below Basic







One Set of Accountability Standards Instead of Two

We recommend that the Legislature amend the Public Schools Accountability Act to align to the federal Title I accountability systems by (1) defining a minimum "proficiency" level for all students for Title I purposes, and (2) adjusting the Academic Performance Index calculation to measure the growth in the number of students meeting the Title I proficiency level. The benefits of this approach is that schools are held to one set of accountability standards instead of two.

The ESEA reauthorization requires states to have one accountability system meeting both federal and state requirements. We believe that there is value in having only one measure of academic progress that determines whether schools need external assistance or receive performance awards. Having two competing systems could send mixed messages if a school receives rewards or sanctions under one program, but different signals under the other. In addition, we believe that the federal government has established a comprehensive approach to monitoring, intervening, and potentially sanctioning low-performing schools. We recommend the Legislature amend the PSAA to correspond more closely to the federal Title I accountability system, as discussed below.

Defining Proficient for Federal Law and Its Impact on the PSAA. As mentioned above, one of the main differences between Title I accountability requirements and the states is how academic improvement is measured. Federal law requires states to improve the achievement of all students to a state-defined proficiency level over a 12-year period. A key difficulty in aligning the state and federal systems will be in redefining the API to measure the progress of students' achievement toward meeting the proficiency target. The Legislature and SDE should carefully consider this matter, as the definition of "proficient" implicitly defines the adequate yearly progress that schools must make to avoid interventions and sanctions. If the state is overly aggressive, and sets the Title I proficiency level too high, most schools will not make their AYP, and the state will eventually have to intervene in many schools, at considerable costs. If the proficiency level is set too low, schools won't be motivated to improve.

We suggest that the state define proficient for Title I purposes differently than the SBE has defined proficient when establishing cut scores for the California Standards Test. Figure 4 shows that only one-third of students currently meet the state's definition of proficient or above. In some of California's lower performing schools, only 5 percent to 10 percent of students currently perform at a proficient level. These lower performing schools would have to achieve unprecedented growth to move all students to a SBE-defined proficiency level over a 12-year period. Since federal law requires states to implement a single state accountability system that meets the Title I accountability requirements, we believe the Legislature will have to amend the PSAA to conform to federal law. Accordingly, we suggest that the SDE and the Legislature carefully consider how they define proficient for Title I purposes. Specifically, we recommend the Legislature amend the PSAA to (1) define a "proficient" level for Title I accountability purposes, and (2) adjust the API calculation to measure the growth in the number of students meeting the "proficiency" target.

Need to Track High School Graduation Rates. In addition to standards-aligned assessments in language arts and mathematics, federal Title I accountability requires states to track high school graduation rates. Currently, SDE is unable to accurately collect reliable graduation-rate data because SDE is unable to track individual students. The 2000-01 Budget Act provided $500,000 to the Office of the Secretary for Education (OSE) to contract for a study to determine how the state should collect data on (1) graduation rates, (2) student and teacher attendance rates, and (3) other potential academic indicators to support the API. The OSE plans to release this report soon. We discuss school and student-data issues in more detail in the California School Information Services section of this chapter.

Low-Performing School Interventions and Sanctions

In accountability systems, interventions are the first steps taken after a school has shown a lack of progress in meeting its goals. In this section we discuss the state and federal intervention programs. We identify some of the differences among the programs, and propose aligning the planning requirements for the four existing intervention programs to reduce the burden on schools of developing multiple action plans.

Schools participating in the intervention programs must begin to improve the academic performance of their students or face more severe interventions and sanctions. The first set of schools participating in these programs will potentially face state or federal sanctions in the fall of 2002. We identify funding sources to finance the costs of the more severe interventions and sanctions. We then provide an estimate of the number of schools that may have to face the more severe interventions and sanctions. Finally, we discuss the infrastructure that the state must develop to prepare to sanction low performing schools that continue to fail to improve.


The SDE administers four low performing school intervention programs—the state High Priority Grant Program (HP) for Low-Performing Schools, the state Immediate Intervention for Underperforming Schools (II/USP), the federal Comprehensive School Reform Demonstration (CSRD) program, and the federal Title I accountability—School Improvement program. Figure 5 summarizes these programs and shows their similarities and differences.

Figure 5

Low-Performing School Intervention Programs


High Priority Grant Program

Intervention for
Underperforming Schools (II/USP)

Comprehensive School Reform

Title I

Number of Schools

Approximately 580






Voluntary, API decile 1 to 5, funding for about 580 API decile 1 schools.

Voluntary, API decile 1 to 5, did not make API growth target one year.

Competitive Grant, Title I school, SDE creates priorities.

School receiving Title I funds, did not make API growth target two consecutive years.


$50,000 planning grant, $400 per
student implementation grant.

$50,000 planning grant; $400 per student implementation grant.

$200 per student implementation grant, can receive II/USP planning grant.

Must focus existing Title I funding on intervention.

Action Plan

All II/USP requirements plus four additional requirements. Provide annual data on progress.

22 specific requirements.

Nine specific components. Must use research-based model. Must also complete II/USP plan.

Research-based, corrective action plan. District must provide technical assistance.



School district or external.

School district or


School district.


Three years implementation, SBE review.

Two years implementation, if “significant growth”—additional year of funding.

Three years.

See Figure 6.

Types of

SPI can assign intervention team, or SPI  can assume legal rights and duties of school.

Same as High Priority Grant Program.

Same as High Priority Grant Program.

See Figure 6.


Aligning Existing Intervention Programs

We recommend the Legislature align the planning requirements for the existing intervention programs to focus the attention of schools and school districts on core components of the action plans. We further recommend the Legislature amend statute to allow federal plans to meet the planning requirements of state programs.

Figure 5 shows the different planning requirements for the state and federal intervention programs. There are similarities among the four sets of planning requirements, but there are also many differences. It is possible that a school could participate in all four programs, and be required to develop four different school plans. Because the intent of the programs is similar, we recommend that the Legislature streamline the planning process, by allowing a school to submit only one plan regardless of the program in which the school is involved.

Since the Legislature cannot change the requirements of the federal CSRD or School Improvement programs, we recommend the Legislature allow a CSRD application or a School Improvement corrective action plan to meet the planning requirements of II/USP or HP. In addition, we recommend that the Legislature consolidate the planning requirements of the two state programs, and focus on the most important reform requirements. We recommend the Legislature streamline the intervention planning process by (1) allowing federal plans to meet the requirements of state plans, and (2) consolidating the planning requirements for the state interventions.

Funding Available for Additional Intervention and Sanctions

The Legislature may have up to $55.6 million of federal Title I, Part A funding for School Improvement purposes, including school intervention and sanction activities, if a state waiver request is successful.

New accountability provisions of Title I, Part A require that states reserve 2 percent of Part A allocations for School Improvement purposes in 2002-03. As mentioned above, the Governor's budget does not reflect the $411 million increase in Title I funding for 2002-03. California must use $29.1 million of this unbudgeted amount for School Improvement purposes to meet the 2 percent requirement in the budget year. We believe that the additional costs of supporting interventions and sanctions may exceed $29.1 million, and we have identified additional federal resources that could be redirected for this purpose (see below).

Other Potential Funding Depends on Federal Waiver. We recommend in the "Assessments" section of this chapter that the Legislature direct SDE to seek a waiver from the federal Department of Education (DOE) to redirect $26.5 million of funds provided for federal assessment requirements instead to Title I School Improvement efforts. If DOE approves the waiver, the Legislature would have $55.6 million in federal funds available for School Improvement efforts. Below, we provide recommendations on how the Legislature should utilize the additional funding to assist schools that will be subject to sanctions in 2002-03.

Schools at Risk of Sanctions under Federal Title I

We recommend the Legislature enact legislation to include School Improvement schools subject to federal sanctions in the sanctioning process under state law, in order to align the state and federal accountability systems.

As noted earlier, Title I schools that do not make AYP (currently defined as making API growth targets) for two consecutive years are deemed "School Improvement" schools under federal law. Figure 6 shows the intervention and sanction timeline for a school assigned School Improvement status. As part of Title I reauthorization, Congress made numerous changes to this process including:

Figure 6

Intervention Timeline for Federal Title I Accountability

Failed to make Annual Yearly Progress (AYP)
For two consecutive years.

·   Develop two-year improvement plan.

·   Use 10 percent of Title I funds for professional development focused on school improvement.

·   Provide students with option to transfer to any other school in the school
district (if space is available) and pay the transportation costs.

Failed to make AYP for three consecutive years.

·   Students permitted to use Title I funds to obtain tutoring/after school program from SDE approved public or private provider.

Corrective Action—failed to make AYP for four consecutive years.

·   School district must take one of the following actions—replace responsible staff, implement new curriculum, significantly decrease management authority at school level, appoint external expert to advise school, extend school day or school year, or restructure the internal organizational structure of the school.

Sanctions failed to make AYP for five consecutive years.

·   Immediately prepare a plan, and do one of the following options within one year:

    - Reopen school as charter school.

    - Replace most of the school staff.

    - Hire private management company to operate school.

    - Turn the operation over to SDE.

    - Other major restructuring.


Although the reauthorization restructures the intervention process, the clock does not start over for schools that were identified for School Improvement in the past. Figure 7 summarizes the number of California schools in School Improvement, and the year in which they started the program. Schools that make their AYP for two out of three years exit the School Improvement program. Currently, 1,281 California schools are still in the program at one of the stages identified in Figure 6. Many of these School Improvement schools will have to use their Title I funds to provide greater school choice and offer tutoring after school vouchers in 2002-03. Some of the schools will face school district corrective actions. In addition, SDE has identified that as many as 18 schools could face Title I sanctions in fall 2002. The number of schools facing Title I sanctions is likely to grow in subsequent years.

Figure 7

California Schools in Federal
School Improvement Program

Current Status of Cohorts

Implementation Year

Entered School

 Exited School

Remaining In School




















Under federal law, SDE is required to determine from a menu of options how School Improvement schools are sanctioned. The sanctions process established in PSAA would meet the federal sanction requirements. In order to avoid having two separate sanctioning processes, we recommend that the Legislature adopt legislation to apply the PSAA sanctioning process to School Improvement schools that are subject to sanctions under federal law.

SBE Definition Will Determine the Number of Schools Facing State Sanctions

The II/USP provides participating schools with $50,000 planning grants followed by $200 per-pupil implementation grants for two years. The first cohort of II/USP schools will complete their implementation grants in fall 2002. After the two implementation years, II/USP schools face one of three potential actions depending on the schools academic achievement:

At the February 2002 meeting, SBE defined "significant growth" as making positive growth in one of the two implementation years. Figure 8 shows the achievement of II/USP schools during their planning grant year, and first implementation grant year (1999-00 and 2000-01). In fall 2002, SDE will use similar data from the first and second implementation years to determine which schools make significant growth (2000-01 and 2001-02). The figure shows that:

The Governor's budget assumes that 80 percent of II/USP cohort I schools will continue to receive a third-year implementation grant. If the data in Figure 8 are representative of how cohort I will do in 2000-01 and 2001-02, about two-thirds of schools (rather than 80 percent) would make significant growth and receive a third year of funding. Based on the available data, we estimate that II/USP is overbudgeted by $6 million. Below we recommend using the excess $6 million for costs of the sanctioning process.

Figure 8

Performance of Cohort 1 II/USP Schools on the API

1999-00 and 2000-01


Number of Schools

Percent of Schools

Made API growth targets (two years)



Positive API growth 2000-01



Declining API 2000-01



No data 2000-01


Declining API (two years)







Create School Assistance and Intervention Teams

We recommend the Legislature use excess Immediate Intervention for Underperforming Schools Program funds and Title I School Improvement funds to assist school districts in paying for "school assistance and intervention teams."

Chapter 749, Statutes of 2001 (AB 961, Steinberg) amended the PSAA to provide the Superintendent of Public Instruction (SPI) with an additional option for II/USP schools that are subject to sanctions. Under the amended law, the SPI may require a school district with an II/USP school that is subject to state sanctions to contract with a "school assistance and intervention team" to provide intensive support and expertise to implement school reform.

Create Regional School Assistance and Intervention Teams. Requiring school districts to contract with school assistance and intervention teams presumes that assistance and intervention teams exist. While some of the external evaluators currently assisting II/USP schools may be qualified to participate on these teams, we have concerns about the ability of SDE to have the teams operational by fall 2002. The SDE should begin work immediately with SBE to establish criteria for selecting educational experts to participate in assistance and intervention teams.

Of the $29.1 million the state must spend on School Improvement efforts, the state can use 5 percent or $1.5 million for state operations purposes. We recommend that the Legislature use some portion of the School Improvement state operations funds to establish and train school assistance and intervention teams.

Once those teams are established and trained, there would be costs to schools to pay for these services. Our analysis indicates that potential funding may be available from the II/USP. As discussed above, we estimate that funding for II/USP cohort I is overbudgeted by at least $6 million, but may be higher if more schools face state sanctions. Since the state will face costs to sanction schools, we recommend that the Legislature adopt budget bill language authorizing SDE use any excess II/USP funds to (1) assist school districts in paying for school assistance and intervention teams, and (2) assist school districts in paying for costs of other state sanctions. Most of the II/USP schools subject to sanctions are likely to also be School Improvement schools. To the extent that II/USP funds are insufficient to meet these purposes, we recommend the Legislature use funding that we have identified for School Improvement to assist school districts in paying the costs of the school assistance and intervention teams.

Clarifying PSAA and Federal Sanction Process

We recommend the Legislature clarify in statute how school finance, facility funding and other issues should operate before the Superintendent of Public Instruction takes over some low performing schools in fall 2002.

For any II/USP school that (1) fails to make significant growth, and (2) is not required to contract for school assistance and intervention teams, state law directs the SPI to assume all legal rights, duties, and powers of the school district governing board with respect to that school. The SPI must reassign the principal (subject to review), and take one of the following actions:

These sanction options venture into uncharted territory for SDE and the state. While SDE has begun some planning activities to prepare for the sanction process, there are some ambiguities in statute that we recommend the Legislature clarify through urgency legislation prior to the SPI assuming legal rights and duties for schools. Specifically, we recommend the Legislature address the following issues before the SPI takes over schools:

Other issues the Legislature may want to clarify include:

Other Issues

Excess Comprehensive School Reform Demonstration Funds

We recommend that the Legislature adopt legislation to (1) allow State Board of Education-approved Comprehensive School Reform Demonstration (CSRD) applications to meet the requirements of Immediate Intervention for Underperforming Schools (II/USP) action plans, and (2) create a priority in the II/USP application process for schools that commit to apply for CSRD.

In the 2001-02 Analysis (see page E-102), our office raised the issue that federal CSRD funds were accumulating, and that the state needed to develop a plan to expend these funds in a timely fashion. The CSRD program provides competitive grants to low performing schools to initiate structural reforms, including improved resource allocation, instruction and curriculum, classroom management, and professional development. The CSRD program requires schools to contract with an "external evaluator" to assist in reforming the school. An external evaluator is an education expert who meets a specific set of criteria established by the SBE.

Since no policy changes were made during the 2001 legislative session to ensure that federal funds were used in a timely fashion, the state had to return approximately $2.5 million to the federal government in fall 2001. Figure 9 summarizes the excess CSRD funding currently available, and when the federal expenditures would expire. We estimate that California could lose up to an additional $22 million in CSRD funding in fall 2002.

Figure 9

Available CSRD Funds and
Federal Expenditure Timelines

(In Millions)

Date of Federal Appropriation

for Grant
to School District

to Expend Funds

Federal Appropriation

Funds Committed
to Existing Cohort

Funds Available
for New Cohort

October 2000

October 2002

October 2003




October 2001

October 2003

October 2004





Recently, the Legislature and SDE have taken actions to help ensure that no additional CSRD funding is reverted. Specifically:

The recent actions taken by SDE and the Legislature may help ensure that the $22 million of federal funds at risk for 2002-03 are used effectively. However, we suggest that the Legislature closely track this issue to ensure that federal funds are not lost.

Other Actions to Ensure Full Use of Future CSRD Funds

Simplify CSRD Application Process. The Legislature could reduce the burden of the CSRD application process. Currently, CSRD applicants must meet the nine CSRD requirements, and complete a 22-requirement II/USP action plan. Since the general goals of the 22 requirements in the II/USP action plan are similar in nature to the nine requirements of the CSRD application, we recommend the Legislature enact legislation to allow an SBE-approved CSRD application to substitute for the requirements of the II/USP action plan. One missing component of the CSRD application is alignment to state academic content standards. We recommend the Legislature explicitly require that the CSRD application ensure that all components of their application are aligned to state academic content standards. We believe that by reducing the extra burden of the CSRD application process, the Legislature can encourage more schools to apply for CSRD.

Create Priority in II/USP Application Process for Schools That Commit to Apply for CSRD Funding. A long-term solution to ensure all CSRD funds are used and that General Fund savings are generated would be for the Legislature to give priority in selecting the fourth II/USP cohort to schools that commit to apply for CSRD. This strategy would help ensure (1) that CSRD funds are used in a timely fashion, and (2) that the state could either save General Fund support (Proposition 98) for other education purposes or increase the total number of schools in II/USP. Accordingly, we recommend the Legislature adopt legislation to give priority to schools that commit to apply for CSRD when selecting the future II/USP cohorts.

Inadequate Funding to Evaluate PSAA

We recommend that the Legislature (1) provide $500,000 from federal Comprehensive School Reform Demonstration funds to the State Department of Education to continue the contract for an evaluation of the Public Schools Accountability Act, and (2) adopt legislation to amend the statutory deadline for submitting the evaluation until June 30, 2003.

The PSAA requires SDE to contract for an external evaluation of PSAA—including the GPA program, II/USP, and the impact of these programs on student achievement. The 2001-02 Budget Act provided SDE with $500,000 to start to evaluate California's accountability system. The SDE has contracted with American Institute of Research (AIR) to conduct the multiyear evaluation.

We believe that the $500,000 is inadequate given the complexity of issues that the evaluation must address. When SDE requested proposals for the PSAA evaluation, it requested a multiyear evaluation costing up to $500,000 a year for two years. Not funding the second year of the evaluation would significantly reduce the value of the study.

Given the importance of the PSAA to the state's education system, and the extensive list of legislative requirements for the evaluation, we recommend that the Legislature appropriate $500,000 of federal CSRD funds to expand the PSAA evaluation to evaluate CSRD in greater depth. As discussed above, the state has an excess amount of CSRD funds, and has had difficulty spending those funds. The federal CSRD grant allows the state to use up to 5 percent of the grant amount to pay the costs of administering the program—including evaluation activities. Federal law requires the state to evaluate CSRD as part of administering the program. The AIR scope of work focuses mainly on II/USP and CSRD, and the effectiveness of these intervention strategy. Since the AIR study is evaluating CSRD, and since the federal funds are available for this purpose, we recommend that the Legislature provide $500,000 of CSRD funds to continue the PSAA evaluation.

Extend the Statutory Deadline for the Evaluation. The statute requires a preliminary report to be submitted in March 2002, a final report by June 2002, and biennial evaluations beginning in 2003. The SDE was not able to start the evaluation on time because of funding constraints. Since the evaluation just started, AIR will not be able to submit a meaningful evaluation by June 2002. We recommend the Legislature amend statute to extend by one year the statutory deadline for the evaluation such that preliminary findings are due March 31, 2003, and the final report is due June 30, 2003.

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