LAO 2004-05 Budget Analysis: General Government

Analysis of the 2004-05 Budget Bill

Legislative Analyst's Office
February 2004

Instructional Materials

We recommend that the Legislature shift $250 million in instructional materials funding into revenue limits, $75 million more than the Governor's proposed shift. This level of funding restores funding to the 2002-03 base level, and reflects expected need for 2004-05. We recommend the Legislature reject the Governor's creation of a new categorical program proposal because it contradicts the streamlining provided in the Governor's revenue limit proposal. Combined, these recommendations free up $113 million for other legislative priorities.

Governor's Proposal Contradictory

In the 2004-05 budget, the Governor shifts $175 million of existing instructional materials funding into the revenue limit as part of his proposal to streamline categorical programs and provide school districts increased flexibility. The budget also provides $188 million for a new instructional materials categorical program. According to the Department of Finance (DOF), programs selected for inclusion in revenue limits met the following criteria: (1) they contain few restrictions on the use of funds, (2) they do not support services for special needs students, and (3) they have stable district allocations. Given these criteria, the Governor folds the ongoing instructional materials funds into revenue limits. At the same time, however, the Governor proposes to create a new categorical program with $188 million in instructional materials funding, distributed similarly to the current program.

DOF Has Not Been Able to Explain the Rationale for the Contradictory Proposals. Instructional materials funding clearly meets the Governor's criteria for inclusion in the revenue limits—it provides a stable source of funding and every school district receives this funding. The Governor's proposal, however, disregards the administration's criteria and creates a new program providing funding for the same purpose as the funding folded into the revenue limit. The Governor's initial reason for shifting program funding into the revenue limit was to streamline the categorical system and provide school districts increased flexibility by: (1) eliminating the number of programs and requirements and (2) alleviating administrative burden. Instead, the Governor has failed to streamline and has continued the current bureaucratic process.

Fold Instructional Materials Into Revenue Limits. In our analysis of the Governor's categorical consolidation proposal earlier in this chapter, we provide the Legislature with a set of criteria to use to determine whether a categorical program should be included in the revenue limit. Our suggested criteria focus on whether districts have local incentives to underinvest in a particular service. We believe that instructional materials are inputs that are critical to the educational process. Because standards-aligned materials play a large role in ensuring that a school district's pupils perform well on standardized tests, we do not believe this is an area where school districts would have an incentive to underinvest. In addition, having instructional materials funds in the revenue limit would provide school districts with greater flexibility to determine which instructional materials are highest priority for their district. Therefore, we recommend the Legislature shift all of the instructional materials funding into the revenue limit. In the next section, we examine the appropriate level of instructional materials funds to fold into the revenue limit given recent legislative action and upcoming instructional materials adoptions.

Governor's Funding Level Too High

In the budget year, the Governor provides a significant increase above current-year instructional material funding levels by providing an additional $188 million in funding. According to DOF, the Governor provides this increase to: (1) restore funding for the instructional materials block grant to an amount closer to the level intended to provide for purchase of the 2002 English language arts adoption and (2) provide incentive funding to school districts to purchase newly adopted English language arts and the 2005 history/social science standards-aligned materials.

Figure 1 provides instructional materials funding information. As shown in 2002-03, instructional materials funding within the instructional materials block grant was $293 million, including $250 million ongoing and $43 million one-time (the latter prioritized for purchasing standards-aligned materials for English language learners and reading intervention materials for pupils in grades 4 through 8). In the current year, the Legislature reduced ongoing instructional materials funding from $250 million to $175 million—a reduction of $75 million. We recommend restoring $75 million of base funding, returning instructional materials funding level to $250 million, for the reasons discussed below. 

Figure 1

Instructional Materials Funding

2002-03 Through 2004-05
(In Millions)




2004-05 Proposed






Instructional Materials Block Grant









  One-time incentive funding


Revenue limit



Lottery funds for instructional materialsa











a  Represents Proposition 20 funding that is specifically designated for instructional materials. Dollar amounts represent projections by the Lottery Commission.

Many Districts Have Funds Available for English Language Arts (ELA) Materials. Figure 2  provides recent history related to standards-aligned instructional materials and highlights important legislative actions. As shown, Chapter 481, Statutes of 1998 (AB 2519, Poochigian), required the State Board of Education (SBE) to conduct an interim adoption of basic and partial programs in ELA. To provide school districts with funding to purchase these materials, the Legislature created the Schiff-Bustamante Instructional Materials Program, Chapter 312, Statutes of 1998, (AB 2041, Bustamante). The SBE adopted interim ELA materials in summer 1999. In January 2002, the SBE adopted fully-aligned ELA materials. In recent years, the Legislature has attempted to balance the desire to transition school districts to the 2002 ELA materials, while recognizing the investments that some school districts made in the 1999 ELA materials. Since the state has not adopted new materials in any subject areas in the last two years, school districts have continued to focus their resources on purchasing ELA materials.

Figure 2

Recent History of Standards-Aligned Instructional Materials


·   1995 Through 1998—State Develops Academic Content Standards. As required by law, the State Board of Education (SBE) adopts academic content standards in English language arts (ELA), mathematics, science, and history/social science.

·   1998—Schiff-Bustamante Instructional Materials Program Provides $1 Billion. In order to get standards-aligned instructional materials in the hands of students, the state invests $1 billion over a four-year period to purchase instructional materials adopted by SBE in 1999.

·   1999—State Adopts First Standards-Aligned Materials. Chapter 481, Statutes of 1998 (AB 2519, Poochigian), requires SBE to conduct a special interim adoption of basic and partial programs in ELA and mathematics. By July 1999, the board adopted ELA materials. Under current law, school districts can purchase ELA materials through June 2005.

·   2002—State Adopts Comprehensive ELA Materials. The SBE recently adopted new ELA materials that include reading intervention programs for English learners in grades 4 through 8.

·   2002—Legislature Creates Instructional Materials Funding Realignment Program. Legislature merged three existing programs into one instructional materials block grant. The Legislature prioritizes the use of the funds: (1) newly adopted standards-aligned materials in ELA and math, (2) standards-aligned materials in history/social science and science, (3) other materials.

Districts used different strategies, however, with regard to their Schiff-Bustamante funding. Many districts spent their funds on the interim materials, and they now need additional funds to purchase the fully-aligned ELA materials. Other districts, however, did not purchase the interim materials and "banked" their funds, which can now be used to purchase the 2002 ELA materials. We believe that the Governor's pro posed augmentation does not recognize that many districts have been banking funds the last two years to pay for the 2002 ELA materials.

School Districts Likely to "Pilot" History/Social Science Materials in 2005-06. The history/social science instructional materials are scheduled for adoption in January 2005. Because the purchase of instructional materials represents a significant investment to school districts, they typically choose to pilot various instructional materials to determine which materials best meet the needs of their district. Piloting the materials involves a structured and monitored process in which various materials are used in different classrooms to provide teachers experience with the program's organization, assessment, and range of instructional strategies. Typically, school districts pilot newly adopted materials in the spring and fall following the adoption, usually for a period of six months to two years. We expect school districts to begin piloting the history/social science instructional materials during the spring of the budget year and to purchase these materials in budget year plus one or later depending on their pilot period. Therefore, less funding is required in the budget year because piloting does not cost a great deal.

Restore Instructional Materials Funding to 2002-03 Level by Redirecting $75 Million From Governor's Categorical Program. We believe that the Governor's combined funding level of $363 million is too high given that (1) many districts already have funds for their ELA purchases and (2) school districts likely will pilot—rather than purchase— history/social science materials in the budget year. We recommend, therefore, that the Legislature reduce funding for instructional materials by $113 million from the Governor's proposed level and redirect those savings to other legislative priorities. We believe that this level of funding would provide districts sufficient funds to both purchase ELA materials and sufficient history/social materials to pilot the materials in 2004-05.

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