LAO 2005-06 Budget Analysis: Education TOC
Analysis of the 2005-06 Budget Bill
Education Issue-By-Issue Contents
Overview
Funding Per Student
Proposition 98
Proposition 98 Allocations
Enrollment Funding
Setting Education Priorities for 2005-06
Crosscutting Issues
Proposition 98 Budget Priorities
Governor's Major Proposals
Budget Creates Costs Without Identifying Funding
Proposed Constitutional Amendments Affect K-14
Current-Year Guarantee Level Is Pivotal
LAO Forecast—Higher Revenues, Lower Guarantee
Balance State and Local Fiscal Needs
Building a Base Budget for 2005-06
Align Budget With Workload Priorities
STRS Proposal Lacks Benefits
K-14 Priorities Under a Higher Guarantee
Governor's Vocational Education Reform
Proposal Addresses an Important Problem
Proposal Not Fully Developed
Legislature Needs Details
State Teachers' Retirement System (1920)
Background
The Basics of the STRS Plan
Actuarial Valuation Finds Funding Shortfall
Local Program Has No Local Control or Responsibility
System Problems
Long-Term Solutions
Governor Proposes Cost Shift to School Districts
Proposal
Short Term: Does the Governor's Proposal Work As a 2005-06
Budget Solution?
Long Term: Does the Proposal Move Toward the Goals of
Local Control and Responsibility?
K-12 Education
K-12 Introduction
Overview of
K-12 Education Spending
Per Pupil Spending Grows by $362 in 2005-06
Major K-12 Funding Changes
Proposition 98 Spending by Major Program
Enrollment Trends
Budget Issues
School District Financial Condition
Retiree Benefits Pose Long-Term Challenge
Some District Liabilities Are Huge
Require District Plans for Addressing Liabilities
Create a New Declining Enrollment Option
Declining Enrollment Affects Many Districts
Option: Permanently Increase Revenue Limits
Add a Declining Enrollment Revenue Limit Adjustment
Categorical Reform
Categorical Reform and Supplemental Instruction
Complex "Holdback" for At-Risk Instructional
Programs
Mandate Ruling Creates Another Cost Pressure
Block Grant Faces Implementation Problems
Add the Required Supplemental Instruction Programs To the
Block Grant
Linking Teaching With Learning
Recent Developments Enhance Flexibility, Ignore
Accountability
Enhance Flexibility and Strengthen Accountability
Assure Block Grant Monies Are Tied to Need
Special Education
Technical Issues Offer Savings
Revise Federal Supplanting Calculation
Significant Technical Problems With Budget Proposal
Use Funds to Meet Special Education and Other Priorities
Make Mental Health Shift Permanent
Budget Would Suspend Mandates
Other Issues
Cleanup Needed on New Formula
Incidence Factor Remains Outdated
Charter Schools
Existing Block Grant Funding Model Has Become Virtually
Unworkable
Working Group Makes Some Progress Toward New Model
Governor's Proposal Is Not Viable Reform Option
Alternative Approach Could Achieve Simplicity, Clarity,
and Comparability
Alternative Authorizers Could Improve Quality
Mandates
Newly Identified Mandate Review
Offsetting Revenues Process Is Needed
Strengthen Language on Offsetting Revenues
After School Programs And Proposition 49
21st Century Community Learning Centers Not
Spending Federal Grants
Background
Funds Are Consistently Underutilized
Restructure Program and Serve More Kids
Proposition 49: After School Education and Safety
Program
Child Care
Eligibility Depends Upon Family Income and CalWORKs
Participation
Governor's Child Care Reform Proposals
Eligibility Reforms
Shifting CalWORKs Families to AP Programs
Eliminating the Long-Term CalWORKs Child Care Guarantee
Two-Tiered Waiting Lists
Advantages to Governor's Proposal
Implementation Concerns
LAO Recommendation
Governor Proposes Further Reforms for 11- and 12-Year-Olds
Child Care Terminology
Types of Providers
Other Terms
Reimbursement Rate Reforms
Two Types of Service Models— Vouchers and Direct State
Contracts
Proposal Creates a Tiered Reimbursement Rate Structure for
AP Providers
Governor's Tiered Reimbursement Proposal
Environmental Rating Scales
Proposal to Create Incentives for Quality Makes Sense
Reform Could Promote Child Development
Tiered System Would Reflect Real Cost of Service
Differences
A Star Rating System Would Make Quality Differences
Transparent
A Tiered Reimbursement Could Address Significant Problems
in the Current System
Transition Title 5 Provider Reimbursement to RMRs
Reimbursement Rates Should Reflect a Systematic Approach
to Improving Quality in Child Care
"Pick-Five" Regulations Would Enhance Rate
Equity
New RMR Survey Methodology Shows Promise
Commission on Teacher Credentialing (6360)
Revised TDAA Fund Condition Requires Additional
Explanation
If Fund Statements Reliable, Action Should Be Taken to
Keep CTC Solvent
Other Issues
Few Details on Other Proposals
Higher Education
Higher Education Introduction
Total Higher Education Budget Proposal
Major Funding Sources
Funding by Segment
Major Cost Drivers for Higher Education
Major Budget Changes
Budget Issues
Intersegmental: Higher Education "Compact"
Background
Concerns With the Compact
Compact's Funding Targets Are Disconnected From Master
Plan
Compact Would Place Higher Education Funding on
"Autopilot"
Compact's Accountability Provisions Are Inadequate
Conclusion
Intersegmental: Higher Education Enrollment Growth and
Funding
Higher Education Enrollment Trends
Enrollment Down in 2004-05, But Master Plan Intact
Disconnect Between Enrollment Funding and Actual
Enrollment
Governor's Budget Proposal
Determining Enrollment Growth Funding for 2005-06
How Much Enrollment Growth Should Be Funded?
Provide 2 Percent Enrollment Growth
Ensuring That Enrollment Targets Are Met
How Much General Fund Support Should Be Provided for Each
Additional Student?
Background on the Development of the Marginal Cost
Methodology
UC and CSU Used Different Methodologies Before 1992
Legislature Called for New Methodology in 1990s
Recent Departure From the 1995 Marginal Cost Methodology
LAO Recommendations Based on 1995 Methodology
Legislative Review of Marginal Cost Methodology Needed
Intersegmental: Student Fees
Lack of Fee Policy Has Resulted in Volatility and
Disparity
Governor Makes Agreement With UC and CSU on Student Fees
Governor's Agreement Has Serious Shortcomings
Fee Agreement Used to Justify All Budget-Year Fee
Proposals
Adopt Share-of-Cost Fee Policy
Use Share-of-Cost Approach to Assess Budget-Year Fee
Levels
Legislature Should Budget New Fee Revenue
Score Fee Revenue From Second-Year Phase In Of Excess-Unit
Fee Initiative
State Lacks CCC Fee Policy
Increasing CCC Fee Shifts Costs to Federal Government
Without Hurting Students
University of California (6440)
Student Fee Increases
Intersegmental Issues Involving UC
Impact of LAO Recommendations
California State University (6610)
Student Fee Increases
Intersegmental Issues Involving CSU
Impact of LAO Recommendations
California Community Colleges (6870)
Major Budget Changes
Proposition 98 Spending by Major Program
Student Fees
Enrollment Growth
Enrollment Changes Over Time
Recent Slight Decline in CCC Enrollment— The Story Behind
the Numbers
Enrollment Funding
State's Effort to Equalize District Funding Should Remain
a High Priority
Greater Accountability Needed
"Partnership for Excellence" Has Expired
District-Level Accountability to Be Developed
Local Autonomy in Course Offerings Should Be Balanced With
State Oversight
Cal-PASS Helps Districts to Improve Outcomes, Fosters
Accountability
Student Aid Commission (7980)
Major Budget Proposals
Private University Cal Grant
Create Parity for Financially Needy Students Attending
Public and Private Universities
National Guard APLE Program
New Warrants Have No Budget-Year Cost
EdFund Operating Surplus
Use Larger Budget-Year Swap to Restore Cal Grant Benefits
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