LAO 2006-07 Budget Analysis: Education TOC
Analysis of the 2006-07 Budget Bill
Education Issue-By-Issue Contents
Overview
Funding Per Student
Proposition 98
Proposition 98 Allocations
Enrollment Funding
Setting Education Priorities for 2006-07
Crosscutting Issues
Proposition 98 Update
Governor’s Budget
Prior-Year Adjustments
Current-Year Adjustments
Budget-Year Estimates
Legislative Analyst’s Office (LAO) Forecast
Budget-Year Estimates
Proposition 49 Pays Off Maintenance Factor Obligation
Technical Proposition 98 Issues
Suspension and the Chapter 213 Target
Maintenance Factor
Rebenching the Test 1 Factor
State Owes Proposition 98 Settle-Up for Past Years
Cost-of-Living Adjustment (COLA)
Proposition 98 Priorities
Governor Proposes Significant New Resources
Minimum Guarantee Insufficient to Maintain Base Program
State Still Exposed to Significant Fiscal Threats
K-14 Funding Is Linked to State’s Fortunes
Minimize Impact of Proposition 98 on Structural Gap
Option 1: Supplement Base With One-Time Funds
Pay Off Mandates, Reduce Structural Gap
Option 2: Target New Funds at Highest Local Needs
Address K-12 Fiscal Issues
Achieve California Community Colleges (CCC) Equalization Targets
Departmental Issues
Introduction
Overview of K-12 Education Spending
Per-Pupil Spending Grows by $604 in 2006-07
Major K-12 Funding Changes
Proposition 98 Spending by Major Program
Enrollment Trends
New Categorical Programs
New Categorical Programs Not Critical
School District Financial Condition
Retiree Health Benefit Liabilities
California Department of Education (CDE) Survey Incomplete, But Reveals Large Liabilities
Why Retiree Benefits Is an Important State Issue
Districts Need to Address Liabilities
Negotiate a Plan to Use Federal Funds for Retiree Costs
Create a Fiscal Solvency Block Grant
District Financial Woes Continue
Improve Incentives, Insist on Local Solutions
A Solution That Rewards Good Financial Practices
Revenue Limits
Redirect Funding for Deficit Factor to COLA
Increase Funding for Declining Enrollment Adjustment
Redirect Equalization Funding to Fiscal Solvency Block Grant
Including Add-On Programs Would Lead to More Uniform Funding Levels
Mandates
Newly Identified Mandate Review
Fully Fund Ongoing Mandate Costs
Create New Mandate Block Grant
Mandates Often Not the Most Effective Financing Mechanism
A Lengthy and Legalistic Process for Identifying New Mandates
A Claiming Process That Requires Significant State and Local Administrative Effort
Audit Process Increases Friction Between Districts and the State
An Education Mandate Block Grant
Revisit the STAR Mandate
A Proposal to Settle All STAR Claims
Create a New Truancy Program
Problems With the Mandate Approach to Truancy
Establish a New Truancy Grant Program
After School Programs and Proposition 49
Background on Current Program
Recommend Legislature Repeal Proposition 49
The Legislature Faces Legal Constraints and Uncertainties
What Changes Can the Legislature Make Without Going Back to the Voters?
Clarify the Interaction With Proposition 98 and How the State Should Treat Unused Funds
A Framework for Evaluating Competing After School Proposals
Governor’s Proposal Makes Significant Program Changes
Balancing Competing Policy Goals
Assessing the Governor’s Proposal
Other Program Considerations
An Alternative Approach to Reforming Proposition 49
Specifics of the LAO Proposal
Child Care
Eligibility Depends Upon Family Income and CalWORKs Participation
Steps Toward Linking Reimbursement to Quality
Child Care Terminology
Types of Providers
Other Terms
Two Types of Service Models-Vouchers and Direct State Contracts
Problems with the Current Reimbursement System
Increase Funding for Higher Quality Programs
Redirect Child Care Growth Funding
Limit License Exempt Reimbursement Rate
Create a State Level Sibling Discount
Adopt a Sliding Scale COLA for General Child Care and State Preschool
If Proposition 49 Implemented in 2006-07 Child Care Savings Likely
New RMR Survey Awaits Administration Approval
Economic Impact Aid
The EIA Formula Is Outdated and Problematic
Legislature Has Several Options for Addressing CalWORKs Data Issues
Simplify Formula and Provide Funding to Ease Transition
Conclusion
Special Education
Fully Fund the Base Special Education Budget
Technical Issues Involve 2004-05 and 2005-06 Revisions
Fully Fund Growth and COLA on Federal Funds
No New Proposal for Mental Health Services
Facilities Emergency Repair Program
Program Structure Makes It Difficult for Districts To Apply for Funding
Program Creates Bad Incentives
Remove Bad Incentives and Get Funding out to Districts-Modify Funding Distribution System
Federal Funds
Federal Carryover Proposal
Reject All but One Component of Governor’s Carryover Proposal
Migrant Education
Background
Funding Model
Concerns With the Current Funding Model
Revise Funding Model to Improve Quality of Services and Enhance Accountability
Revise Funding Model to Reflect Program Priorities
Migrant Education Data System
Concerns with the Current Data System
Enhancing Data System Could Improve Program Effectiveness
Carryover Funds
Use Carryover Funds to Build Better System
Authorize Limited Local Carryover Authority
Conclusion
Other Issues
Test the Impact of a CAHSEE Block Grant
Many Factors Affecting Student Success on CAHSEE
Test Different Approaches
Instructional Materials
Introduction
Total Higher Education Budget Proposal
Major Funding Sources
Funding by Segment
Major Cost Drivers for Higher Education
Major Budget Changes
Intersegmental: Protecting Legislative Priorities in Higher Education
Higher Education Budget-Key Choices
Specific LAO Recommendations
What About the Budget for Community Colleges?
Intersegmental: UC And CSU Enrollment Growth And Funding
Recent Enrollment Trends
UC Has Generally Met Enrollment Targets
CSU Has Not Been Meeting Enrollment Targets
Governor’s Budget Proposal
Determining Enrollment Growth Funding For 2006-07
How Much Enrollment Growth Should Be Funded?
Provide 2 Percent Enrollment Growth
LAO Higher Education Enrollment Projections
Adjust CSU’s Base Budget to Reflect Actual Enrollment
Ensuring Enrollment Targets Are Met
How Much General Fund Support Should Be Provided for Each Additional Student?
Development of Current Marginal Cost Methodology
Chronology of Marginal Cost Funding
UC and CSU Used Different Methodologies Before 1992
Legislature Called for New Methodology in 1990s
Legislature Requests Marginal Cost Review for 2006-07
Governor Proposes New Marginal Cost Methodology
Concerns With Governor’s Proposal
Ignores Contribution of Student Fees
Over Budgets Certain Costs
Limits Legislative Budgetary Discretion
LAO Marginal Cost Recommendations
Refine Current Marginal Cost Methodology
Fund Enrollment Growth Based on LAO’s Revised Methodology
Intersegmental: Year-Round Operations at UC and CSU
Key State Actions Toward Fully Implementing Year-Round Operations
Update on Summer Enrollment
UC Summer Enrollment Has Increased
CSU Summer Enrollment Has Declined
Issues for Legislative Consideration
Should the State Provide Funding to Fully Convert Additional Campuses?
How to Encourage Better Utilization of the Summer Term?
Intersegmental: Student Fees
Share-of-Cost Fee Policy Would Benefit Students and the State
State Financial Aid Programs Intended to Ensure Access
Maintain Students’ Share of Cost at Current-Year Level
Reject Concept of Fee Buyout
Conclusion
University of California (6440)
Student Fees
Intersegmental Issues Involving UC
General Fund Base Increase
Other Issues
K-14 Outreach Programs
PRIME-LC
California State University (6610)
Proposed General Fund Changes
Student Fees
Intersegmental Issues Involving CSU
General Fund Base Increase
K-14 Outreach Programs
Continuous Appropriation of Fee Revenue Could Reduce Accountability
California Community Colleges (6870)
Major Budget Changes
Proposition 98 Spending by Major Program
Student Fees
Enrollment
Modest Growth in College-Age Population Brings No Tidal Wave
Why Has Enrollment Lagged Population Growth?
Effect of Decline on the Student Population Profile
Recent Enrollment Funding Trends
2006-07 Enrollment Growth
Equalization
Equalization Makes Sense
2004-05 Budget Act Initiated Multiyear Equalization Effort
Equalization to Cost More Than Governor’s Proposed $130 Million
Link Equalization Funding to New Apportionment Allocation Method
Career Technical Education
Retiree Health Benefit Liabilities
CCC Accountability update
New CCC Accountability System
CCC District-Level Accountability Reporting
Cal-PASS Funding a Good Investment
Student Aid Commission (7980)
Major Budget Proposals
Promote Parity for Financially Needy Students Attending Public and Private Universities
Avoid Complicating Existing, Well-Structured Program
Intersegmental Issue Involving CSAC
Restructuring How the State Administers Grant and Loan Financial Aid Programs
Organizational Options
Single State-Agency Structure Had Shortcomings
Existing Two-Agency Structure Has Shortcomings
Recommend Single Agency With Flexibility in Daily Operations but Stronger Accountability Requirements
Conclusion
|