Governor Newsom and Legislature Reach Budget Agreement

On Monday, June 22, 2020, Governor Newsom and legislative leaders announced they reached a state budget agreement. In their press release, both Assembly Speaker Rendon and Senate Pro Tem Atkins stated that “this budget required some tough decisions and more work remains ahead”. Senate Budget and Fiscal Review Committee will meet tomorrow, June 24, 2020 to act on the budget package.

The Legislature is expected to vote on the agreement later this week before sending the budget package to Governor Newsom for his signature.

List of Budget Bills

SB 74 (Mitchell): Budget Act of 2020.

AB 77 (Committee on Budget)/ SB 98 (Committee on Budget and Fiscal Review): Education finance: education omnibus budget trailer bill.

AB 84 (Committee on Budget): Public employment and retirement.

SB 121 (Committee on Budget and Fiscal Review): Budget Act of 2020.

Final Assembly Floor Report

Analysis of Budget Trailer Bills

CASBO Newsbreak: PDF Friendly

2020-21 General Fund Budget Summary

2020 Budget Act

(Dollars in Millions)

The state budget is primarily based on the Legislature's framework, which relies on $14 billion in federal funding to be received by October 15, 2020. If federal funds are more than $2 billion but less than $14 billion, the amount above $2 billion shall be proportionally allocated among the programs listed below. Should the state receive an infusion of new federal funding, the following restorations and actions would occur:

• $150 million restored to the Judicial branch budget.
• $45 million restored to the moderate-income housing production funding.
• $203 million restored to the infill infrastructure grant program at the Department of Housing and Community Development.
• $46 million restored to the child support administration.
• $5.8 billion deferrals rescinded to K-12 schools.
• $791 million deferrals rescinded to California Community Colleges.
• $472 million restored to the University of California.
• $500 million restored to the California State University.
• $88 million restored to the Golden State Teacher Grant Program.
• $250 million would be provided to offset counties’ recent loss of realignment sales tax funding.
• $2.8 billion would be deposited into the Employee Compensation Reduction Offset Fund.

Major K-12 Adjustments

• Rejects 10% LCFF reduction from May Revise and provides no cost of living adjustment. The final budget package does not include the requirements as specified in AB 1835 (Weber).
• Allocates $5.53 billion in discretionary federal funds and General Fund for one-time COVID closure impacts.
• Allocates $1.4 billion in federal Elementary and Secondary School Emergency Relief Fund (ESSER) funds directly to local educational agencies (LEAs) based on Title 1 distribution.
• Provides $2.3 billion funding relief to reduce school employers’ rate contributions to the California State Teachers' Retirement System (CalSTRS) and the California Public Employees Retirement System (CalPERS).
• Restores K-12 categorical programs, completely rejecting the Governor’s May Revise proposal to reduce these programs by $352.9 million.
• Provides $50 million for the California Department of Education to administer the Early Literacy Support Block Grant to award grants to local educational agencies with the 75 schools that have the highest percentage of pupils in grade 3 scoring at the lowest achievement standard level on the state summative assessment in English language arts and also meet other specified conditions.
• Provides $3 million to the California Department of Education to establish an expert lead in literacy within the statewide system of support and require the expert lead in literacy to assist local educational agencies eligible for grants authorized by the Early Literacy Support Block Grant as well as create professional learning networks.
• Provides $450,000 for the California Department of Education to support the alignment and integration of online platforms supporting the California School Dashboard, the Local Control and Accountability Plan electronic template system, and the school accountability report card.
• Provides $4.2 million for the Kern County superintendent of schools to administer the Standardized Account Code Structure system replacement project.
• Provides $60 million for the Classified School Employee Summer Assistance Program, in which funds would be available until June 30, 2025.

Analysis of AB 77 - The Education Trailer Bill

Deferrals. For the 2019-20 budget year, the state will defer from the June apportionment $1,850,377,000 to July 2020, to be paid by the State Controller no later than July 15, 2020. 

For the 2020-21 budget year, the state will defer a total of $11,041,535,000, which includes the $5,278,463,00 that was part of the May Revise, and an additional $5,763,072,000 in trigger deferrals that has been included in the final budget deal. The breakdown is as follows:                                            

• $1,540,303,000 from the February apportionment to be drawn in November
• $2,375,308,000 from the March apportionment to be drawn in October
• $2,375,308,000 from the April apportionment to be drawn in September
• $2,375,308,000 from the May apportionment to be drawn in August
• $2,375,308,00 from the June apportionment to be drawn in July
• The Director of Finance will determine that if there are sufficient federal funds provided to the state for the 2020-21 fiscal year that may be used to offset the deferral of payments.

The state budget also defers $3.412 billion in the 2021-22 budget year.

(AB 77, Section 10, Education Code Section 14041.5, pages 57-60; Section 11, Education Code Section 14041.6, pages 60-65)

The state budget will provide up to $300 million in deferral hardship funds for school districts and charter schools that have exhausted all internal and external sources of borrowing. In order for a local educational agency (LEA) to receive a payment, the county superintendent of schools or the chartering authority shall certify to the Superintendent of Public Instruction and the Department of Finance on or before January 5, 2021 that the LEA is unable to meet obligations for February or any subsequent month until the deferral is repaid, and shall provide the Superintendent an estimate of the amount of additional funds necessary for the school district to meet its financial obligations for February or any subsequent month until the deferral is paid.

(AB 77, Section 12, Education Code Section 14041.8, pages 65-75)  

Full-Day Kindergarten Facilities Grant Program. The state budget makes the program contingent upon an appropriation by the Legislature, to fund for the first two years schoolsites that did not offer a full-day kindergarten program as of July 1, 2019.

(AB 77, Section 13, Education Code Section 17375, pages 75-79)

Proceeds from the Sale of Surplus Property. A school district may deposit the proceeds from the sale or lease of surplus real property into the general fund of the school district for any one-time general fund purpose. Before a school district exercises this authority, it must submit to the State Allocation Board documents certifying both of the following:

• The sale of real property pursuant to this section does not violate the provisions of a local bond act.
• The real property is not suitable to meet projected school construction needs for the next 10 years.

The governing board of the school district at a regularly scheduled meeting shall present a plan for expending one-time resources and identify the source and use of the funds and describe the reasons why the expenditures will not result in ongoing fiscal obligations for the school district.

(AB 77, Section 14, Education Code Section 17463.7, pages 79-81; Section 15, Education Code Section 17524, page 81)

Peace Officers on School Campuses. The Legislature intends to evaluate the presence of peace officers and other law enforcement on school campuses and identify and consider alternative options to ensure pupil safety is based on the needs of the local school communities. It’s the intent of the Legislature to encourage local educational agencies to use school resources currently allocated to such personnel, for pupil support services, such as mental health and professional development on cultural competency and restorative justice.

(AB 77, Section 17, Education Code Section 38000, pages 82-84)

Micro-college Prohibition. School districts, charter schools, and county offices of education shall not expend funds provided for courses or instruction offered by private or public college or universities beyond that permitted in pursuit of a high school diploma, except for courses or instruction in which pupils are enrolled in before July 1, 2020.

(AB 77, Section 23, Education Code Section 41370, page 89)

Inter-fund Borrowing Allowance. For the 2020-21 and 2021-22 fiscal years, if the state defers any payments owed to school districts, the governing board of a school district may authorize, by resolution, moneys held in any fund or account to be temporarily transferred to another fund or account for payment of obligations. Amounts transferred shall be repaid either in the same fiscal year, or in the following fiscal year, if the transfer takes place within the final 120 calendar days of a fiscal year. The governing board of a school district shall hold a public hearing to take testimony from the public before adopting the required resolution.

(AB 77, Section 33, Education Code Section 42603.1, page 135)

School Finance, Instruction, and Accountability. Provides the following definitions:

• Distance learning: instruction in which the pupil and instructor are in different locations and pupils are under the general supervision of a certificated employee of the local educational agency. Distance learning may include, but is not limited to, all of the following:
  
  • Interaction, instruction, and check-ins between teachers and pupils through the use of a computer or communication technology.
  • Video or audio instruction in which the primary mode of communication between the pupil and certificated employee is online interaction, instructional television, video, telecourses, or other instruction that relies on computer or communications technology.
  • The use of print materials incorporating assignments that are the subject of written or oral feedback.
  • Distance learning may be offered under the following circumstances:
    • On a local educational agency or schoolwide level as a result of an order or guidance from a state public health officer or a local public health officer.
    • For pupils who are medically fragile or would be put at risk by in-person instruction, or who are self-quarantining because of exposure to COVID-19.
  • Distance learning shall include all of the following:
    • Confirmation or provision of access for all pupils to connectivity and devices adequate to participate in the educational program and complete assigned work.
    • Content aligned to grade level standards that is provided at a level of quality and intellectual challenge substantially equivalent to in-person instruction.
    • Academic and other supports designed to address the needs of pupils not performing at grade level or in need of support, such as English learners, students with disabilities, and foster youth or students experiencing homelessness, and students requiring mental health services.
    • Special education and related services required by a student’s individualized education program.
    • Designated and integrated instruction in English language development, including assessment of English language proficiency, support to access curriculum, the ability to reclassify as fully English proficient, and as applicable, support for dual language learning.
    • Daily live interaction with certificated employees and peers for purposes of instruction, progress monitoring, and maintaining school connectedness. If daily live interaction is not feasible, the governing board of the school district shall develop, with parent and stakeholder input, an alternative plan for frequent live interaction that provides a comparable level of service and school connectedness. 
• In-person instruction: instruction under the immediate physical supervision and control of a certificated employee of the local educational agency while engaged in educational activities required of the pupil. A local educational agency shall offer in-person instruction to the greatest extend possible.
• Local educational agency: school district, county office of education, or charter school, excluding a charter school classified as a nonclassroom-based charter school pursuant to Section 47612.5 and 47634.2 as of the 2019-20 fiscal year.

For the 2020-21 school year, the minimum schoolday for a local educational agency is as follows:

• 180 instructional minutes in kindergarten.
• 230 instructional minutes in grades 1 to 3, inclusive.
• 240 instructional minutes in grades 4-12, inclusive.
• 180 instructional minutes for pupils in grades 11 and 12 that are enrolled part time in classes of the California State University or the University of California for which academic credit will be provided upon satisfactory completion of enrolled courses.
• 180 instructional minutes for any pupil who is also a special part-time student enrolled in a community college and who will receive academic credit upon satisfactory completion of enrolled courses.
• 180 instructional minutes for pupils enrolled in a continuation high school.

Calculating Apportionments for 2020-21 Fiscal Year. A LEA shall offer in-person instruction, and may offer distance learning pursuant to the following requirements:

• The California Department of Education shall use the average daily attendance in the 2019-20 fiscal year reported for both the second period and the annual period apportionment that included all full school months from July 1, 2019 to February 29, 2020, inclusive, and extended year average daily attendance attributed to the 2019-20 school year reported pursuant to Section 96 of the act. Any positive adjustment to ADA for the 2019-20 fiscal year in the second or annual period attendance report submitted to the Superintendent of Public Instruction after August 17, 2020, shall be substantiated by concurrence from an independent auditor.
• LEAs shall satisfy the annual instructional day requirements described in Section 41420, 46200.5, and 46208, and in Section 11960 of Title 5 of the California Code of Regulations through in-person instruction or a combination of in-person instruction and distance learning.
• LEAs shall not be required to offer the annual instructional minutes that it would otherwise have offered pupils to meet the requirements of Sections 46207 and 47612.5, or the implementing regulations of those sections.
• LEAs shall not be required to offer the minimum instructional minutes in physical education required pursuant to Section 51210, 51220, 51222, and 51223.

Determining Instructional Minutes in the 2020-21 School Year.

• For in-person instruction, instructional minutes shall be based on time scheduled under the immediate physical supervision and control of an employee of the local educational agency who possesses a valid certification document, registered as required by law.
• For distance learning, instructional time shall be based on the time value of assignments as determined, and certified to, by an employee of the local educational agency who possess a valid certification document, registered as required by law.
• For a combined day of instruction using in-person instruction and distance learning, time scheduled under the immediate supervision of an employee of the local educational agency who possesses a valid certification document can be combined with assignments to meet the equivalent of a minimum day of instruction.
• The process by which a local educational agency receives credit for a material decrease in ADA for apportionment pursuant to Section 46392 due to an event described in this section, is suspended for all LEAs.

Child Nutrition. School districts, county offices of education, and charter school shall provide nutritionally adequate meals for pupils who are eligible for free or reduced-price meals, whether engaged in in-person instruction or distance learning, contingent upon the California Department of Education receiving an approved waiver from the United States Department of Agriculture, for each day of the scheduled school year.

The budget provides $112.2 million from the Federal Trust Fund to reimburse eligible child nutrition program operators based on meals served for breakfast and lunch at a rate not to exceed an additional $0.75 per meal.

(AB 77, Section 118, pages 333-336)

Documenting Attendance. Document daily participation for each pupil on each schoolday. A pupil that does not participate in distance learning shall be documented as absent. Each LEA shall ensure that a weekly engagement record is completed for each pupil for each whole or partial day of distance learning. A student who does not participate daily in either in-person instruction or distance learning, shall be deemed absent, to be reported in the LEAs chronic absenteeism rates in its local control and accountability plan.

LEAs shall develop written procedures for tiered reengagement strategies for all pupils who are absent for more than three schooldays or 60 percent of the instructional days in a school week, and communicate regularly with parents/guardians regarding the pupil’s academic progress.

Penalties for Non-compliance.

• For a school district that offers fewer than the 180 instructional days or for a charter school that offers fewer than the 175 instructional days, the Superintendent of Public Instruction shall withhold from the local educational agency’s local control funding formula grant apportionment for the prior year ADA of each affected grade level, the sum of .0056 multiplied by that apportionment for each day less than what was required.
• For a local educational agency that does not meet the daily attendance and participation requirements, the Superintendent of Public Instruction shall withhold from the LEA’s local control funding formula grant apportionment the percentage of days out of compliance multiplied by the derived value of ADA, all multiplied by the ADA of each affected grade level.
• For local educational agencies that provides distance learning shall not be penalized for instruction provided before September 1, 2020, that fails to meet these requirements.

Learning Continuity and Attendance Plan. The governing board of a school district, a county board of education, and charter school shall adopt a learning continuity and attendance plan, in consultation with stakeholders, by September 30, 2020 and the local control funding formula budget overview for parents by December 15, 2020. These documents are to be adopted in a public meeting.

The governing board of a school district, county board of education, and charter school shall not be required to adopt a local control and accountability plan or annual update to a local control and accountability plan for the 2020-21 school year and shall not be required to comply with paragraph 2 of Executive Order No. N-56-20, which extends the deadline to adopt the LCAP and budget overview for parents to December 15, 2020.

The school board shall file the learning continuity and attendance plan with the county superintendent of schools no later than five days after adoption, and the county superintendent of school may submit recommendations, in writing, for amendments to the learning plan by October 30, 2020. The school board shall consider the recommendations in a public meeting within 15 days of receiving the county superintendent’s recommendations. 

The Superintendent of Public Instruction, in consultation with the executive director of the state board, shall develop a template for the learning continuity and attendance plan that includes a 1) description of how the LEA will provide continuity of learning and address the impact of COVID-19 on pupils, staff, and the community and the LEA’s ability to address the impact of COVID-19; 2) in-person instructional offerings and actions to address learning loss due to school closures in the 2019-20 and 2020-21 school years; 3) plans for distance learning; and 4) mental health, professional development, and reengagement strategies. 

(AB 77, Section 34, Education Code Section 43500, pages 136-149)

Prohibits Lay-offs of Specified Credentialed Employees. From July 1, 2020 to July 1, 2021, prohibits school districts laying off certificated employees, except for administrative or supervisory credential positions.

(AB 77, Section 38, Education Code Section 44955.5, pages 150-151)

Prohibits Lay-offs of Specified Classified Employees. From July 1, 2020 to July 1, 2021, school districts, county offices of education, community colleges, or joint powers authority shall not terminate the services of any permanent or probationary classified employees because of a lack of funds or a lack of work if the employees either hold classifications in, or are assigned to positions in, nutrition, transportation, or custodial services.

(AB 77, Section 94, page 303)

Special Education. Approves the Governor’s special education funding reform and provides $645 million for special education services, of which $545 million will go towards increasing the base rates ($625 per ADA) and $100 million for the low-incident cost pool. Allocates $4 million to establish a California Dyslexia Initiative.

(AB 77, Section 66, Education Code Section 56345, pages 219-254)

Local Control and Accountability Plan (LCAP). The LCAP will include a summary of the stakeholder engagement process and how stakeholder engagement influenced the development of the adopted local control and accountability plan and annual update to the local control and accountability plan. On or before January 31, 2022, the state board of education will develop instructions for LEAs that meet the criteria to receive technical assistance shall include a goal in the LCAP focused on improving the performance of the pupil subgroup(s) and for LEAs with a school(s) that receives the two lowest performance levels on all but one of the state indicators on the California School Dashboard, shall include a goal in the LCAP focused on addressing the disparities in performance at the school(s) compared to the district/county office of education as a whole. 

(AB 77, Section 57, Education Code Section 52064, pages 198-204)

Excess Educational Revenue Augmentation Fund (ERAF). The State Controller shall issue, on or before December 31, 2020, guidance to counties that commencing with the 2019-20 fiscal year, if a county auditor-controller fails to allocate Educational Revenue Augmentation Fund revenues, the State Controller may request a writ of mandate to require the county auditor-controller to immediately perform this duty.

(AB 77, Section 84-85, Revenue and Taxation Code Section 97.2 and 97.3, pages 262-284)

The Early Childhood Development Act of 2020. It’s the intent of the Legislature to launch a phased approach to achieving the state’s Master Plan for Early Learning and Care to integrate child care programs to preschool, transitional kindergarten, and K-12 education. Commencing July 1, 2021, child care programs, (except for the California State Preschool) will be transferred from the California Department of Education to the California Department of Social Services.

(AB 77, Section 86, Education Code Section 10200, pages 284-290)

Compliance with Executive Order No. N-26-20. Waives Education Code Sections 1244 and 41601 to avoid contradictory provisions for all local educational agencies that comply with Executive Order No. N-26-20 or that are not subject to a closure due to the coronavirus (COVID-19), for purposes of average daily attendance claimed for apportionment for the 2019-20 school year.

(AB 77, Section 91, page 301)

SB 117 (Chapter 3, Statutes of 2020) Clarification. Clarifies that the $100 million appropriated to school districts on the basis of average daily attendance funded as of the 2019-20 first principal apportionment to LEAs, excluding nonclassroom-based charter schools, shall be used for costs associated with maintaining nutrition services, cleaning and disinfecting facilities, personal protective equipment, and materials necessary to provide pupils with distance learning services.

(AB 77, Section 93, pages 302-303)

Uses of Federal Funds.

• $1.5 billion ($355,227,000 from the Federal Trust Fund and $1,144,773,000 from the Coronavirus Relief Fund) are allocated to eligible local educational agencies in an equal amount per pupil with exceptional needs, to mitigate learning loss.
• $2.855 billion from the Coronavirus Relief Fund is allocated on the basis of the eligible local educational agency’s supplemental and concentration grant funding determined as of the 2019-20 second principal apportionment certification.
• $539.9 million in General Fund and $439.844 million from the Coronavirus Relief Fund are allocated to eligible local educational agencies on the basis of its LCFF entitlement determined as of the 2019-20 second principal apportionment certification.
• Funding from the Federal Trust Fund shall be used from March 13, 2020 to September 30, 2021, and all other funds in this section shall be used from March 1, 2020 to December 30, 2020 for activities that directly support pupil academic achievement and learning loss related to COVID-19 school closures.
• Eligible local educational agencies will certify that funding will be used in full compliance with federal law, and shall adopt, on or before September 30, 2020, at a regular board meeting, a learning continuity and attendance plan, and can expend funds before the adoption of the plan. The eligible LEA shall maintain on a file of all receipts and records of expenditures for no less than three years, or, where an audit has been requested, until the audit is resolved. The eligible LEA shall report, on or before August 30, 2020, the balance of any unexpended funds received from the Coronavirus Relief Fund to the Superintendent of Public Instruction. Funds that are not expended by December 30, 2020, shall be reported and the Superintendent of Public Instruction shall initiate collection proceedings

(AB 77, Section 110, pages 308-311)

California Community Schools Partnership Program. Provides $45 million from the federal Elementary and Secondary School Emergency Relief Fund (ESSER) to establish the California Community Schools Partnership Program. The Superintendent of Public Instruction with the approval of the executive director of the State Board of Education, shall develop an application process to expand and sustain existing community schools, coordinate and provide health services, and provide training and develop best practices for integrating pupil supports.

(AB 77, Section 117, pages 331-333)

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