2001-02

K-12 Education

Improving the academic performance of California’s six million pupils remains the Administration’s highest priority. The Budget reflects that priority by providing an additional $3.5 billion in total resources for K-12 above the 2000 Budget Act. As indicated in Figure K12-1, approximately $53.3 billion will be devoted to California’s 988 school districts and 58 county offices of education, resulting in estimated total per-pupil expenditures from all sources of $8,850 in fiscal year 2000-01 and $9,267 in 2001-02. Figure K12-2 displays the various sources of revenue for schools.

Total Proposition 98 support for K-12 education will increase 8.3 percent in 2001-02, over the 2000 Budget Act level, for a two-year total increase of $3.2 billion. The amount by which the Budget exceeds the minimum required funding level under Proposition 98 is $555.1 million in 2000-01 and $1,868.6 million in 2001-02. This level of resources results in K-12 Proposition 98 per-pupil expenditures of $7,174 in 2001-02, up from $6,308 in 1999-00, and $6,695 in 2000-01 (see Figure K12-3).

Funding reported by schools from their General Fund, the various categories of expenditure, along with the respective shares of total funding for each category, are displayed in Figure K12-4. All costs shown are those reported to the State by schools using the definitions specified in the California School Accounting Manual.

Attendance growth in public schools continues to be relatively low, primarily due to steady declines in birth rates beginning in the early 1990s. For the current year, total K-12 Average Daily Attendance (ADA) is estimated to be 5,688,675. This reflects an increase of 81,781 ADA or 1.46 percent over the 1999-00 fiscal year and is 6,563 higher than the estimate for the May Revision. For the budget year, total K-12 ADA is estimated to be 5,750,105. This reflects ADA growth of 61,430 or 1.08 percent over the current year.

Governor’s Initiatives

For the 2001-02 Budget, the Governor is proposing a series of initiatives designed to continue the improvements in student performance begun over the last two years. The initiatives all center on improving classroom instruction and measuring student performance to assure that students are meeting the State’s academic standards. The initiatives are described below:

Longer Year for Middle School—The primary grades have been a recent priority for additional investments, principally through class size reduction. However, middle schools provide the critical transition from primary grades to secondary education. The Budget proposes to increase instructional time in middle schools to improve educational performance and assist students with the transition to high school without further exacerbating current teacher shortages. Accordingly, the Budget proposes $100 million as the first step in a three-year effort to increase the length of the instructional year by 30 days for all middle schools.

The Budget proposes a per-student incentive of proportional funding (approximately $770 per pupil) in exchange for adding the additional days and meeting other requirements of the program. The Administration will propose legislation appropriating $450 million for the second year and $900 million for the third year to ensure the opportunity for all schools to meet the 210-day instructional year goal over the implementation period. The added days will be used for additional instructional time for all students in participating schools, and schools must also agree to align their textbooks to State standards. First-year funding is sufficient to extend the school year for approximately 130,000 middle school students in schools that are ready to participate in 2001-02—a figure that will increase in future years as other middle schools develop plans and schedules to meet the incentive requirements.

Intensive Professional Development in Reading and Mathematics—As part of the Administration’s continuing effort to improve education standards and pupil performance in California, the Budget includes $335 million to provide 252,000 teachers and 22,000 instructional aides with standards-based professional development training in mathematics and reading. Modeled after the existing Professional Development Institutes, but structured as a $2,500 per teacher/$1,000 per instructional aide incentive payment to school districts, this three-year professional development program will provide mathematics and reading training to 140,000 multiple subject K-6 teachers, 28,000 special education teachers, and 22,000 instructional aides statewide. It will also provide mathematics training to 21,000 mathematics teachers and 15,000 science teachers, and reading training to 26,000 English teachers and 22,000 social science teachers. This intensive plan to train every teacher in the academic standards over the next three years is an integral component of the Governor’s overall strategy to prepare California’s students for the High School Exit Exam (HSEE).

Principal Training—Recognizing that the leadership provided by principals and vice principals is key to the success of both students and teachers, the Budget includes $15 million to enhance the leadership skills and content knowledge of principals and vice principals through the provision of a new standards-based professional development training program. This program will provide principals with a solid foundation in the State’s academic standards, a clear understanding of how to use student assessments to guide and improve teacher instruction and student learning, a strong knowledge base in financial and personnel management, and a firm understanding of instructional leadership.

Intensive Algebra Initiative—The Budget includes $30 million to provide incentives to school districts to increase the number of students enrolled in Algebra classes. Under a new law (Chapter 1024, Statutes of 2000) enacted last year, Algebra is a required course for high school graduation. Schools will be provided $50 for each student currently taking Algebra and the standards-based test; districts will receive $100 for each additional pupil beyond the current year number of pupils who take the algebra standards-based test. These funds may be used in any manner to attract and retain Algebra teachers, including providing salary differentials, training, and reducing class loads. The funds can also be used to implement programs to improve pre-Algebra skills of students falling behind in mathematics.

Mathematics and Science Challenge Grants—The Budget provides $5 million for an incentive program for California businesses, education agencies, and community-based organizations to engage in advanced, technology-friendly education and entrepreneurial development. Matching grants will be provided to do the following:

High Tech High Schools—Integrating technology throughout the curriculum, with an emphasis in math, science, and engineering, is a fundamental requirement for both teaching and learning in preparing California’s children for the future. To meet this need, the Budget includes a one-time appropriation of $20 million in Proposition 98 General Fund for 10 new High Tech Highs across California. Matching grants of $2 million each will be awarded by the Secretary for Education on a competitive basis.

Using Assessment Data to Improve Student Achievement—The Budget provides $20 million in incentive funds to purchase or develop software and related training to aid in analyzing Standardized Testing and Reporting (STAR) test data. This test is the basis for the Academic Performance Index (API), the primary accountability measure for our schools. This program will help determine how students are performing academically, thereby allowing schools to most effectively allocate resources to assist students in mastering the State-adopted standards.

Monitoring Student Achievement—The Budget sets aside $5 million to be used for the establishment of a method to monitor student-level scores, which are used to formulate an API score for each schoolsite. Due to privacy concerns, the system will use a unique student identifier that can not be traced back to a student’s name. The goal is to develop an incentives-based system, which does not result in State-mandated costs, to enable schools to monitor student performance across schools and districts. This will increase understanding of the strengths and weaknesses in the performance of our students.

Student Performance

Kindergarten Readiness Pilot Program—The Budget provides $13.9 million to implement the first year of the Kindergarten Readiness Pilot Program established by Chapter 1022, Statutes of 2000 (AB 25). The amount budgeted includes $500,000 to fund initial evaluation activities, pending refinement of an evaluation design and long term funding requirements. The Administration will propose trailer legislation to address technical issues consistent with the Governor’s signing message accompanying his signature of AB 25. This multi-year program will compensate participating school districts that agree to the following:

Academic Volunteer and Mentor Service Program Expansion—The Budget includes $5 million to expand the Academic Volunteer and Mentor Service Program, increasing the total support for this program to $15 million. This expansion will match an additional 10,000 at-risk children and youth with adult mentors who offer tutoring support to help students excel academically. This is a 50 percent increase over the level in the current year, in which approximately 20,000 at-risk children and youth are being served. This augmentation will be targeted at increasing the number of university student mentors.

Student Academic Partnerships—The Budget includes $10 million to continue the Student Academic Partnerships Program, which was previously funded with Federal Goals 2000 monies. The program provides funding for recruitment of, and stipends for, college students who tutor K-12 students in mathematics and English.

Consultant to Align Tests with Standards—The Budget provides $3 million in the current year for an independent evaluator to determine whether the current standards-based tests adequately measure the State-adopted content standards. The evaluator will refine performance measures for the STAR exam and assist in developing performance measures for the HSEE.

Standards-Based Student Workbooks—The Budget proposes $27.5 million for workbooks for the standards-based STAR exam and the HSEE. These exams are key components in California’s system of assessment and accountability. These workbooks will provide students and their parents with valuable information regarding the standards to which students will be held accountable, as well as the skills they must master. The workbooks will be provided free of charge to all students being tested so that each student will have access to this vital information.

Governor’s Performance Awards—The Budget provides a $123 million budget year augmentation to fully fund the Governor’s Performance Awards at $150 per test taker in grades 2 through 11. Since pupils in kindergarten and grades 1 and 12 do not take the STAR exam, these students will not be included in the calculation of award amounts. These awards will be provided to schools that meet the following growth and participation targets as measured by the API:

Secondary School Reading Program—The Budget includes $8 million to continue the Secondary School Reading Program, which was previously funded with Federal Goals 2000 monies. The program provides school districts with grants to establish "model" professional development programs that help teachers increase the reading skills of students in grades 4-12.

Special Education

Special Education—The Budget reflects implementation of the fourth year of the per-pupil funding formula prescribed by Chapter 854, Statutes of 1997 (AB 602). A total of $159.6 million in additional Proposition 98 local assistance is provided for statutory adjustments to the special education formula, which includes increases of $126.5 million for a COLA, $41.5 million for program growth, and a $22 million reduction to reflect an increase in property taxes. This funding level also includes an adjustment of $13.6 million to reflect the ongoing cost of a current year deficiency in the special education program due to 2000-01 ADA increases.

Special Education Settlement—In November 2000, a settlement was reached with the claimants in the 20-year-old Riverside Special Education Mandate Case. This agreement also includes settlement of the Long Beach Mandate Case regarding provision of services to students, ages 3 to 5 and 18 to 21. Efforts are underway to secure the necessary school district, county office, and Special Education Local Plan Area signatures for the settlement to be effective. The Budget includes $270 million in one-time funding for retroactive payments, the first $25 million in one-time funds that will be provided on an annual basis for fiscal years 2001-02 through 2010-11, and $100 million in 2001-02 on a permanent basis. By increasing special education funding, this proposal reduces the demand on schools’ general purpose funds, resulting in increased discretionary funding for school districts.

State Special Schools—The Budget includes $828,000 and 12.8 positions for the State Special Schools. Increases for the State Special School for the Deaf in Riverside include $163,000 and 3 positions to increase interpreter services and enhance communication between parents and school staff; $89,000 and one position to address the case management needs of students in need of a social worker; and $34,000 and 0.5 position to provide sufficient health-related services to pupils.

Support for the State Special School for the Deaf in Fremont grows by $404,000 and 5.3 positions to improve reading assessments and instruction; provide adaptive physical education assessments and services; provide performing arts instruction to meet high school graduation requirements for performing arts; and increase janitorial support for a new Health Services Building.

For the School for the Blind in Fremont, the Budget includes $138,000 and three positions to meet the clerical needs of the school.

K-12 School Facilities

Deferred Maintenance—As part of the Administration’s ongoing commitment to K-12 school facilities, the Budget provides a total of $185 million in Proposition 98 General Fund, an increase of $8.8 million, for the K-12 Deferred Maintenance Program to fully fund the one-half of 1 percent State match. These funds, along with excess loan repayment funds and School Site Utilization Funds, will provide State funding of $203.6 million, which, when combined with the local match, will provide a total of $407.2 million for K-12 deferred maintenance needs.

School Construction—In November 1998, voters passed Proposition 1A, which provides $6.7 billion in general obligation bond funds for K-12 school construction over four years. Proposition 1A bond proceeds for new construction, modernization, and class size reduction have been apportioned to school districts in a timely and efficient manner. As of December 13, 2000, $1.6 billion of the funds remain to be apportioned. These funds are available for apportionment to school districts through July 2002 specifically for new school construction ($1.3 billion), hardship funding for school districts in difficult fiscal circumstances ($261 million), and class size reduction ($29 million).

Proposition 39—Voters statewide passed Proposition 39 in November 2000, which makes it easier for local communities to pass school bonds by lowering the voter approval requirement from 66 and two-thirds percent to 55 percent. Subject to prospective voter approval of local bonds, additional resources will be available to assist school districts in improving the quality of California’s school facilities through repairs, construction, or replacement.

Child Care

Child Care Policy Review—Last spring, the Administration initiated a review of the State’s child care policies, with the goal of determining how existing resources may be more efficiently used to equitably serve the State’s neediest families. Issues under review include current eligibility standards, family fees, and federal and State subsidy levels. This policy review will continue into the early part of 2001, with results and recommendations expected in the spring.

Child Care For CalWORKs Families

Child care services help public assistance recipients achieve and maintain self-sufficiency. The Budget, therefore, provides over $700 million to support child care for families in CalWORKs Stages 2 and 3. Families receiving Stage 2 child care services are in a stable work activity and are either receiving cash assistance or are in a two-year transition period from cash assistance. Families receiving Stage 3 child care services have exhausted their two-year eligibility for transitional child care services.

Stage 2 and Reserve—The Budget includes $491 million to fund the estimated Stage 2 caseload of families whose work status has stabilized or who are transitioning off of cash aid. This is a $98 million decrease from the current year level. While the Stage 1 estimate increased from the current year, the Stage 2 caseload decreased due to families moving from Stage 1 to Stage 2 at a slower rate than anticipated. The amount of the federal fund transfer from the Temporary Assistance to Needy Families Block Grant to the Child Care and Development Fund decreases by $147 million from the current year to the budget year due to both a caseload decline and an increased amount of prior years’ savings available to offset budget year costs. A reserve of $100 million is separately budgeted and available to both the Department of Social Services and the State Department of Education (SDE) to ensure sufficient funding for Stage 1 and Stage 2 services. (For additional discussion of CalWORKs child care, see the Health and Human Services section).

Stage 3 Setaside—The Budget also provides a $41.7 million Proposition 98 General Fund increase for a total funding level of $157.4 million to continue services to all families exhausting their two-year transitional benefit after leaving cash assistance in the current year, plus those families entering Stage 3 in July 2001. This fully funds the Administration’s one-year commitment to this population pending completion of the child care policy review. Upon conclusion of this review, Stage 3 funding needs will be addressed, in combination with the necessary policy changes to the overall child care program, to meet the goals expressed last year of serving the State’s neediest families within existing resources.

Other Augmentations To Child Care And After School Programs

In addition to the funding described above, the Budget proposes the following significant adjustments:

After School Expansion—The Budget includes over $22 million to expand the After School Learning and Safe Neighborhoods Partnerships Program, which provides homework assistance and access to safe after school care for children with working parents. This amount includes $20 million for mid-year expansion of After School grants, $2 million in one-time funds for Regional Resource Centers to increase technical assistance focused on middle school providers, and $240,000 and two permanent positions for State-level workload increases. Program expansion funding is targeted to middle schools, giving priority to programs with high academic assistance standards, and is sufficient to fund grants for all remaining middle schools meeting the statutory priority criteria where at least 50 percent of the students qualify for free or reduced-cost meals. This expansion will provide services to approximately 350 additional schools serving at least 44,000 additional students. This funding represents half-year costs to account for the time necessary to conduct the application and award process; full funding of $40 million will be provided in the following year.

Subsidized Child Care—The Budget provides increases of $66.8 million of Proposition 98 General Fund for the State’s subsidized child care programs for working, low-income families. This funding annualizes the half-year expansions initiated in the current year for General Child Care targeted to 0-5 year olds ($40 million), State Preschool ($23.8 million), and Migrant Day Care ($3 million).

Child Care Quality Improvement—The Budget provides a total of $5 million, which represents an increase of $4 million in Proposition 98 one-time savings over the current year, to expand upon the Pre-Kindergarten Guidelines for child care centers completed in the current year and to strengthen the quality of care delivered by family child care homes and exempt providers. Of this amount:

Additionally, $1 million will continue to support the Home Instruction Program for Preschool Youngsters (HIPPY), which supports low income parents’ efforts with in-home early childhood development activities.

Total State quality enhancement expenditures continue to exceed federally required minimums, and total over $80 million through SDE programs and projects alone.

Increasing the Number of Child Care Facilities—To support the CalWORKs Center-Based Pilot initiated in the 1999 Budget Act and to meet the overall demand for new child care facilities, the Budget transfers $53.8 million in one-time Proposition 98 child care savings to the Child Care Facilities Revolving Fund, which provides loans to child care providers for the purchase and installation of portable child care facilities and for renovating and improving existing buildings for licensure.

Cost-of-Living and Minimum Wage Increases—The Budget provides $45.5 million ($36.3 million Proposition 98 General Fund and $9.2 million federal funds) for a 3.91 percent COLA for all eligible child care programs, including local child care planning councils. The Budget also includes $5.4 million in Proposition 98 General Fund to help compensate child care and development contractors for increased costs associated with State minimum wage increase requirements.

Support of Child Care Agencies—In addition to the State operations resources noted above for after school expansion, the Budget includes $148,000 for State operations to address workloads for compliance with eligibility and quality standards and technical assistance to new providers and program directors related to General Child Care and Migrant Day Care expansions authorized in the 2000 Budget Act.

California State Library

The Governor’s Budget includes the following augmentations for the California State Library (CSL):

Other Adjustments—The Budget includes an additional $212,000 for the CSL to address growing workload in its fiscal and business services units, associated in part with the passage of the California Public Library Construction and Renovation Bond Act of 2000. In addition, urgent maintenance and repair needs will be addressed at the Library and Courts II building through a one-time augmentation of $429,000. Another $41,000 will support increasing membership in the California Library Services Act System Services Program, which provides a higher level of reference assistance to member libraries that are unable to answer reference questions at the local level, as well as van delivery of books and other materials loaned between libraries.

Proposition 98 Guarantee

The total 2001-02 Proposition 98 funding level is proposed to be $46.4 billion, an increase of $3.5 billion over the revised 2000-01 funding level. The General Fund makes up approximately 70.6 percent, or $32.8 billion, of the total funding (see Figure K12-5). The Constitution requires a calculation of the minimum required funding level for K-12 and Community Colleges. As part of the calculation, the Constitution allows the State to provide a lower funding level (Test 3) in years when personal income growth exceeds General Fund revenue growth. Because this alternate calculation is intended to be used when the State is experiencing unusually slow revenue growth, the Budget proposes to exceed the minimum funding level, and instead, fund Proposition 98 at the higher level (Test 2). The amount by which the Budget exceeds the minimum required funding level is $1,868.6 million in 2001-02.

The total 2000-01 Proposition 98 guarantee is expected to increase by $40.4 million from the 2000 Budget Act level. This change is funded by an increase in property tax receipts of $172.3 million and a decrease in the General Fund share of the guarantee of $131.9 million. The $40.4 million net increase is due to legislation enacted at the end of the legislative session ($8.5 million), increases in estimated ADA growth ($8.6 million), and miscellaneous adjustments ($1.3 million), adjusted for property tax receipts of $150.3 million that offset ADA growth. The overappropriation of the minimum calculated guarantee in the current year is $555.1 million.

The total 1999-00 Proposition 98 guarantee increased by $296.2 million over the 2000 Budget Act level. The General Fund share of the guarantee increased by $191.6 million due to increased total school district and county offices of education apportionment costs that were partially offset by increased property tax collections for the fiscal year of $95.5 million. Additionally, $270 million is included for the retroactive payments for the settlement of the Special Education mandate case.

Other Adjustments

The following is a summary of all one-time appropriations from the Proposition 98 Reversion Account: