Assembly Budget Subcommittee No. 2 on Education Finance

[chatter]

Good morning, everybody. Welcome today's overview hearing. This is the overview of the KCK through 12 budget, Prop 98, and the governor's proposals for the CK through 12 education budget today. No action items, just an informational overview of the proposed budget before us. And of course we will dig into. The proposals in the coming weeks and put our fingerprints in accordingly to make adjustments if necessary. This is pretty much a status quo budget based upon.

Exactly. So mute should be the opposite. Okay, sorry about that. Good morning. This is the informational hearing of the governor's 2324 budget, the Prop 98 budget and TK through 12 education. Somewhat of a status quo budget because of economic conditions that we'll certainly get into. We have been through two amazing years of funding public education funding at the highest level in the history of California.

We don't know the final tell yet, but we were for the most part in the past 3040 years in the bottom 10 states in per pupil funding. Now somewhat certainly the top half, we think roughly in the teens. But whatever the number is, we certainly have come a long way since we created LCFF 10 years ago, and sometimes better to be lucky than good.

And we're funding our schools at record levels, and that certainly is an issue that we hear about from our schools, the adequate funding. We're also asking challenges too, with declining enrollment coming out of the pandemic and learning loss issues that we'll certainly dig into in the coming weeks. Again, this is a budget that's pretty much status quo budget. We do have a significant COLA in this year's budget and we do hear from districts in questioning whether or not that's going to stick to the amount.

That's a statutory COLA and that's our plan right now. But I would just note that this is an amazing COLA of over 8%, and some programs in California, including health and welfare, have a COLA of zero. So we should very much be mindful about that. We will go into today an update on our universal transitional kindergarten implementation and rebands, as well as LCFF funding formula in the COLA. And here an update from Ficmat.

But as usual, we're going to start by hearing from our Superintendent of public instruction, Tony Thurmond, former Member of the State Assembly. It's going to give us an overview on the health of our TK through 12 schools in California. Mr. Thurman.

Thank you.

Mr. Chair. Good morning, Members. Thank you for the opportunity to be here. Thank you for the great prep from your staff on the important topics to discuss today. You're going to hear from a number of staff today from the California Department of Education. I think there's at least a dozen in the room, and we're excited to share with you a number of topics. I'm joined by one of our deputy superintendents, Vella, who will be sharing some points about the presentation today.

You're going to also hear from our Chief Deputy Superintendent, who will talk on some of the LCFF matters. Today's her birthday, so please take good care of her. And you will also hear from Sarah Neville Morgan, who you know will be talking on a number of the items related to early education. I would say that the State of education is one that is hopeful.

There are many challenges, of course, and we can talk about those, but great things are happening in our schools, and I encourage you when you can, to get out and visit schools in your districts. And if we can help you with that, we'd like to do that right now. Our schools are preparing for this week for Read Across America Day and promoting the importance of reading. And so, in spite of challenges, there are great things happening in our schools.

And I want to just say thank you to our great teachers, our classified staff, our administrators, our students, and our parents for the great things that they are doing.

While there are challenges, we have so many things in California that other states just don't have, and not the least of which is a learning block recovering grant for $8 billion, community schools program for $4 billion, over $2 billion for the arts, and not to mention the recent passage of Prop 28 for arts, $250,000,000 for reading coaches and specialist programs, and another proposed $250,000,000 in this current budget. And, yes, there are challenges, and these challenges are being experienced all across the nation.

They're not unique to California. Chronic absenteeism has been an issue. We know that students either have left our state, they've left our schools, and we're working with our districts on those issues. There are learning gaps that we've seen grow since the pandemic, and we have a workforce shortage. We have attacks on LGBTQ plus youth, and many of our districts are dealing with weather challenges that have impacted our schools on top of fires. And now we have these weather challenges.

And our emergency team that we call the three J's have been nonstop, and they've been in direct contact with so many in our districts. Again, we have resources to work through these challenges, and we are literally showing districts how to do learning acceleration using the learning Recovery Block grant. We have 3000 tutors and mentors who are in schools across our state supporting our schools. And we know that high dosage tutoring is one of those strategies that will help to offset learning gaps.

We are working to show school districts how they can use their expanded learning dollars for more things like making the school year a little longer with things like STEAM academies. We're putting out a grant to school districts to provide Steam academies, and we're asking them to focus on the students who've been chronically absent so that they get more time and they get preparation for careers that will be important during the future.

We note that there's a Bill, again, that would change the way schools receive funding as it relates to attendance. That Bill would bring $3 billion in resources to school districts and including for resources to have more outreach workers. And I want to thank the folks at Mount Diablo Unified School District who invited me to come out with their home visitors and knock on doors and talk to families who've been impacted by chronic absenteeism. Arts funding again.

And I would just mention that when you look at Prop 98, it's the highest. What's proposed is the highest we've ever seen, at more than $17,000 per student. Continuing on, why I think the times are hopeful that we have a universal preschool initiative that no other states have, and you'll hear about that from Cyril Nevermorgan. But every three year old and four year old has the ability to be in a preschool program, universal meals, two meals a day for any student, regardless of their background.

No other state can talk about that. The funding has been provided to help us recruit 10,000 counselors. We have a $20,000 scholarship for anyone who wants to be a mental health clinician in our schools. When you look at the community Schools initiative, $4 billion allocated, but 650,000,000 of that already allocated for implementation and planning grants. Having said that, we know that more recruitment of our workforce is needed. We won't be able to meet the goals for universal TK unless we can recruit more teachers.

And so the Department of Education has taken up the work of recruitment. We don't have recruitment staff, but we're building out our capacity to do more. We've created a public service announcement where we feature award winning teachers to talk about the benefits of becoming a teacher. We've created a hotline and an email where anyone who wants to know about the Golden State teacher grant, the $20,000 that's available, can get that information.

We've launched a career fair series focused on 10,000 people who are working in our communities, many who are working in schools, to show them how you get a teaching credential, to show them how you can become a teacher.

And of course, we encourage anyone who's interested in becoming a teacher to send us a note at Teachandca at CdE CA Gov. Again, as we look at the great proposals in the budget, I would ask you all to think about how we turn to other areas where help is needed, in particular, helping homeless students in our state. The last estimate that we were provided that there are more than 200,000 homeless students in our state, some 8000 who are on their own.

I believe those numbers are actually higher when you think about how difficult it is for us to be aware and have awareness of where our students are. I would ask that this Committee and its Members give thought to how do we tackle the rising costs of housing for educators?

Just a few years ago, we sponsored legislation that ended up in the budget that created tax credit financing for building educator housing on school district land, taking surplus land and building housing for teachers and classified staff, and providing those tax credits to developers. And I can tell you that program is fully utilized. And I think it's time for us to pursue similar work, not to mention the importance of our continued work on helping students reach reading goals by third grade.

I'm pleased to let you know that we've hired two new statewide literacy directors at the Department of Education to help districts create their plan for getting to reading by third grade. We've got to be thinking about discipline and alternatives to discipline. We continue to see disproportionate rates of discipline impacting African American students and Native American students and disabled students.

And so we've got work to do, but we have the resources to do that work in a way that we've not seen at any other time in this state's history and in a way that we do not see in any other state. And so I leave you where I began, that while we have challenges, the prospects are hopeful and we have the resources to do the work that's needed.

The entire California Department of Education, our Chief Deputy, Mary Nicely, who's celebrating the birthday today, who you'll hear from, has assembled an incredible team, and we are all here to answer any questions that you might have about the budget or any other topics relating to education. Thank you.

Okay, thank you. We're going to hear from the Department of Education next of the Prop 98 overview. But before we get to that, do we have any questions for our Superintendent of public instruction, Mr. Muratshuchi?

Thank you very much. Welcome back, Mr. Superintendent.

Thank you.

Always good to see, sir.

You too.

You know, I wanted to thank you for touching on all the touchstones of what I think are the biggest challenges facing our TK through 12 students throughout the State of California. And I think it's worth noting that I believe today is the official end of the State of emergency for the pandemic. I know that you're going to be coming to the Assembly Education Committee's hearing tomorrow on, as we're emerging out of the pandemic, where are we at and where do we need to go?

If I may, Mr. Chair, I wanted to take this opportunity to invite the entire membership of the budget Subcommitee to the education Committee hearing. Also, we're going to have the Superintendent back again along with other education leaders.

But one issue that I've been focusing on is one of the many issues that you touched upon, which is not only the teacher workforce shortage, but the overall workforce shortage, where we have the funding, like, say for mental health counselors, but we can't find enough people to hire to fill those positions. I mean, it's such an incredibly frustrating situation where we have the funding, but we can't find the people to fill those jobs.

I know that you have been working with the Governor and others on the children's Behavioral Health initiative and to provide a spectrum of workforce, everything from MSWs in classrooms like yourself to peer counselors. But overall, what do we need to do to get more people to want to become teachers, to want to work in our schools to address the mental health crisis?

Thank you for the question, and we look forward to seeing you in the Committee and we'll change up the talking points so that we have a different presentation. But I think the topics are the same. It's one thing to have the resources to get teachers and classified staff and counselors, but if we don't feel those positions, we won't feel the positive impacts of that work.

And so that's why we've taken up this issue around recruitment, because we feel the pain that many of our districts are experiencing. We've worked on legislation that could provide a waiver for those retirees who want to come back short term. So we're trying to look at the issue from a short term and long term perspective, and we've essentially assembled higher education programs, teacher credentialing programs, school districts.

We did a career presentation last week where we had 30 school districts that are recruiting, and we said, let's all be recruiting together, but also with the teacher credentialing programs at the table, with the residency programs at the table, it's just difficult for candidates to even learn about what's available.

And so what we've created for now is a one stop shop where people can get information and they can just call and someone will call them back and say, here's how you get access to the Golden State teacher Grant. Here's how you can be enrolled immediately in a teacher credentialing program. And so while it's traditionally been the role of school districts to lead that recruitment, we feel their pain. And we've entered into the lane and working with lots of great groups that also work on recruitment.

But we've said we're going to lead this discharge. And we've seen an increase in applications for the Golden State teacher grant, including for those who want to become mental health clinicians. My point is, the more you make it aware to individuals, the better return we will see. And so we're working on short term and long term efforts.

We've engaged in recruitment in a way that we've not ever seen before at the Department of Education, and we know that it's needed and we're happy to be doing it, and we'll continue to do more.

All right.

Thank you very much.

Thank you.

Thank you, Superintendent, for being a tremendous voice for our public school kids, 6 million of them strong and appreciate your work. Next, we're going to bring up your other leadership of the Department of ED, Department of Finance, and then LAO, and then if the CDE representative wants to thank you.

Good morning, chair and Members. Amin Singh here from the California Department of Finance. I will be going over the Proposition 98 guarantee for TK through 14 education. The Governor's Budget estimates that the Proposition 98 guarantee amount for fiscal year 2324 will be $108.8 billion. This is $1.5 billion lower than forecast at the 2022 Budget act and represents a 1.35% decline over Budget act.

Despite this decrease, per pupil spending remains at one of its highest ever years, and the overall size of the guarantee is not significantly different from what was forecast at Budget act. Across the three year budget window from fiscal year 2122 through fiscal year 2324 Proposition 98 shows a decline of $4.7 billion compared to Budget act. All budget years remain in a test one, which means that the Proposition 98 guarantee amount is roughly equal to 38% of the state's General Fund.

The current cost of living adjustment, or COLA, is 8.13%, which poses a large cost pressure on the education budget. Fully funding COLA will post a cost of over $6 billion for K through 12 programs alone, but fully funding the statutory COLA will ensure that education programs will be funded at a rate that remains in line with the rate of inflation in the State of California. Despite the drop in the Proposition 98 guarantee level, per pupil spending is at over $17,500 of Prop.

98 per student and over $23,700 per student. If all funding sources are included to address the Proposition 98 decrease, the Governor's Budget does contain multiple onetime solutions which offer a balanced and realistic approach to mending the budget gap. The state maintains a rainy day Fund for education, and the balance of the rainy day Fund is currently $8.4 billion. That's $1.1 billion lower than forecast at the 2022 Budget act, and the reason for that downgrade is due to a decrease in capital gains revenues.

Despite the lower balance, the rainy day Fund will be receiving a deposit of $338,000,000 based upon a statutory formula. The Governor's Budget does not propose making a withdrawal from the rainy day Fund, as the criteria for withdrawal have not been met. As for policies impacting Proposition 98, the guarantee has been rebenched to reflect the continued implementation of universal transitional kindergarten, and the newly passed Proposition 28 Arts and Music in Schools act requires additional funding to Proposition 98 equal to 1% of the previous year's guarantee level.

The very first year of the Proposition 28 Arts and Music and Schools Act appropriation will be fiscal year 2324 and it will be in a supplemental payment amount of $941,000,000. That concludes my summary of Proposition 98. I'm available for any questions.

Okay, thank you. Next, LAO thank you.

Chair and Members, Ken Capon with the analyst office. I'll be speaking from a handout that's in your packet. I think the Department of Finance gave you a good overview of the changes in the guarantee this year. I wanted to pick up on 1.0 that amen mentioned, which is the importance of the fact that Proposition 98 is being determined by the formula we call test one this year.

And that's important because in test one years, the minimum funding requirement is equal to a minimum percentage of state General Fund revenue, just under 40%. And that means that for each dollar of higher or lower state tax revenue, the guarantee would increase or decrease about $0.40. So the reduction in the guarantee compared with last June is due mainly to the state's lower General Fund revenue estimates.

Based on our most recent economic assessment, we think the state has about a 70% to 80% chance of receiving less revenue than the Governor's Budget anticipates. A number of a couple of leading economic indicators, like the retail sales and income tax withholding, have been weak since the release of the Governor's Budget, and our best estimate right now is that state revenues would be around 10 billion below the Governor's Budget level across 2223 and 2324 combined.

If that transpires, the guarantee would be approximately 4 billion below the levels that are in the budget right now. Some portion of that drop might be mitigated by higher local property tax revenue. Property tax revenue accounts for a little bit more than a quarter of the total Proposition 98 funding requirement, and we think it could exceed the Governor's Budget by at least a couple $100.0 million and potentially up to a billion. Another potential mitigating factor is the Proposition 98 Reserve.

You heard a lot about state reserves in your full Committee hearing three weeks ago, and what makes the balance in the Proposition 98 Reserve special is that it's only available to supplement the funding schools receive under Proposition 98. Unlike all of the state's other Reserve accounts, it's not available to address a broader budget shortfall. If the guarantee is particularly weak, the formulas might require an automatic withdrawal from that Reserve account.

But the state can also, or the Legislature can also make a discretionary withdrawal if the Governor declares a budget emergency. Shifting to page or starting with page five of our handout, I want to talk a little bit about some our high level comments on the governor's spending proposals. So, under the Governor's Budget, even though the Proposition 98 guarantee is lower, the state has about $5.2 billion available for K 12 augmentations. And as far as the policy proposals, the budget has three main components.

There is $6 billion in new ongoing spending. This is primarily to cover the cost of living adjustment. The only other notable ongoing proposal is $300 million. For the new equity multiplier, the budget has $376,000,000 in new one time proposals. This is mainly for literacy grants and for an arts and culture program for high school seniors.

Those proposals altogether add up to $6.4 billion, since that's more than the funding available under Proposition 98, the budget also has a proposal for a $1.2 billion reduction to an existing program. This is the reduction to the arts, music and instructional materials discretionary block grant. Page six of our handout just gives you a list of all the specific proposals. You'll cover each of these in subsequent hearings. Turning to our assessment on page eight, we think one strength of this budget is that it prioritizes core programs.

Most of the funding is to support existing programs. There's not too many new initiatives, and we think that's an appropriate focus given the state's tighter fiscal position. Directing increases toward existing programs could help districts address local cost pressure and sustain some of the expansions that they've begun in previous years. We also think the plan to save the Proposition 98 Reserve for now is a prudent starting point.

So holding on to the Reserve gives the state a tool that it can use to protect programs from cuts in the event the state experiences a more significant economic downturn. Turning briefly to our concerns, this is on page nine. One of our concerns is that the budget would use 1.4 billion in onetime funds to cover ongoing costs for the Local Control Funding Formula. And that's a concern because it creates a deficit in the Proposition 98 budget moving forward because those costs will continue the following year.

But that onetime funding does not, and that's maybe even more of a concern this year, given our estimate that the guarantee is likely to be lower than the Governor's Budget anticipates. We also have some concerns about the mid year reduction to the arts and music discretionary grant.

Our understanding is that districts have often gone through a local planning process for those funds already, and adjusting those funds now likely would be disruptive to their budgets and could require larger changes that they've already discussed with their local stakeholders through their local planning process. Shifting to page 10, we'd recommend building a budget that does not rely on one time funds for ongoing costs.

We'd also recommend building the budget with a view to avoiding that midyear reduction to the arts and music discretionary grant to the extent possible. The state has a couple options for achieving that. One starting point. One we'd recommend is to not adopt the governor's proposals for three new programs.

I will talk later about all of those proposals on their merits, but we think two of those are somewhat duplicative of existing funding, and one of those, the literacy proposal, is one where we're still waiting for data on how the first round of funding was used. Our concerns are heightened this year given our again, outlook for a weaker revenue picture, so rejecting those new programs would make more funding available to sustain existing programs. Another option could be to Fund a lower COLA rate.

Each half a percent change in the COLA rate right now is worth about 400 million. If the state wanted to Fund LCFF without relying on one time funds and not make any other changes to the Governor's Budget, we estimate it could Fund a 6.4% COLA if revenue is significantly worse, this might be an option the state needs to take a close look at.

Turning to page 11, our final page, a third option could be to revisit a few of the augmentations the state approved in previous years. Two that we highlight are the expanded Learning Opportunities program and state preschool. Just briefly, on expanded learning, some districts indicate that they're having difficulty running those programs at the scale the state envisioned. We understand that reflects both difficulty scaling up the programs and hiring staff, as well as the fact that in some districts, not all students are interested in that program.

We think the state could think about reducing funding so that it no longer assumes 100% participation or potentially accounting for the funds districts already receive through existing after school programs for state preschool. Some of the funding the state has allocated for recent slot increases is going unused, and we think the governor's estimates of the costs for COLA for that program are too high.

We'll talk a little bit more about some of the details of that later on, but we think that's a program where the state could reduce ongoing funding while still maintaining the program as it currently operates.

I think we'd emphasize that to the extent you can do all of these options to different extents, and to the extent that you do one option more than enough, do one option more, that reduces the need to do reductions in some of the other ways so you have options about exactly how the budget becomes balanced. Thank you, and that concludes our comments.

Okay, thank you. Questions for the

Good morning, Dan Merwin. On behalf of the Superintendent, I'll keep my marks very brief, as both finance and LAO have already covered this, you.

Can you get a little closer to your mic. Thank you.

We do appreciate the administration's commitment to keeping Prop 98 particularly whole. Thank you. And that does reflect keeping education a priority, and we encourage the Legislature to keep that in mind, particularly the fully funding the COLA. As we said, LAO and finance have already covered this very thoroughly, but we do not have any concerns with the Prop 98 calculation or related calculations, for example, for the Prop 98 Day Reserve. Happy to take any questions at the appropriate time.

Okay, thank you. Questions for this panel, Mr. Alvarez.

Thank you, chair, and thank you to the panel. I think maybe it's appropriate to start by acknowledging that year over year, a lot is holding steady, which is good for our districts and for our schools. And I think the Governor's Budget proposal, particularly in this regard, holding folks harmless in the education sector is a good approach, as is a big priority for me, anyway. Excuse me, maybe I'll start with questions on the two programs that were identified by the LAO on potential savings.

I think the common thread through budget, at least for me, will be identifying opportunities for savings, given that it's likely the revenues are going to be lower, in my opinion, and as the Legislature tries to identify our priorities, we need to make sure we find savings in the budget to be able to Fund those priorities. So there's two in particular I'd like to ask finance or the Department or the LAO to chime in on. First, the Expanded Learning Opportunities program.

I believe the program is funded with the intent of all children at schools that qualify attending these programs. As a father of kid in a middle school and an elementary school, where these are schools that are likely would be receiving, or qualify for receiving funding for these programs as their titlee one, low income, English language learner population is quite substantial at both of those schools.

I think that assuming a 100% participation by the full student population is not a good assumption, and I just want to know if you can share how that assumption was reached, if I'm incorrect in understanding that, and if the Department or finance can provide some feedback on that.

Thank you, Assembly Member. I can take a first response at that. So the state's existing largest existing after school program is the after school safety and education program. The state allocates funds for that program based on the number of students who actually are participating in after school programs. What's different about expanded learning is it's based on the total number of students in the it's not districts are expected to run the program at a certain scale, kind of regardless of how many students are attending.

And that is an area where, as you said, we think there is some possibility for savings if the state were to allow reduced funding to reflect a lower participation rate. I can maybe let one of my colleagues at the Department of Finance say if they kind of give their reaction to that suggestion.

I would defer to CDE for questions about expanded learning implementation.

Thanks and I apologize, sir. I can get back to you on that and see where we are in implementation and how that's worked out with Ada versus utilization.

Okay, follow up short. Thank you. I look forward to that. The other program where potentially savings could be achieved is in the preschool program. Now, just want to make it clear, I'm full supporter of preschool programs, but it appears that the slots that have been funded have not all fully also been utilized and I'd appreciate any update on the status of that.

Sarah Neville Morgan I'm with the California Department of Education representing the state Superintendent. So for the state preschool program slots and access, in one of our surveys we asked around demand and did get feedback from Leas that they are really interested in expanding their state preschool programs. So we think over the next few years we'll actually have a greater demand for state preschool to address the three year old need. Right now in state preschool we only serve 8.5% of eligible children.

Okay. You probably don't have a response to sort of the numbers at the moment, but I'd be interested in understanding sort of where the funded slots are compared to the actual slots that are filled in preschool. Given that the desire to grow over the next couple of years, I'd be interested in what that delta is from what's been funded to what is being occupied by a student and what the projections are for growth as well.

That's something that we can follow up on.

Thank you, appreciate it. As it relates to the COLA rate, this is maybe more of a really educational question for me. I apologize if others already know the answer to this, but the COLA number at 8.13% is a statutory requirement. Can you briefly identify how that number is determined? Is it just based on CPI and indexes? How do we get to the 8.13?

Yeah, Kenneth Kapphahn again with the analyst office. I can answer that. So the COLA rate is based on the national price index for state and local governments across the country, and it is based on the changes in that index that are lagged a year and a quarter. So it's actually picking up not so much inflation that's anticipated to happen in 2324. But inflation that happened during 22-23. That's one reason why it's so high.

We think actual inflation in 23-24 won't be 8%, but because it was higher this year, that's what the number is.

So combine that with the 13 something percent from last year that was in current budget right. That number and this number. Do we assume that we've now caught up with inflationary pressures or where are we related to last year and this year as it relates to cost of living?

Yeah. So last year, in this fiscal year, the statutory cost of living adjustment was 6.56%. What the state actually funded was 13.26%. So there was a kind of concern about costs within the Legislature and one of the ways the houses agreed to respond to that. Was providing a much larger increase than what the statutory COLA would be for this fiscal year.

So it might be fair to say that with last year's adjustment and this year's adjustment, we might be above true inflationary cost increases.

Yeah, the percentage increases in the LCF are above what the statutory formula is that we typically Fund.

Okay, I'm interested in that as a section of the budget, as potential funding as well. Savings to not take up as much time as I already have. But I have one last question. I'm really a strong supporter of the arts in our education programs. And one of the budget proposals that I'm not a fan of is the cut to the arts block grant program. Especially as Prop 28 gets implemented starting this school year and there's this very unique opportunity with that.

With Prop 28 and with the block grant program. We can actually produce a robust program in the arts in our schools. Particularly to the schools that don't have resources for parents and others to raise money for these types of programs. So if I can get a response from the Department on the reasoning behind the cut to the arts grant program.

Amin Singh from the Department of Finance. One of the Governor's Budget proposals to close the gap that we're seeing in Proposition 98 guarantee amount. Is reducing funding to the arts, music, and instructional materials. Block grant from 3.5 billion to 2.4 billion. The block grant program is relatively new. And the first year, I believe, was 22-23. So local education agencies will essentially be seeing a reduction to the amount of initially anticipated appropriation by one third. Of course, any reduction to funding is difficult to decide upon.

But that is one of the major solutions that the Governor's Budget proposes in approaching the budgetary gap that we're seeing for Proposition 98. But as you mentioned, Proposition 28, which is the Arts and Music in Schools Act that was passed by voters this past November, will increase the guarantee by 1% of the prior year's guarantee amount. So we can think of it as Proposition 98 plus 1% of the prior year's amount.

And given that Proposition 98 is sitting at like roughly $100 billion, that's a nearly 100 billion dollar increase that will be permanently rebenched into the calculation. The first year of Proposition 28 funding will be fiscal year 23-24 and it will be in the form of a supplemental payment in the amount of $941,000,000, beginning in fiscal year 24-25 that will be permanently re benched, or like the Proposition 98 calculation, will be recalibrated essentially to permanently incorporate this program.

While we're seeing that $1 billion reduction into the arts, music, and instructional materials block grant funding as a budgetary solution, we will be seeing increase in arts and music funding in General resulting from Proposition 28.

Thank you. I understand that. I just think that there are other programs that are in very similar boat in terms of we've started them and the funds haven't been expended yet. They continue to be in the budget as proposed, continued expenditures. But this one in particular, where there has been significant planning by LEAS at the local level to spend this money, and they're going to get money from Prop 28, not just for actual supplies, but to actually have teachers in the classroom.

I think this is one of those that makes more sense to continue funding as opposed to defer or eliminate funding. And I hope that that gets reconsidered in the May revise. The last one now, really, I really appreciate the recognition of the literacy coaches. I would like to get more information on that because I think that's one of the programs, as I was just saying, that actually seems to be not on time in terms of rolling it out and where funding or savings could be accomplished.

But I'd like to know where we're at with training literacy coaches and reading specialists, especially at schools that have demonstrated lower rates of proficiency, and then where we're at with rolling that out in the current year. And now we are adding another 250 million, can we actually get that expended? And then the other one that I find really interesting, I really like this one, is the idea of funding activities for students in grade 12, culturally enriching activities, I'd like to learn more about that proposal.

I think it's one that is very attractive to the schools that I represent. But I would also like to note that particularly the schools that are perhaps title one schools or with a higher number of low income and English language students. Low income primarily because kids in these schools don't have the opportunity to go to a lot of these cultural activities that perhaps other children might have the opportunity to do so, a more tailored approach in that program is something that makes sense to me.

In addition to going back to the ELOP, 100% participation is think, probably not a realistic funding number. Something lower than that would be appropriate, and I think some savings can be achieved that way. So thank you all for answering your questions. I look forward to the CDE's response on those particular questions I asked just before.

I thank you for the answer here. We do have detailed hearings on that early as next week, in the coming weeks.

But I have one more thing. Sarah Neville Morgan, Department of Ed for the ELOP or expanded Learning Opportunities program, it is funded for 85% of unduplicated. So the students who are low income, homeless, those categories, but the school has to offer it. So even in the offering, it's not fully funded at that amount. And I will say overall, for literacy, for ELOP, for state preschool, all of those for TK.

As you roll them out, it takes a few years to be able to build out a program and make sure that you have the capacity within the school and that families know about it. And so sort of growth of a program does take a few years to get to full enrollment.

Okay, Mr. Maratsuchi.

Thank you very much. I'd like to start off with Mr. Kapphahn.

Thank you.

Your handout indicates flags the issue of the governor's proposal relying on $1.4 billion in one time funds to cover ongoing LCFF costs. I might have missed it, but could you identify the nature of those one time funds?

Yeah. So those one time funds are all attributable to the 21-22 fiscal year and the reason we have one time funds in that fiscal year is a combination of factors. LCFF costs came in a little bit lower than we thought that year, the guarantee was slightly higher than we thought. And then there is that reduction to the arts and music discretionary grant, which was paid for out of 21-22 dollars. So accounting for all of those changes, there's unspent funds in 21-22. The Governor's Budget is proposing to use 1.4 of billion of that funding to cover LCFF in 23-24.

Okay, next in your handout. I'm looking forward to along with Mr. Alvarez and the rest of the Committee on our follow up hearing on early childhood education, including, well, I guess the follow up hearing on the ELA program. But since we have Mr. Kapphahn here and you have in your handout here, some districts indicate that not all students may express interest in participating in ELA. Can you specifically expand on that statement, like what districts, what evidence you have of that?

One of the challenges with the program is we don't have a lot of good data, and I think we'd encourage you to improve the data collection for the program. That will help make more refined adjustments in the future. But anecdotally, what we hear is that even the districts that are feeling very successful with this program are still seeing participation rates in the range of 70% to 80% rather than 100%. That's consistent with what we've seen with some of the other programs, the existing ACES program.

So even in districts that are doing a lot with this, we can't find very many examples of those that are coming close to 100% participation. Again, doesn't mean there might not be a few districts out there that are at that level. That doesn't seem to be the most common situation that we're hearing right now.

Given what we heard from the Department of Education on how it takes time to ramp up programs. How does that sound to you?

I think the point about ramping up programs is well taken, but given the state's fiscal condition right now, this might not be the right time to push districts to expand programs even more than they're already doing.

Question for Department of Finance maybe I should have started off by echoing Mr. Alvarez and I'm sure the rest of the Committee and thanking the Governor for demonstrating his strong ongoing commitment to protect classroom funding and overall TK-12, well education funding overall, despite the projected, the governor's projected on $22.5 billion budget deficit.

One area that I was concerned that I noted in particular, and I raised this at the Larger Budget Committee hearing a few weeks ago, but it jumped out to me how while the Governor is demonstrating his strong ongoing commitment for all of the early childhood education initiatives that the Governor of the Legislature has initiated, particularly in regards to the commitment. I believe, $4 billion commitment to ongoing support to reach universal transitional kindergarten by 2026.

At the same time, the Governor in his January proposal was delaying, proposing to delay by one year the plan, $550 million to support the facilities grant program. Given what the Department of Education has highlighted about how it takes time to build up our readiness for this expansion. And given that we're hearing from districts throughout the state that they're not going to have enough facilities to accommodate all of the additional transitional kindergarten kids, can you explain the administration's thinking behind this proposal?

Aman Singh from the California Department of Finance. I don't have expertise on facilities, but I can get you additional information regarding that.

If I may, Chris Ferguson with the California Department of Finance. So certainly I think we see the broad total and context of the $22.5 billion reduction. We understand that that's going to require a mix of reduction, solutions, delays, and that was just part of the reduction, solutions, delays, given the broad context within the budget. That said, when it comes to construction, there are districts that may be able to avail themselves of the school facility program and build out in that manner.

They may have local bonds that they can use to build out in that manner. They may also be able to avail themselves of bridge financing if they're confident that they would receive a grant through this program in 24-25. So certainly we understand that it takes time. We understand that it's a challenge for districts, but we think, just given the overall context of this year's budget, that it was a prudent action.

Okay. And if I may follow up, I mean, part of the challenge with school districts is that while they may have local bond funding, that we are running out of the state matching funds for construction bond funds. What is the administration's position on the need for a state construction bond?

Yeah, certainly we believe that there will be a discussion this year in that context. So we understand that the states put in roughly $4 billion to support the school facility program in the Governor's Budget over the multi year plan. But we do recognize that there is a pending discussion there.

All right, thank you. Going back to Mr. Kapphahn, you also, in your handout, recommend rejecting the equity multiplier funding. Could you expand on that?

Yeah, I think one of my colleagues will talk a little bit later about some of the details about that. But our assessment is that I think there's this long standing and legitimate concern about how the existing concentration and supplemental dollars are being used to close those kinds of achievement gaps. We don't think that the root issue of that is a lack of funding. We think there are some changes we could make to the system of support and oversight and accountability system.

Some of those elements of the Department of Finance's proposal are promising. I think you could adopt those. We think that's a more promising approach than creating a new program, new $300 million program, on top of the significant amount of supplemental and concentration funding that's already provided through LCFF.

Can you give the most compelling example of the reform that you're referring to in terms of existing supplemental and concentration grant funding.

If I may? On that one I'll defer to my colleague because I think they've got a couple examples that we can share in a bit.

Hi. Good morning. Edgar Cabral with the LAO. And I know we'll talk about the equity multiplier in a subsequent hearing in more detail. I would just say I think we lay out in our analysis a number of options for providing a little bit more transparency in terms of how funding is spent at the school site level.

The main thing that we recommend is requiring districts to provide more information in terms of staffing, what seniority levels are, overall staffing, and the level of experience of teachers across school sites so that there's better information in terms of how that's being spent. But we're happy to talk about that in more detail in subsequent hearings.

Okay, thank you. I realize I'm getting ahead of myself. Mr. Chair has a plan here. Last question for me is in regards to the Prop 98 Rainy Day Fund. First the Administration and then the Legislative Analyst. The Administration, do you have criteria for when and how much we should be utilizing the Prop 98 Rainy Day Fund?

Amin Singh, California Department of Finance there are two major criteria for when a withdrawal from the Rainy Day Fund can be made. The first is if the governor declares a State of budgetary emergency, and the second is if a statutory formula or threshold is met. And the formula for withdrawal depends upon if the Proposition 98 guarantee level falls below the prior year. Proposition 98 level after adjustments for inflation and school attendance are made. The Governor's Budget does not propose making a withdrawal from the Rainy Day Fund at this time, as neither of those two criteria have occurred.

All right, thank you very much.

Okay. Thank you for those questions, all of it. Mr. Fong or Ms. Cervantes seeing none. Okay, I'll jump in with a few questions. Some of the issues were touched on. I'll start first with the early education issue and the slots and rates. One of the issues, why we don't have as many slots, is we don't pay enough in rates. So doesn't take a rocket scientist to figure out that, hey, maybe we can use some of that money over here. So to the LAO, can we legally do that with the existing allocation?

Yeah, we have a report on this that we'll get into, but obviously, one way to use some of the savings is as a budget solution, but another way could be to do some kinds of targeted augmentations like that to the state preschool program. I think we lay out a few different ways that those savings could be kept in the program and used to augment services, if that's something you're interested in.

Yeah, that's certainly something that I think that we'll recommend. We know we have a huge need in childcare access and we're not filling the slots and we're paying the workforce poverty wages. They literally qualify for the programs that they're working under because they're low pay. They can make more working at Costco and In n Out Burger. So we need to address that in the rates. So that's number one.

Number two, I know that the statutory COLA may be in question because how much revenue we have coming in. So it just begs the question, we have some of these new programs there. So do we want to be the state for the first time in a decade or so that doesn't properly fund the COLA. I know we did that during the great recession a couple of times and during the Wilson Administration. I don't think that we want to do that.

So we ought to be taking a look at the new programs. I know the Administration mentions this in other areas of the budget that during contracted economic times, we may not want to fund new programs. So certainly take a look at that. Then, number three, this is for the LAO. So if we do have to potentially stretch to fund the statutory COLA, what's the process again of utilizing the reserves? I know there are multiple reserves in the State of California.

I think there's three if you include the Prop 98 Reserve, and some of them you have to have a direction, an order by the governor declaring a fiscal emergency, some you don't. I know you asked us last week in our caucus discussion, so remind us which one again, we can utilize and what needs to happen if we need to use it to adequately fund the COLA.

Yeah, so if revenue is really much weaker than the Governor's Budget by May, the state might have to make a required withdrawal automatically from the Proposition 98 Reserve. But setting aside that possibility, the state likely already meets the conditions for the governor to declare a budget emergency based on a slowdown in state revenue. And once that declaration is made, the legislature can withdraw on a discretionary basis any amount from the Proposition 98 Reserve up to the full eight and a half billion.

It can also withdraw up to half of the amount in the budget stabilization account, which is the state's main constitutional rainy day fund. So it's that emergency declaration that unlocks discretionary withdrawals from both of those accounts.

Okay, thank you. And then Mr. Muratsuchi mentioned the Pre-K facilities. I total concurrence on that issue, I know it's a general fund issue, but we'll certainly look at other areas of the budget. We can make some adjustments and put those up front so we can focus on expansion. And then lastly, the ELOP program, which is a fancy word for after school programs that is so key to the future of California.

As Mr. Alvarez noted, not just for working parents, but for students with learning loss and behind in school, you know those are the tutors that they can't always afford to pay with their own family resources. You know, our police chiefs and DA's say these are the things that keep kids out of trouble from three to six and primetime juvenile crime. So this is a top priority for the legislature and we absolutely are not going to adjust that in the negative.

One of the reasons why is because doing so, especially for LEAS that are struggling, could cripple that expansion and more. During the last 2-3 years, we did probably four things that would have been a massive thing in any decade, all in basically two year period. So universal after school programs, universal Pre-K through TK for all, universal school meals and community schools. That's a lot of stuff happening, and it's going to take some time.

And frankly, what we should be doing is put some more money. We're looking at doing it in the budget for technical assistance, for just best practices on how to do things, but pulling them back is not something that we're interested in doing. These really are going to make a difference for our kids throughout California. So just want to mention that. That's it for now. Further questions for this panel seeing none. Thank you so much. This is an informational item.

No action here and no action today for all the items. This is an informational hearing today. So no voting today. Issue number two is okay, we're going to talk about universal transitional kindergarten enrollment and rebench. Okay, please proceed. Department of Finance, LAO and CDE.

Amin Singh, Department of Finance. The Proposition 98 guarantee was rebenched in fiscal year 22-23 to include universal transitional kindergarten.

Can I just ask you real quick, since we have a new committee member and expanded, can you give us the 101 on what rebench is?

Sure, rebench, to put it simply, and that's a term that we use kind of internally, is to recalibrate or just include a new formula in our Proposition 98 calculation to incorporate a new policy or a new program. In this case, it's universal transitional kindergarten. Our Proposition 98 formula is based on statutory guidelines. So any change to that formula is made with a lot of prudence. And the universal transitional kindergarten was a big decision to be made because it changed how we calculated Proposition 98.

So when we say rebench, we basically mean the Proposition 98 guarantee is calculated a little bit differently to include this program. And post rebench, the calculation is permanently changed to include that program. Does that answer your question? Okay, so the Proposition 98 guarantee was rebenched or recalibrated in fiscal year 22-23 to include universal TK, the Governor's Budget continues to roll out transitional kindergarten implementation through expansion and student teacher ratio reduction.

The budget revises the first year investment, down from $614 at budget act to $604 million to cover age eligibility expansion, and also includes $690 million to implement the second year of transitional kindergarten expansion, which will increase access to the program to students who turn five years old between the dates of September 2 and April 2, which is approximately 46,000 more children. Previously, that birthday window was a little bit shorter, so it included fewer students turning five, but it's been expanded by a couple of months.

The Governor's Budget also provides $337 million to add one additional certified staff person to each universal TK classroom. These spending amounts have been revised slightly downward since the 2022 Budget Act to reflect updated enrollment and attendance data. Full implementation of the universal TK program is expected by fiscal year 25-26. That ends my summary of Universal TK, and I'll be happy to take any questions.

Okay, thank you LAO.

Thank you Chair and members Ken Kapphahn again with the analyst office. We've reviewed the Department of Finances calculations. We don't have any technical concerns. Their adjustment to the guarantee seems consistent with the agreement with the budget agreement that was in the June 2021 budget. At the direction of you and your staff, we've been looking closely at the enrollment data and the attendance data to make sure we have the best estimate for TK expansion and the associated cost for the budget. We'd be happy to answer any questions that you have.

Okay, thank you. CDE.

Good morning. Sarah Neville Morgan on behalf of State Superintendent of Public Instruction Tony Thurmond. Universal access to TK is key to delivering on the universal pre kindergarten promise to provide all children with a strong and early start and support equitable opportunities for school readiness through high quality, joyful, developmentally informed, inclusive, and rigorous Pre K programs.

We appreciate the administration's commitment to appropriating funding for the next year of expansion, which will support enrollment for any child turning five between September 2 and April 2 to attend TK if their family wishes to enroll them.

The increase in availability of TK will support hundreds of thousands of families across the state, including the 250,000 four year old children who are currently eligible for the California State preschool program but not able to enroll due to limited program availability and the 155,000 four year olds from families whose incomes are above the threshold for state preschool but might not be able to afford the high cost of private Pre K. When we look at 2021-22 data, TK was serving over 75,000 children, about 63% of those eligible, and kindergarten served about 81% of age eligible children.

While TK enrollment data for the current 2022-23 school year will not be available until early spring 2024, the Learning Policy Institute or LPI projects 137,000 children will be served in TK this year as a result of the first year of TK expansion, about 30% of all four year olds in the state. By 2025-26 LPI projects TK will serve almost 314,000 children, approximately 70% of California's four year olds.

According to a report by LPI, assuming a ratio of one teacher for every 10 children, we would need a projected total of nearly 12,000 to 15,600 additional lead teachers for TK and 16 to 19,700 assistant teachers or teacher aides will be required by 2025-26, so by full implementation. These numbers represent an increase of more than three times what currently exists of our 4000 TK teachers and highlights the need for continued investments in supporting the expansion of UPK.

The CDE is really appreciative of the current and ongoing investments in UPK expansion, such as the 500 million for UPK planning and implementation grants across the 2021-22 and the current 22-23 years, and extensive funds for workforce development, professional learning facilities, and more. Supporting the workforce and providing equitable access to UPK is critical. Thus, the CDE will continue to monitor these items closely to ensure the success of UPK expansion.

As of January 2023, 853 school districts, or 99%, and 693 charter schools, or 93% of those with kindergarten enrollment, have turned in UPK plans to the CDE to meet the requirements of the UPK Planning and Implementation grant funded in the 2021-22 budget and renewed again in the 2022-23 budget. Additionally, all 58 county offices of education have submitted their UPK planning planning plans.

Of those that completed the UPK Planning and Implementation grant survey by January of 2023, 60% of districts and charter schools reported they plan on offering TK at all school sites so that it will be accessible for parents and families to access. Additionally, 70% of districts and charters reported they plan to offer full day TK. In the same survey, LEAs also indicated their intent to serve children in TK beyond the requirements through early admittance, TK or ETK.

Specifically, 43% of school districts and 40% of charters indicated they plan to offer ETK to children with birthdays after February 3 and before the end of the school year. So going beyond the current required age threshold. The data also indicates the majority of districts are either planning to offer ETK or considering offering it in the future. Districts with UPK plans whose overall enrollment is under 10,000 students were slightly more likely than larger districts to say they're considering offering ETK.

We think that's because they need the full classroom of students in order to be able to afford the teachers. Smaller districts were also more likely to report they were offering or considering offering ETK closer to the timeline of full UTK implementation. School districts and charters planning for UPK also reported extensive parent engagement as part of their planning and implementation.

The most common manner of parent engagement was through parent surveys followed by their LCAP input sessions, engaging with the School Site Council, Parent Teacher Association meetings, and engaging with the English Learner Advisory Committee. Additionally, we've heard from districts that they have engaged families in a variety of ways to address and promote TK enrollment.

This includes informational meetings specifically catering to TK, emailing and mailing postcards to every household within their district, offering tours to visit the school, utilizing their websites to post information about TK welcome and enrollment centers to put out virtual messages and distributing flyers through their community through social media, newspapers, text, even banners to really help address and highlight the availability of TK. So CDE has also worked to support this through written guidance templates.

We have UPK communication toolkits that have gone out and are really trying to address the variety of languages that our families speak through creating materials in 10 different languages.

We greatly appreciate your engagement in this issue through the creation of UPK and expansion of both TK and our California State Preschool program, California has taken the first big step to ensure all children have access to quality early education programs in the year before kindergarten that support the whole child and family while also supporting targeted universalism for our three year olds. I have with me Stephen Profiter and Virginia Early to assist in answering questions at the appropriate time. Thank you so much.

Okay, thank you. Questions for this panel. All right, I'll start with a few. So, first of all, we're excited to see this launching across California. This past fall, our staff and I went to visit multiple school sites across California, mainly around here in the Sacramento, and saw excited little four year olds in their TK classrooms and teachers. And for all the talk about a new program here, this isn't new. This is something we've had for 10 years.

It's essentially been a pilot, but only families who were lucky enough to have their little kid born in the fall got the free pre k for universal transitional kindergarten. So expanding it isn't that complicated as creating a new program. That being said, there are some growing pains. Facilities is one, the workforce is another. Wherever we went, we heard the same thing. All these similar issues, the pandemic and just kids going back to school in the first place, that has an issue.

Some parents, especially those who are eligible for state preschool programs, chose staying with their family provided program with their full day programs. And then just one of the major issues is just lack of information. I think we could have done a better job having public awareness campaign like we do on so many other issues. So I think that we should think about using one time money to do just that, to do a better job at awareness.

I think most of the districts said that roughly about half of what they thought they could get based upon just mathematics in their three months ended up coming. So a bunch of people are coming, just not all. But as we go for more and more months, and it's kind of a tricky thing because you're telling the community, free breakfast for kids in the community if you're born on a Monday, Tuesday, Wednesday or Thursday.

So you're not saying the whole thing is, there's like an asterisk there, so we can't do the whole. So there's going to be a confusion until we're all the way implemented. So that's why some districts, like San Diego, I think we're amazing, just ripped off the Band Aid at once and just have full implementation. I know that some other local districts are talking about doing that as well, but I still think that we could have a better statewide campaign.

And, hey, why not have it led by our governor, who launched this, helped launch this initiative here in California, along with an anonymous Assembly Member from Sacramento. But certainly he can lead that campaign. That being said, that will cost a bit of money. But one idea we have is in this rebench here, as noted in the agenda and your comments earlier, with this rebench, it's about $3 billion. And based upon this split, there's always certain money goes to the community colleges.

And so since this rebench is 100% because of the TK expansion, why do we have this windfall with $300 million going to the community colleges? Nothing was done to warrant that. So why can't we use it all to TK and potentially use some of that to help with implementation and expansion of this. Is that feasible, Mr. Kapphahn?

Yeah, so I think legally. Legally, yes. Just a brief bit of background, because this is one of the more kind of rooted in Proposition 98 history. The state kind of, as a matter of budgeting practice for at least the past 10 years, allocates about 11% of the Proposition 98 guarantee to community colleges and 89% to schools. And it's stuck with that split whenever the guarantee rises or falls for any reason.

I think the issue that's in your staff agenda is that because of this rebenching adjustment, the Proposition 98 guarantee will be about 3 billion higher by 25-26. And the Department of Finance's proposal, kind of consistent with what the state has done in the past, is to give 89% of that increase to schools and 11% to the colleges. The issue in your staff agenda that's being raised is. Well, because the TK expansion is the reason for that increase, and that's entirely a K-12 program.

Why not give all of that increase in the guarantee to K-12 schools? There's nothing in the constitution or Proposition 98 itself that requires a specific split of funding between schools and community colleges. In fact, that's not even a statutory requirement. So it's very much something you could change at your discretion. I'll maybe let my Department of Finance, if they want to add anything about how they put together the Governor's Budget Proposal. But from a legal perspective and budgeting perspective, this is something that's certainly well within your discretion to change, if you'd like to do that.

Okay, thank you. And then my next question is to CDE. Can you give any insight on similar, the comments that I made when I go to school sites, talk to superintendents, school board members, principals, or even teachers about TK. They're certainly excited, but there are some growing pains. And the good news is we knew this was going to happen. We didn't know it was going to be a global pandemic, but we knew this was going to happen over a few years.

So it is implementation over a couple of years. And there are, of course, other issues with EC and childcare, which I'm sure we'll hear about in the coming weeks. But just from logistics perspective for our schools, do you, Sarah or CDE have any comments on what's happening out there or what California could be doing to help implementation and expansion to make sure we have a successful universal TK in California?

Yeah. So, Sarah Neville Morgan again with CDE. I think I shared some in my remarks around supporting workforce but also professional learning in this space. Through the planning and implementation grants, we are able to get annual data back and from that, trying to understand their needs. So the workforce is definitely one.

There is a new pre-k to third grade credential that will help in that space because it really will build off child development as a deep level of expertise, but also bring in those instructional strategies that you really need in those early grades. So we think supporting the commission on teacher credentialing and what will need to happen across higher ed in that space to make sure that our districts have the staff and teachers that they need is pretty critical.

Additional funding for our schools to really address those workforce shortages and do the apprenticeship and other models to grow their staff from their communities and supporting things like dual language immersion programs starting from the beginning. So we're really addressing in state preschool and tk the early brain development around language acquisition. So those are all things that we've heard as we've looked at TK along with things like facilities. So trying to see if there's anything else that I can address.

The communications part, we have been doing as much as we could from our end and have engaged a group of support across California to address it. But there always, as you said, needs to be more we are looking at a few tiny PSAs in the Central Valley using radio, knowing that some of our families really access more information through things like radio than they would in other ways.

But we are hoping that our communications toolkit at least provides a start for schools to be able to engage as well as state preschool programs and others. So some of the professional learning that we think we need more of are the coaching and mentoring, those literacy coaches and how they can come in and really start from the beginning. So not thinking of all the investments in isolation, but how do they work together is pretty critical.

I will say the expanded Learning Opportunities program and how that really helps TK and offers not just a school day, but what our families need, which is a full day to support young children in being able to access the TK program. What we want to make sure is that there's equity and access, so families who need more than three to 6 hours are really able to start enrolling children in the public education system from the beginning. The last part, I'll say, is inclusion.

So one of our big things you'll see from the department is a real focus on inclusive classroom settings and how we're supporting all teachers and starting with our state preschool to really address children with disabilities. And so that's an area, as we continue to look at how we would help TK and other classrooms in that space, how are we supporting teachers in addressing full inclusion of our students with disabilities?

Thank you very much. I first of all want to thank that anonymous Assembly Member from Sacramento for all your leadership. Is it Mccarthy? Anyway, question for Department of Education. So you mentioned the workforce issue. I think either you or someone mentioned that we're going to have to, what, triple the number of not only teachers, but assistant teachers. And you mentioned that there is a preschool to third grade credential that currently exists.

It's in the regulatory package stage through the Commission on Teacher Credentialing.

Okay. I'm sorry. It currently exists.

So it's been approved by the commission, but actually needs to get through regulation, and then it will be able to be adopted, and then higher Ed has to start offering that as a credential.

Okay. All right. So I had a good meeting this past weekend with some folks working at our preschools at a California Teachers Association event, and they were talking about, well, there were individuals that were questioning whether there was a need for a full credential versus someone with, I believe they called it an early childhood development certificate, recognizing that while we want a well qualified, well trained workforce to address our needs, we're also facing this workforce shortage.

And so, similar to our earlier conversation about the mental health workforce, is there a need for us to be thinking a spectrum of workforce qualifications? And specifically, I wanted to see if you had any thoughts. Again, I think we have another hearing coming up on this, but since you raised the issue, is there a potential role for not just a full on credential requirement, but for this early childhood development certificate perhaps being offered by our wonderful community colleges to help address that and plan for that workforce need?

Thank you for that question. We really think that building from the community colleges is critical in this space, especially since they tend to have most of the child development training that the field goes through. So we think that no matter where we go, that will have to be a foundational component. Right now we have teachers with multiple subjects who are then going back to get 24 units of early childhood education to enhance that focus on early childhood.

We do think that credentials like the PK to third really help because they do build off a core curriculum focused on child development that can start with the community college and then move over into a four year part of the system, and then they leave with that credential. So because this is part of the first year of a two year kindergarten program, a credential is required for all teachers in our TK to 12 system. It's just this allows us to build a new credential that's deeply focused on early childhood at its core.

What about the requirements for the assistant teachers?

And right now there's a proposal in the budget for the assistant teacher. I'm not going to remember all the specifics, but it would include some basic child development by 2028 as the proposal from the administration around the second adult in the classroom.

Hi, Virginia Early with the Department of Education. I also want to flag that this year's budget, or the 22-23 budget included language that permitted the Commission on Teacher Credentialing to issue and renew a one year specialist, emergency specialist teaching permit in early childhood education that authorizes teaching in a TK General Ed Classroom. So there's some recognition there and some supports given our ramp up timeline.

Okay. Thank you. And Mr. Chair, please tell me if this is going beyond the scope of this.

No, this is fine. This is kind of a preview for things to come.

Okay.

So please prime the pump.

I'll prime the pump. Thank you. So at that same CTA event, the preschool providers were concerned that they were being left behind as TK is being rebenched into Prop 98, whereas the funding for our preschools are not being protected like the TK program now. And so I think you were referring to the reimbursement rates for the preschools.

No, I think that issue, and we're going to hear about this a lot in a few weeks at the childcare hearing, not just a TK hearing, is that the people in the field who serve three year olds are concerned that they're going to serve four year olds, are concerned they're going to lose people that used to pay and now they get it for free.

And I think that's a good thing, that families in Torrance no longer have to pay two grand a month to go to preschool. They get it for free at Torrance elementary school. That being said, those providers, we don't want them to go out of business. And so what CDE was talking about earlier is trying to help them serve more three year olds, because if they can serve more three year olds, that's a win win. Those kids get pre K at 3 and 4.

And also we clarified in TK expansion that income eligible families, so families that make about 100 grand in your district for a family of four can continue to go to state preschool for four year olds. So we're not taking away that ability for income eligible families to continue to stay at that site, but it is something that will have growing pains, this implementation of this new policy. So we'll have to focus on the impacts on the broader scale. Mr. Alvarez.

Thank you, and first want to acknowledge the work chair has done as it relates to universal TK. I think this is one of the programs that certainly no interest in growth on this one is going to be painful, but we have to commit to this one as opposed to, I think, other programs where perhaps some savings could be achieved. I think on this one, part of the, some of the questions I'm going to ask is what I hear out in the community.

I used to be President of the PTA, very involved in my school. It's a very low income school. And so questions arise from the community as to what these TK programs are. We had San Diego unified, we had a fantastic at our school TK program, and it was a full day program, and this was while it was still being piloted. And that's why I think it's a great investment for us long term. But one of the questions, and if you could help me just clarify this, that I hear is that some TK programs are not being offered as full day. Is that still the like? Just fill me in on what the plan is going forward.

So, Sarah Neville Morgan, Department of Education, about 70% have said they will be offering full day Tk, which I will couch as school day Tk. Right. Which is why things like the expanded learning opportunities program are really critical in that expansion to serve beyond what a school day is. And about 20% have said they will offer a part day Tk.

So the requirement, our requirement is you could offer one or the other?

That's correct.

Okay. We won't get into the discussion as to why the decision was made, but it just makes sense to me. If you're entering into the school programs, you should be attending full school days. But there must be other reasons why that's not happening. But the other question I hear from folks is about the two adults in the classroom. I think requirements are that the classroom sizes stay under 24.

And my understanding was that at some point the requirement was going to be that one adult for every 10 students. But are we not requiring that? Is it one credentialed adult either to this new pre k through third credential or through the other process, which is I'll ask about. But apparently now we're requiring teachers to take minimum of 24 units of early childhood education or have a child development permit. So there's that one adult and then there's an aide which doesn't require that level of education. We're keeping it to 12 students per adult. Are we moving to 10? What's the status on that?

Brittany Thompson, Department of Finance the move to the ratio of one to 10 was contingent upon budget appropriation and given the current fiscal outlook, we just didn't move forward with that at this time.

Okay, I see. So that continues to be the plan when there is enough resources, I assume.

Contingent upon resources, yeah.

Okay. Thank you. Continuing on the issue of the workforce, there's a requirement, and I don't know if this is also not going to be a requirement because of the circumstances, but that starting in this year that the TK teachers would be required 24 units of early childhood education. I'm assuming that's a large amount of teachers. Is that requirement still going to be ongoing or what's the status of that.

So Sarah Neville-Morgan, Department of Ed. As far as I know, that is still moving forward.

Okay. And I think you had surveys, what you did with the LEAs. Did you get any data on how many of their TK teachers will be prepared? I mean, you should have been taken--if you didn't have any of those units, you had to start like at least a year ago to get to 24. Not sure what that's going to mean.

So, Sarah Neville-Morgan. I don't have information on that. That requirement, though, has been in law for quite a few years. So they've had numerous years to build up to that piece of the requirements.

Okay. I'm reading here that it was take effect in 2023, but you're saying that's been the requirement.

So back when TK was originally put in with just those fall birthdays, there was a requirement created at that time where by 2023--so it must have had an eight to ten year ramp up--teachers would need to have those 24 units of early childhood or the district could create an equivalent.

Oh, I see. So they've known for years--what you're saying is they've known for a few years that by 2023 they'd have to have this requirement and districts have an option. Okay. Would a teacher not be allowed in the classroom if they didn't meet this requirement to teach in a TK classroom?

It becomes an issue of apportionment. So the funding that they get could be reduced based on meeting some of the requirements around the teacher qualifications, the group size, the ratio. All of those are issues of apportionment.

Got it. Okay. All right. Well, let's hope folks are on top of that. The only other question is on--I had wrote it down. Oh, on the attendance issue. I thought I heard you say that we don't have numbers for the current enrollment, for the current year. How do we not have enrollment numbers from districts? Or did I misunderstand that?

Sarah Neville-Morgan again. That is correct. We don't have the current TK enrollment. We have enrollment for the 2021-22 year, but not for the current year.

Yes, please.

If I can add on to that, Assembly Member, so we do have some initial attendance data for the first half of the 22-23 fiscal year, and from that data, it looks like total TK attendance for both the new and expanded population was 91,480 students.

91,000 in attendance data. And then--sorry--you said the 21-22 number, that was like, the official number was, what, 70 something thousand?

I just lost it. Just over 75,000. So 75,465.

So some growth, it appears, until we have official data, obviously. Okay. Well, again, I think this is one that I continue, one: recognize the work done by this Committee and the Chair and the Governor, and that we need to continue to be committed to long-term and not cut from this section in terms of growth.

I also recognize a statement you made about integrating other programs, particularly with TK, whether it's the after-school programs, the EL Program; I think that's critical, but I think we also need to identify what those enrollment numbers or those participation levels really are to have a better understanding of what the resources that are needed in order to continue those programs and to really marry them with this TK program. So thank you, Mr. Chair.

Okay, thank you. Seeing no further questions on this, we will have a robust hearing on this topic on the 31st of March. Next, we're going to focus on the COLA and LCFF Funding Formula and especially for our newer members. We have a 101 from LAO right now, right here on LCFF, which I know Mr. Muratsuchi could lead this thesis as well. Professor. Thank you. Please proceed.

Sorry. Good morning, Mr. Chair and Members. Michael Alferes with the Legislative Analyst Office. We were asked to provide a brief overview of Local Control Funding Formula known as LCFF. Our office recently published a primer on LCFF which you may have available in front of you for those that are listening remotely. It's also an attachment on the hearing agenda and is available on the LAO website. For this presentation, I'll just focus on providing a description of the main components and how the formula operates.

Kind of the high level summary is that the formula was established in 2013-14 and was intended to simplify the way that schools were funded compared to under the previous system and provide more flexibility for school districts and charter schools and COEs to make a local decision on how to spend their funding. So school districts and charter schools receive most of their funding through a per-student basis through a base grant through different grade spans.

About 20 percent of the funding is calculated on two different formulas that provide additional funding based on student demographics, specifically for English language learners, low-income students, and foster youth. They receive funding through average daily attendance, which, as it sounds, is the average of the attendance that districts receive every day. The formula also includes a few add-ons that remain from the previous funding system.

The 22-23 budget package assumed 75 billion in LCFF funding, which represents about 80 percent of the total Proposition 98 funding that schools receive. So I'll turn to page two in the handout and you'll see on the bottom there's figure one. It shows the main components. There's three major components which are the base grant, supplemental and concentration grant, as well as some smaller add-ons. There's descriptions on the table and then some estimates that were our estimates at the time of writing this post.

They're now a little bit lower with--given the Department of Finance's updated attendance data. So you can see the majority of the LCFF is provided through a base supplement on concentration grants, both 74 billion out of the 75 and a half billion. I won't touch on the add-ons in this presentation, but I'll start by just the base grants. As I mentioned, there's a base amount of funding that's provided to districts and charter schools for every student that they have attending.

I'll turn your attention real quick to figure two on the next page that shows these attendance rates--sorry--these LCFF rates that are adjusted by different grade spans. See, there's a kindergarten to third grade rate. There's a four through six rate, a seven through eight rate, and then a high school rate. You'll see that the rates are higher generally at the higher grade levels. This is reflective of the higher costs of providing education at the higher levels for higher class sizes and more extracurricular activities.

There's also two grade span adjustments. As was discussed in the previous panel, there's an adjustment in K to three to provide lower class sizes, about 24 to one. This does not reflect in this chart right here that the additional TK add-on, that's about 2,800 per TK student, but for the ninth through twelfth add-on, that is just reflective of kind of higher costs of providing CTE at high schools.

And I'll just note real quick that for attendance, ADA districts are accredited with the higher of ADA that they have either in the current year, the prior year, or the three prior years, versus charter schools are just funded on the current year only. Moving on to the supplemental and concentration grants, these are the grants I referred to that provide additional funding based on the number of students that districts have that are English learners, low-income students, or foster youth.

You'll often hear these student groups referred to together as unduplicated pupils. It's because students that satisfy multiple criteria or fit into multiple of these groups, they are only counted once. So, for example, a student that might be low-income and an English learner, they're only counted once under the formula.

It gets kind of technical when talking about these grants, but the kind of easiest way to describe is that the supplemental grants, you get 20 percent of the adjusted base rates that you see on page three for every student that is an English learner, low-income student, or foster youth. For concentration grants, it provides additional funding for schools that have high proportions of students in these categories.

And so for districts and charter schools that have 55 percent or more of their student enrollment that is unduplicated students, they receive 65 percent of the base rate. There are some requirements that districts have on kind of how they track this supplemental concentration grant funding. They're required to track how they spend the funding to increase or improve services for the student subgroups and must ensure proportionality when they're spending this funding.

Another recent policy change I want to highlight here is that there was a recent statute that was created in the 21-22 Budget Act that required districts to track any unspent funding that they had in this for supplemental concentration grant and use that funding for the same purposes in their future years. Previously, supplemental concentration grant funding that was unspent in one year was able to be used for any purpose and further use. I'll turn your attention to page six of the handout.

You'll see figure four at the top of the page. It illustrates how the supplemental concentration grant funding affects per ADA funding at the school district. So this reflects the K through three adjusted LCFF rate. You'll see that the dark purple bar here--every district, regardless of their share of students that are English learners, low-income, or foster youth, that they receive about 10,119 dollars per student, but then the higher of the share of their students that are unduplicated students, that they receive more funding.

And so you see the 25 and 50 percent, they're kind of marginal increases because they receive supplemental grant, and the 75 percent and 100 percent unduplicated pupil districts that they receive more substantial amount of money because concentration grant kicks in at that 55 percent threshold. So with that, I would kind of just kind of back to the higher level approach, on page nine, figure eight here kind of puts into perspective the LCFF out of the total Proposition 98 funding.

You'll see that most of the funding is allocated through LCFF out of Proposition 98. And then figure seven below just kind of give you a sense of where students are. You see that about 63 percent of students are in concentration grant districts. And when you look at specifically English language learners, low-income students, and foster youth, they're about 79 percent in concentration grant districts. So that's the overview.

I think we just wanted to highlight one additional thing, which is that the Governor proposes to provide the annual cost-of-living adjustment. This is typically what the state provides school districts and charter schools. As my colleague Ken Kapphahn had mentioned, our estimate is higher than what the Governor's proposal includes, at which the Governor's Budget includes a 8.13 percent COLA. We currently have it at 8.4 percent.

We'll have the last bit of data to be able to calculate the COLA and later on in the spring, but we estimate that we think that it's likely that the COLA will be higher than 8.13 percent. I think that might translate to about 200 million dollars in additional costs. So with that, I'll end my presentation and happy to answer any questions at appropriate time.

Okay, thank you. Questions for our LAO representative on LCFF funding? Yeah, we're going to get to that next. Do you have questions? Okay, thank you. Now we'll get to the rest of the panel talking about the COLA, this year's proposal. Department of Finance, then LAO, and then CDE. DOF?

Good morning, Chair and Committee Members. My name is Katie Lagomarsino with the Department of Finance, and I was going to provide a brief overview of the Governor's Budget for the LCFF. So, in the past year, 21-22, we have a slight decrease, and that's primarily aligning with actuals seeing this is typical. In the current year 22-23, we see a bigger decrease. This reflects the updated caseload and an updated projection of the initial impacts of the 21-22 ADA yield protection and the three-year rolling average.

Could you pull up the microphone?

Oh, I'm sorry.

Thank you.

I apologize. Yeah. Do you need me to repeat any part of that? Oh, okay. So, in the budget year 23-24, the LCFF grew by 4.1 billion, which compares the budget year to the revised current year. So over where we now know 22-23 landed, we're going to provide an additional 4.1 billion dollars. This increase reflects the historically high cost-of-living adjustment of 8.13 percent, as well as the continued implementation of expanded TK.

And it was mentioned in the last panel, but I'll mention it one more time, that we are using one-time resources in the amount of 613 million for the current year and 1.4 billion in the budget year to fully fund the LCFF. That concludes my presentation.

Thank you very much. LAO?

No additional comments. Just what I said previously, we estimate that the COLA will likely be higher in the spring.

Okay. And Department of Education?

Great. Thank you. Mary Nicely, on behalf of the State Superintendent of Public Instruction. As the SSPI shared in his overview, our schools, students, families, and educators continue to face extraordinary challenges. They are still dealing with the lingering effects of the pandemic and they need to accelerate learning while simultaneously tackling those longstanding issues that predate Covid-19 all in the middle of record inflation. We have generally heard concerns around growing pension costs.

Staffing also remains a huge challenge in the field and there are concerns about being able to effectively implement programs while trying to attract qualified staff, and we've talked quite a bit about that. And of course, there are continued concerns around declining enrollment, average daily attendance, and continued high chronic absenteeism rates of students compared to pre-pandemic levels.

We are thankful for the work that has been done so far to address these issues, such as allowing school districts to use an average of the three prior years of ADA when determining their LCFF funding levels to address the extreme fluctuations in attendance that have been seen as a result of Covid-19 and overall declining enrollment. The recent ADA boost for LEAs that provide an independent study as prescribed by the Legislature also significantly helped over 1,600 LEAs maintain stable funding in light of pandemic-driven absences.

The Administration's proposal this year to fully fund the COLA of 8.13 percent continues those efforts to keep LCFF funding fully funded, and we sincerely hope that that level of COLA will be maintained during budget negotiations. Our LEAs, as well as our educators, face significant cost pressures in this inflationary environment, and any reduced COLA only exacerbates this problem. In closing, we just highlight that there are other interconnected issues to address too, such as the supply of educators.

As we work through the budget this year, it is imperative that we work hard to protect education funding to ensure that our schools can do the best they can for our students. I have with me Aaron Heredia to assist in answering questions at the appropriate time. Thank you.

Thank you very much. Questions from the Committee? Mr. Alvarez.

Thank you. I have questions on the LCFF concentration funding. There's two things that I read that are conflicting to me and I just appreciate you helping me understand that. One is that the funding is allocated to districts with the number, 65 percent, I believe, of students that are EL and LI, and then the district has to proportionately distribute that somehow.

I'd like to understand better how that process works, but then I read also that the concentration grants the district is then required to, it says, 'be used by districts to increase the number of staff that provide direct services to students in schools where there's more than 55 percent of students.' I think I understand why this is why this last piece came into be. I've seen how some districts get some of this funding and then they don't put it out to the schools that really need it, and so I think this is a good approach, but I'm, again, trying to understand, is it proportional or is it required for it to go to the schools with that highest need?

Yes. So the concentration grant threshold is at 55 percent. What I referenced when I said 65 percent was that each student above 55 percent of enrollment, that's an English learner, low-income student, would generate 65 percent of the adjusted base rate for LCFF. And the requirement is--well, I guess stepping back, districts and charter schools can decide locally how to spend the funding. They can either spend supplemental concentration grant funding at a district-wide or a school-wide basis or targeted for specific subgroups.

They just need to track kind of how they're proportionally increasing their students--I'm sorry--their services or programs for these students that are generating the funding. And the specific 65 percent--sorry--the 21-22 budget increased this rate from 50 percent, which it was originally to now 65 percent. And the stipulation for that increase, or the funding was to increase, that the funding would be used--I believe it was about a billion and a half dollars at the time to increase staff at concentration grant schools.

Okay. I think I understand. So that continues now?

Yes.

Okay. Who has information? I assume the annual LCAPs have the information on how the funds are being utilized. I guess I continue to be--I won't say concerned--interested in whether the districts are ensuring that the funds are going to the schools that need them the most. How are we tracking that outside of LCAP? Is that the only way that we do that or does the Department do something else to ensure that that's happening?

I could take that. Edgar Cabral, with the Legislative Analyists Office. So you're right. I think the primary way that this is tracked--there's a lot of broad flexibility for school districts--is through the LCAP process. So it's not just the document itself, but also they need to have their county office review and approve the LCAP. And so as part of the review and approval, the county office is asking those questions of, 'okay, you're using supplemental concentration funding for a district-wide activity. Please tell us why you think that activity.'

I believe the language is that you can use it for that, but that activity needs to principally benefit English learner, low-income, foster youth. So there is a lot of flexibility in terms of how it's used, but the district is intended to be able to explain or justify. But you're right in getting at those concerns. This is something that there's often conversations of because we're not asking districts to track it, like at a granular level and say this is exactly how all of that was spent.

So I think there's often questions about is this actually getting to the school sites? If it's being used for a district-wide activity, is it being used what we think is best? And so right now, the current process is through the LCAP process in the document itself, but also through the conversations with the county office. That's what we do to try to have some assurances that it's being used as intended.

So just to be perfectly clear, the concentration funding does not require that it be utilized at a school site? It could be utilized for district-wide expenditures? Okay. All right. I think that's going to be it for now. Thank you.

Okay.

Thank you. Mr. Fong.

Thank you so much, Mr. Chair, and thank you to everyone here for the presentation. This is more on enrollment decline, and we know that we've seen a loss of 300,000 students since the pandemic. What are some of the ways that local LEAs or what are some of the things they're doing to address chronic absenteeism and really looking at how we can prevent impacts through ADA going forward? We know that in higher education as well in the community colleges, we've seen a steep decline in enrollment, so wanted to get your take as to what LAO is doing to address chronic absenteeism right now.

Hi. Mary Nicely, Department of Education. You know, there's a lot of work going on in our school districts around hiring more attendance personnel, and as you know, this has been a priority of the Superintendent's prior to him even coming to the Department of Education, even as an Assembly Member and as a social worker. He spent a lot of time focusing on chronic absence and getting kids back into school.

And so there's a lot of supportive services that we're working on, and I think a lot of these programs that we look at around expanded learning, bringing people back to school, right, like part of what is going to bring our kids in. Is it going to be expanded learning? Is it mental health supports? Is it other athletic programs? Is it dual immersion programs? So we're looking very closely at the declining enrollment in that way. How do we attract people back into--kids back into our schools?

We're doing quite a bit of and working a lot with our LEAs on parent engagement to understand the root causes of why our kids are not coming back to class. And as we look at some of the preliminary numbers, it looks like our declining enrollment in chronic absence, there's some level of stabilization happening there. As the Superintendent did earlier this year, he held a chronic absence webinar.

We have a whole series going on right now where we are partnering with Attendance Works' nationwide leader in bringing kids and addressing chronic absenteeism, and we've worked with them for over a decade, actually, prior to being here in the Department, and we had over 750 administrators on that webinar. And so it really shows to also, I think--I'm not sure if it was you, Chair Muratsuchi--who discussed technical assistance.

Our LEAs are looking for assistance and guidance from the Department and other partners to see how we can bring kids in, and one of the other things that we've done most recently is the Superintendent--I think he mentioned Mount Diablo School District, and even during Covid, he made phone calls to families to kind of understand what are the barriers that are keeping you from being able to come to school? And a lot of them are outside of the LEA's control, right?

Like some of it's transportation, some of it's food, some of it's housing insecurity, and so as we look at all of these things, we're as concerned as anyone about that and we are trying to work very closely with our county offices of education, bolster the system of support to really address chronic absence.

And in the declining enrollment world, we are working very closely with a group of county superintendents as well as our Ed Coalition partners to see how we--I think Sarah Neville-Morgan mentioned as well the outreach and the PSAs and bringing kids in because the numbers did increase with TK. And so we're hopefully back on the upswing.

So there's a variety of things that we're looking at, but we're trying to address some solutions, give some technical assistance, but also look at the barriers and any other things that we can do to help with address planning, enrollment, and chronic absence.

Thank you so much.

Can I ask a follow-up on that enrollment issue? And we've been hearing a lot about this, and maybe the LAO can just weigh in on this. So one thing earlier was that I'm not sure if it was through CDE or through the Superintendent's comments on this proposal for LAUSD and changing their attendance--basically--policies there so it would bring in additional three billion dollars. It's not bringing in--it's not like that money is coming from the corrections or outer space. It just recirculates three billion within Prop 98, right?

Are you referencing the policy bill I believe with SB 830 or--?

Well just the policy bill in general. But if you change it, is there new money coming to education or is it recirculated if you made such a change?

Well, I believe the specific bill was to provide additional funding in addition to LCFF. It was to calculate what districts get under LCFF and then what they would get under an enrollment-based model and then that would be the kind of essentially an add-on that would have to be provided first.

So where would that three billion come from?

Yeah. It would--if the bill was--

Well, don't talk about the bill per se, but just like the policy. If we give California--if we did that policy right here in the budget, where would that money come from?

I think you're getting at, Assembly Members, right, that Prop 98 is what it is, and if the state is keeping the current practice of funding at the minimum guarantee, that does mean to make room for that kind of a policy change, you would have to make reductions in some other way or potentially proportionally reduce all of the LCFF rates to make room for that additional cost.

Yeah, I guess that's the point. There's no suitcase back here with three billion dollars, is there? No. Okay. And so we haven't got a reality check there. But I guess the bigger question--and we face the same thing with community colleges as well--is we hear they're on their lobby day and the sky is falling.

We don't have as many students, and it's a disaster for our school district. For a few things, one: we're funding schools, as we noted earlier, at record levels, literally double in the last decade or more. So by that definition, you're getting more money to serve fewer kids.

That's like, 'hey, I'm going to have you work your work week. As opposed to 40 hours a week, you're going to work 30 hours a week. I'm going to increase your salary by 50 percent.' You're like, 'okay, where do I sign up for that?' So that's one thing. But also, if all districts are proportionally having the same drop in enrollment--granted there's outliers--but if they're roughly in the same proportion, it's an equal softening. And so everybody has the same impact.

Granted, if there's a school district in Sacramento, that one has a 30 percent drop and the others are dropping like most of California, between four and eight percent, then the outlier has a bigger impact. But if they're all relatively the same, that's everything that I've seen, what am I missing? What's the problem? Because the money is not leaving the school world. It's not going from Prop 98 into schools to corrections or somewhere else. It's staying in the school venue, right? So what are we missing here with the sky is falling scenario?

I can add to that, and I'm sure, I think on the next panel, Mike Fein would be probably very equipped to talk to you about this as well, but I think you're right that as you have fewer students, you have less funding. Maybe you have fewer students, but there still are--when districts are growing, you have these economies of skills. Every additional student you add, the marginal cost of that student isn't the same as the LCFF funding you get.

So it sort of makes it a little bit easier to then sort of expand services and do other things. And so similarly, on the flip side, when you're seeing declines, it does require districts to change what they're doing. So for example, maybe some centrally provided services are no longer possible and they do need to make reductions. I think in this environment where we've had the last few years, we've had declining enrollment but also very significant increases in rates.

That I think is not as big of a concern. But when we do start to get to an environment, say, where rates are not growing significantly, barely at COLA, for example, and you are seeing districts, their rates are going up for COLA but overall their LCFF funding is declining because their attendance declines, you start to have a little bit of additional pressure in order to maintain--in order to keep ourselves fiscally healthy, we need to make downsize some programs that we have.

So I think that's where the pain can come. It doesn't mean that it's not possible, and I think again, given that we've had significant rate increases over the last couple of years, that makes it a lot easier for districts to deal with those declines. But when growth is not as great in terms of rates, that can be more challenging.

But I guess the question though is that the money stays in Prop 98. It's not going anywhere else.

That's right and so--

So how does it get recirculated back?

Right. So I think in terms of if we're in a test one environment as we have been, then if 40 percent of General Fund revenues go to schools, and let's say that 40 percent is growing over time but the attendance is not growing, it's coming down, you'll essentially have greater amount of Prop 98 funding per student, which can be used to increase LCFF and provide higher rates that can help address some of those issues.

And I know we're not debating bills here, but you did mention this policy and this has been proposed to be looked at in the budget process. That's why I'll note this. One thing, we have chronic absenteeism and it has an impact on student achievement. We're going to talk about that at length in your hearing tomorrow, and I get that.

And one of the unintended consequences of such a policy where you just pay people based upon who signs up is you don't go after and follow up to make sure there's people who are going to class. My favorite TV show ever is the Wire. Have you seen the Wire? The best show ever done. And there was a season on the public school system, and the focus of that--I think it was season three or four.

Four? Three--was about how they had a school officer in Baltimore, like a truant officer. His name was Cutty, and he was paid beginning of the year to go track down the kids in Baltimore. And after a few weeks he shows up and they're like, 'your work's done.' He's like, 'well, the kids are still there.' He's like, 'well, you know, you only do this for the first few weeks.' And like, 'well, we need those people to go track down those kids to show up in school.'

'And if you just pay people by who's enrolled on day one, how are we going to make sure that we keep people throughout the year?' And so the school attendants and the SARB officers and all that process, it's real. It keeps people in school. So that's my two cents there. So the homework is go watch season three of the Wire. Mr. Muratsuchi?

I think I have season two on the DVD set, but I'll have to get season three, Mr. McCarty. So does anyone have data on where we're seeing the worst chronic absenteeism? Is it the large urbans? Does it tend to be correlated on socioeconomic demographics?

Well, I mean, a lot of our differentiated assistance is actually based on many of our schools fell into that this year, correct, and most of it is based on chronic absenteeism. So we do have--not for this year, we have last year's data that we're looking at, and the numbers are, of course, higher in our African American, Native American, and our foster and homeless. So those numbers are definitely there across the state as well as--but we do have that last year's data.

We do not have it this year, but we should very soon have information on our census, our fall one data, and it seems to be stabilizing a bit in that area. But there is information, and it is pretty consistent statewide that chronic absence from at least last year is pretty consistent across the state. So if you need that, we can do some follow-up with you to let you see what last year's data looked like.

So last year means the 2021-2022 school year?

Yes. We don't have our chronic absence data for--will not have that.

And for the 2021-22 school year, the absence rates you're saying are pretty similar across school districts?

Actually, let me correct that. I was thinking of enrollment. Sorry about that. So for chronic absence, that still is pretty anecdotal at this point, so we do not have the actual attendance data for this year yet.

But that data is required--school districts are required to report that data?

Yes. Yes, and that's on our dashboard--represented on our dashboard.

Okay. And we should have data for 2021-2022 in terms of what school districts have the worst rates of absenteeism?

Yeah. We have those percentages.

And what do those numbers show?

Those numbers show from last--if we're talking about last year--2021--I had it right off the top of my head--I would say the chronic absence rates in some areas were as high as an increase of about 60 percent.

Six-zero percent?

Yeah, and then in the lower grades, it was about--it's still pretty high at about 40 percent.

Okay. And again, do we see any pattern, any trend in terms of where the rates of absenteeism are the highest?

It is, again, with more of our African American students, Native American students, foster, homeless, and we can get you that information, Mr. Muratsuchi. We actually have a number of presentations that we've presented on last year's data.

Okay. And in fact, I'll be asking the same questions tomorrow at our hearing, so appreciate if you can try to get those numbers together. So, I mean, going back to the Chair's analogy about the Wire and the school, the truant officer hounding students, do we have data or at least anecdotes in terms of what districts are doing to get those students back?

Yeah, I mean, I think there's more home visitation taking place. I mean, a lot of things during the pandemic that you just couldn't do. We ourselves, in addition, the entire executive team and the Superintendent made phone calls during all last winter working with many of the school districts. So we've actually had a number of pilot programs going on around the home visitations. That's probably the main thing at this point that we're looking at, now that we can do that again.

But we're also just trying to address the barriers, and looking at transportation barriers, I think the funding that has been allocated to assisting and even bringing back mass transit and some reimbursements to our schools is going to help a lot in that area. Last year, we also ran into issues even during the pandemic with a shortage of bus drivers, so we couldn't even get kids to school.

So I think independent study was also very helpful in being able to continue the education because that's the main thing that we're trying to address through the heightened chronic absence and being able to use independent study to bring those numbers down.

So the dashboard system requires each school district to report on the rate of chronic absenteeism, correct?

Right. And that is, I believe, ten days absence, if a student is--pretty sure it's ten day absence during a school year. Adds up to being, like, chronically absent.

Okay. So all students with at least ten days or more of absences are recorded as chronically absent?

Yeah.

Okay.

And I think, once again, if we look at last year with the surge in Covid during January, February, I think those are where our numbers, a lot of our numbers may have come from to spike our numbers last year.

Is there any additional data to try to get a sense as to who is being absent? Do we have a sense of who was dropped off the map in terms of school districts losing track of where the students are?

We'll make sure that you have those for tomorrow because we've done quite a few presentations regarding chronic absence with last year's data, so we'll make sure that that is made available for tomorrow's hearing.

Okay. And last question, either for answer today or hopefully for tomorrow, is data being collected as to where those students are going, whether they're going to private schools, whether they're going to out-of-state, whether they're just not going to school? Is that data being collected?

Are you meaning for declining enrollment in that situation? Yeah, so that would be--yeah, actually, we've had reports done with FCMAT as well and done our own internal reporting on how many students--every year a school district has to report exit data, so we find out whether or not students are leaving the state, whether they came back the next year. So there is some level of--but declining enrollment itself has been a trend over at least the last five years.

But, yeah, FCMAT has done some presentations on that for leadership around the state, and we've done our own reports as well, and we'd be happy to share those with you.

Okay. All right. Thank you very much.

Okay, thank you. To be continued. All right. Issue Number Four: we have our annual FCMAT report. Yeah, bring up FCMAT, please. Thank you. Number Four.

So thank you. This is not the traditional FCMAT annual report. This is the annual proposal related to FCMAT. DOF, LAO and CDE.

Katie Lagomarsino with the Department of Finance. So I'll be briefing you on the Fiscal Crisis and Management Assistant Team, FCMAT, proposal. The Governor's Budget provides an increase of 750,000 ongoing Proposition 98 General Fund for FCMAT. The bulk of our proposed augmentation will go towards compensation impacts from Kern County Superintendent of Schools cost of living adjustment, which impacts FCMAT's overall budget. This represents a two year cost increase on FCMAT and covers salary, health benefits and statutory benefit increases associated with salaries. The remainder will benefit the existing Chief Business Officer coaching and induction program and provides planning costs for a new small school district Chief Business Officer mentor program. That concludes my presentation.

Thank you, LAO.

Thank you, Chair and Members. Again, Ken Kapphahn with the Analyst Office. Just very briefly, we're continuing to review all of the smaller proposals on the Governor's Budget, including this one. We'll have a more specific recommendation to share, I think, later in the budget season. But we would note at this point that as the Department of Finance mentioned, most of the augmentation is related to cost of living adjustments. And over the past couple of years, the increases for FCMAT have generally been below the statutory COLA rate. So not anticipating we would have major concerns, would not anticipate having concerns with that portion of the increase.

Okay. Thank you, CDE. Any technical issues?

Technical issues?

Do you have any commenr?

Oh, yeah. Sorry, what am I saying? So, Mary Nicely, on behalf of the State Superintendent of Public Instruction, CDE has a great relationship, partnership with FCMAT in supporting our LEAs. We cannot speak to the community college related programs, but are supportive of efforts to increase knowledge at the LEA level. Much like the educator workforce proposals the Administration and Legislature have approved of in the past several years, programs that support the administrative staff at our LEAs also deserve support. We'll defer to FCMAT for questions regarding capacity to expand and the demand for their existing programs, as well as any additional questions or concerns about these proposals.

Thank you. Yes, I don't have any questions on this proposal. This really relates to the next issue and thank you for your work. And we can get to right to that. Now, issue number five, the state of fiscal health for our public schools. And obviously we appreciate what you do in California to make sure our public schools are solvent. And with this surging school revenue going in, sometimes it may mask some of the issues. And so your work is ever important, and I think issue number four, the support is warranted. But let's get on with issue number five. And Mr. Fine, welcome.

Thank you, Mr. Chair, Members of the Committee, Michael Fine, the Chief Executive Officer of the State's Fiscal Crisis and Management Assistance Team. I've given you a handout that augments what your staff has given you. Just a bit more detail, and I'll start with the attached charts, the first of which gives you a historical look at both qualified and negative certifications at interim reports.

Just to remind you, school districts adopt their budgets on July 1, and by statute they're required to update those budgets twice during the year, first interim and second interim, roughly December and March, and they self certify their conditions as positive, qualified or negative. And your staff report gives you the definitions of those. County superintendents, or the State Superintendent in some cases is required to review that certification and agree or disagree.

You see fairly recent history here, and I would note that our school districts at first interim are in some of the strongest fiscal condition that they've been in years, nine qualified and two negative. With regard to the nine qualified. That's the lowest point of qualified districts at an interim report in many, many years. To the Chair's comments. I would also note that we are collectively, all of us, having a little bit of difficulty with the masking issue that's going on.

And that is that with the substantial amount of one time funds that have been provided to districts during the pandemic, it does mask some fiscal challenges, and I'll talk about some of those in just a moment. A deeper dive on budget approvals county superintendents have from July 1 to September 15 to consider the district's budgets. There were no disapprovals this fall, which is a pleasant change from levels of 1 and 2 districts in the past. Again, at first interim through December qualified interims.

Of the nine qualified, seven of them are non consecutive qualifications, two of them are consecutive, one is a three certification consecutive, and one is a 11 certification. So they've had 11 consecutive qualified certifications. The following page gives you a brief view of those districts and their status. Most are small rural districts. There is one large district in here that we're very familiar with, and that is the 11th consecutive that would be Oakland unified.

And they did submit a positive certification and the County Superintendent changed it to qualified, so it's actually a downgrade. I'll talk about the various issues that are common across these in just a moment, but they all share some of those common items, including what the Chair mentioned. There are two negative districts. Neither of those are consecutive, both small districts. Junction Elementary School District in Siskiyou County is an example of why we have deadlines for annual audit reports.

They are so far behind on their annual audit that there are apportionment findings that go back multiple years and now those have caught up to them. So they have a problem, say four years ago in their ADA. But because they didn't do their audit in a timely fashion, they repeated that poor practice in following years and now they have multiple years where they owe the state backed funds to a total greater than what their annual apportionment is.

Ojai Unified in Ventura County is working through the consequences of declining enrollment and some, and the lack of qualified business office, among other things. They are very focused in the next two weeks of taking the corrective action that they need to take. Junction is behind the curve on taking appropriate action. Ojai I do expect they will take the action they need to take. Downgrades, this is where the County Superintendent or the State Superintendent do not agree with the district certification.

There were two in December. One as I previously mentioned, for Oakland, and then Ojai did submit qualify, their County Superintendent changed it or downgraded it to negative. Lack of going concern is very similar to a negative. However, it can be done at any time during the year as opposed to just at the interim reports. You can see that last year we had a number of them. This year, though we have reflective of strong fiscal conditions, generally we see far fewer.

Let me also say that with regard to lack of going concern designations, they are broader than just the budget being out of balance. There could be leadership issues, there could be internal control issues, there could be special education issues, facility issues. It's a whole host of risk criteria that we look at, not just deficit spending with regard to their budget. Returning to my outline for you, let me touch on a couple of other topics that are generally of interest to the Committee.

One is when certain events happen, a disapproved budget, a downgrade by their County Superintendent, a lack of going concern. FCMAT engages automatically as opposed to waiting to be sent there or to be requested to go there by the district themselves. In those automatic engagements over the last 40 plus months, there have been 52 of them, and we've completed the analysis on 42 and you can see the data there. Most of the 42 come out as high risks.

The result of this analysis is to place the district in a category of risks from high to moderate to low. By far most of them are in the high risk category. Under AB 1840 from 2018, you're aware that both Inglewood Unified and Oakland Unified qualified for additional unrestricted apportionments. You can see what the history is there. That process is now complete. In the current years.

Budget Bill and Trailer Bill AB 181 the Legislature and the Administration provide an additional opportunity for both Oakland and Inglewood for additional funds. Our analysis for Oakland is ongoing. It's due April 1. Our initial analysis for Inglewood is complete and they will not qualify, nor do they need these additional funds. They're not proposing a deficit at this point and their audit report would disqualify them from meeting the eligibility criteria. Districts that are concerned for us, and you've seen these names already in my presentation.

Happy Camp, another very small district in Siskiyou County, Junction elementary in Siskiyou County, Ojai in Ventura, Stockton Unified in San Joaquin. You've read a lot in the media about not only has some internal control issues and questions about how they've spent millions of federal dollars as a result of a recent audit we completed that would appear that there's evidence of wrongdoing, but they are also a lack of going concerned designated district. Weed Union elementary in Siskiyou county is over the hump on their immediate General Fund issues, but they have pending issues related to building construction, which will come back to their General Fund if they don't resolve them otherwise.

And West Contra Costa USD is a lack of going concern designation. They are going through additional analysis right now as they just settled a collective bargaining agreement in the last week. The solvency trends and these go hand in hand with what the Chair and some of your questions, Member Fong just a moment ago. Common across many, many districts is the issue of declining enrollment.

I think it's important in your discussion and staff is well aware of this, have spent hours on this is you have to separate declining enrollment from attendance. They are interrelated, but there are issues going on with declining enrollment that a district cannot necessarily control. The number one influence on declining enrollment in California right now is lower birth rates and has been for a number of years. And that's not something I think from a policy standpoint, most of us are anxious to necessarily control. Right?

From a chronic attendance standpoint, that's a different issue. And there are both as Deputy Superintendent and as the Chair have talked about, there are a number of things that can be done at the local level to help influence that. Spend down of the one time pandemic funds is a concern, not that they're spending them down. That's what we want them to do and to serve kids both on learning loss mitigation and on social and emotional supports and other needs that our students have.

But we are entering the period where those funds will be fully exhausted or they'll hit their deadlines and districts need to have solid exit plans. They have a lot of staff tied to these one time funds. Staff are recurring commitments. They've got to figure out here how they're going to exit that environment. Slowing state revenues certainly, as you've heard in your earlier presentation, when we look at the out years and as the Deputy Superintendent indicated, districts continue to feel the impact of increasing inflationary pressures.

Just because inflation is starting to slow doesn't mean that the price is actually being rolled back. The price for food products to feed our kids, the price of supplies, and certainly the need to adequately compensate our staff so that they can meet all those needs when they go home are important considerations at each district.

Probably not new to you, but new on the radar screen is the issues associated to AB 218 and abuse of students and the claims that have been filed and ultimately the court judgments that are coming to play in this regard. The initial impact is to the various risk pools that will result, though in much higher premiums back to their member districts and a cost impact.

We do have one district with a jury judgment that is currently in appeal that exceeds their insurance levels, and so if their appeal is unsuccessful, they will have immediate fiscal distress depending on how they choose to resolve the uninsured claim. It is substantial compared to the size of the district. The uninsured portion of the claim is. Most frequent condition I've already alluded to these is declining enrollment, ADA yields that are not rebounding.

The out year distress as they think about how they're going to backfill funding as the one time funds are exhausted are common across the districts. That are the handful of districts that are struggling fiscally. Finally, fund reserves. Fund balance reserves are very strong as we entered into the last downturn in 07/08. Economic downturn in 07/08 unified districts averaged about 8% fund balance reserve. In the last official reporting, we were up over 22%.

New reporting will be out very shortly for last year and I expect it to be even higher. So districts enter this potential downturn and tightening with regard to revenues in a much stronger position than they did in 07/08. The same should be said for their cash balances, which are different than their fund balances. Their cash balances, generally speaking, are also very strong with those noted exceptions that I've talked about. Be happy to answer any questions that you may have.

Thank you. A series of questions. We will start with Mr. Muratsuchi.

Thank you. Mr. Fine, good to see you again.

Thank you, sir.

I have your handout that highlights the most frequent condition among qualified certifications. Declining enrollment. ADA yields not rebounding as expected. Do you see any pattern or trend between districts that are seeing these same challenges and yet are not qualified or negative certification districts? What are the main differences?

The main differences are those districts that are not in fiscal distress or having fiscal difficulties due to decline in enrollment because they've been adjusting as they lose students, either by taking advantage of attrition or by potentially not hiring as they lose students. Districts that are experiencing distress are just the opposite. They've not addressed the issue, and the problem, which is not new to them, has been masked by the large sums of one time funds. However, at the local level, that's easy to distinguish.

At our level, that's more difficult. We've got to dig down. Right. But at the local level, where the local governing board and Superintendent and the Chief Business Official are operating, they can see those differences, and they're very evident to them. And so the unfortunate impact is on staff. Right.

We may have more staff than what we need to serve kids at this point in time, or said differently than our traditional formulas, because at the same time, what's going on is they are lacking staff in other areas, find it very difficult to find qualified staff in many areas. And so figuring out how to move somebody from job A to job B, those kinds of things, all are part of that solution.

But is it fair to say, am I hearing you saying that the districts that are in fiscal distress are the districts that have failed to adequately plan for, adequately exercise fiscal responsibility, to recognize the trends, the challenges that they're facing, and to make appropriate staffing and budgetary decisions.

When it comes to declining enrollment. Yes.

As well as ADA.

So ADA, I see, is different. I would not be jumping at adjusting staff because ADA is down. More I'd be looking at ways to invest in additional staff, to do some of the things that the Deputy Superintendent talked about, to do those home visits, to do the daily follow up, to do a variety of tasks that we have known over the years actually increase ADA. We have the new challenge of the pandemic.

We still have lingering aspects of the pandemic as far as challenge that are impacting the lack of rebound in ADA. And we have a new generation of kids in the primary grades, right. That started school during the pandemic. And I don't think they and their families fully appreciate the importance of being there every day. That's how we impact kids is that they're within our reach every day. Right. And we think of that as being in school. And so.

From your perspective, there have been references made during this hearing, a proposal to change the school funding from ADA based to enrollment based. From your perspective, what are your thoughts on that?

Well, California is certainly an outlier in this particular case. So I think it is a worthy conversation that we should be having and the analysis done. And I think Senate, if I remember it was Senate Education, made that recommendation last year on last year's Bill that we study the topic. However, to the Chair's earlier comment, the pot of Prop 98 is the pot is the size of Prop 98. We're just talking about redistributing the funds.

And under the proposal, if we look at the data, about a third of the school districts in California would gain revenue and about two thirds would lose revenue. We are going to redistribute funds among LEAs. And so the other piece of it that we have to keep in mind is if we're going to change the system, we should think about changing the whole system. Remember that Prop 98 set by the voters is driven by ADA.

So if we just change the distribution system to be enrollment, but don't change how the pie is actually crafted and created and use enrollment there, then I question whether we're creating a problem where one can move in one direction, the amount of funds available and the distribution system move in a different direction.

All right, thank you.

Yeah, just on that, is it true that you say a third would win - a third of the school kids, but is a third of the districts, is that third really just two districts?

It's a, if I remember, the data runs from last Spring on last year's proposal. I believe my one third reference, unless somebody behind me can clarify, is to ADA.

Yeah, but I guess what I am asking.

Not to LEAs.

I guess what I am asking, is it possible that there's a thousand districts in California, which I'm going to talk about in a second? It sounds like way too many. Is it possible under this policy that the third really is like couple districts, LA and Oakland, or maybe another one that we look at the number of students in those couple districts, you know less than on my hand, it's really just a couple.

That's probably a fair understanding of it, just based on what we know about large urban districts and their historical attendance rates versus smaller districts and their historical attendance rates.

Yeah, you have to wonder. There's districts - not to bash on LA. There's districts that have the exact same demographics, challenges as LA. Like maybe urban ones here in my district that don't have that issue. So I don't know. So two things I want to jump in on. We talked earlier about COVID and chronic absenteeism. Can you dig into that a bit more?

Well, I think we're still learning to deal.

Let me rephrase. I'm sorry. The so called disappearing students, where they've gone, as Mr. Muratsuchi says, you look at charter schools, private schools, and they're not there either.

Right.

Maybe enlighten us a bit more at that.

So then let me start differently. And that is, in that context, I think we're talking about declining enrollment. Where are our missing kids? Not our kids that are enrolled, that we still know about, that aren't there every day, but where are the 300,000 kids that we've lost in California's K 12 system? You're correct, Chair. If you look at the private school affidavit data that is filed each year with the Department, we know that they didn't all go.

We saw increases in the home school environment during the pandemic, although it's leveled off. We saw traditional private schools that aren't home schools. So church related, diocese related schools stay about the same because they closed as well. They're brick and mortar environments. Right. But they account for a few tens of thousands of kids. Just a handful, not 300,000. Right. And so the question is, where are the kids? We do know from. Let me say this.

Every individual school knows exactly where their kids went, because in the main office, on top of the file cabinet of cum folders, each student's record is a clipboard or a notebook where the new school has requested their records and they log that. They don't necessarily put that in a system that we can all query. Right. It's on this log form on top that file cabinet. So school by school, they know exactly where their kids have gone.

At the district level, we know a generalized reason for their exit. As Deputy Superintendent Nicely indicated in CALPADAS, we collect an exit reason code. It is rolled up many times by the time it reaches the Department. But we can disaggregate that data and look at it to the extent that a district is granular, to the extent that they're not using a very high level code to exit, but they actually have developed multiple reasons for the exit, such as out of state, out of county, and so on.

We know anecdotally from other data of all places, U Haul's annual survey of where trucks are rented from and where trucks end up and the size of trucks which tell us whether it's an individual or a family. In most cases, we know generally speaking, where they are going.

And we know what our migration patterns in the state were going into the pandemic, during the pandemic, and then late or last year starting to reverse back for California to be a net migration in. As opposed to during the pandemic, we were a net migration out state. So we have a variety of data sources, but getting right down to defining that we have 5% of our kids have gone to Texas, 4% of our kids have gone to the Carolinas, 2% to Florida or Nevada or Idaho. That's pretty difficult to do without individual school site reporting to us. The zip codes of where they mailed the records to.

But isn't there. I saw some research that shows beyond all of that, there's still missing kids.

Yeah.

So are they not in school? Is there this so called.

I don't think we know. And it's a concern. When we saw this trending start during the pandemic, I think we all freaked out a little bit. Right. We have historically been pretty good about knowing who our kids are, having them in school or accounting for them in a variety of ways. We have a whole policy and statutes, both federal and state related to this. But during the pandemic, everything changed. Sir, I don't think we have a solid answer. That adds up to 300,000 I think is the point.

Okay. Thank you. And then I noticed on the districts they're all over the map. So some are urban districts and we've seen Oakland on the list for a decade. And hopefully I won't.

Doing better. Yeah, let me say they're doing better.

Hopefully we won't see some other urban districts like my local district here, which our education leaders have been concerned about, like our county officer there. That being said, what do we think about some of these little districts in the worthiness. I know we support local control. If Ms. Dahle was here, she'd talk about how it really matters. Maybe they're little but they're 80 miles away in mountain ranges and no way to get there.

But in some of the districts, even 10 miles from here in my district, I don't even remember the name of it. It's so small. To right where there's Robla and there's another little one where it's like two elementary schools. Something. Alberta.

Alberta has been on our list recently.

Yeah, but they're just a couple schools and two schools. And not to bash on AXSA, but like we're paying a Superintendent salary for two schools. You know, we have school boards and this and that. So does it make sense for some of these have a threshold, like 10 or more schools, unless you're in a rural area where there's some issues which you can justify, but if you're in a concentrated area, why have these little school districts? Too much bureaucracy and just doesn't look like good government.

Well, certainly something the Legislature dealt with back in the 60s, right. When they provided financial incentives for unification from what was predominantly separate elementary and high school districts. There was financial incentives provided to create unifieds. That's really where most of our unifieds today grew out of. The districts I've all worked for, all have history of unification in them before I came into this position. So Sonoma County is a great example.

If I remember right, there are 47 school districts, some with enrollment, many single school districts, some with enrollment below the ED Code threshold of 6 and 7 kids. To your point, is well taken. They have an administrative structure in place that is not 100% contingent on the number of kids they serve, and yet they are paying out for a Superintendent, a Chief Business Official, others. Local control has always been the factor.

If I go to Kern county with - off top of my head, 42 districts - spread out a little bit more than Sonoma County, but it's the same issue, right? Even as they have grown and there's less distance between communities because of growth, right. They have a lot of districts for what has historically been a lower populated county. In Siskiyou County, your colleague that is not here, she actually has several districts on the list.

Some of those are so small that they are not generating interest by governing board members, i.e. one of them does not have a functional school board. The County Office of Education's board members sit as that school district's board because there aren't enough folks in the community interested in being a school board member. At that point, you really have to question whether local control is in play or not because it's being provided by the county, right.

If you did have a policy, would you think a threshold would be a number, like a certain number of schools, certain number of students?

Students would be the normal threshold, but I think you have to go beyond that and you have to look at the characteristics of the community. It's the same discussion that you have anytime you consider closing a neighborhood school. A horrible decision. You can't stick to just a number - that I'm below 200 or below 100 kids, and therefore it's ripe to be closed or right to be closed. You have to look at the characteristics of the neighborhood, the closest school.

So the closest district in this case, similarities between the communities. And does it make sense to unify or merge them in some fashion? Off top of my head, in the last decade, I think we've had two or three districts lapse that were in fiscal distress and they lapsed into a neighboring district as a result. But that's not a frequent choice that the local community makes.

Yes. Mr. Muratsuchi.

Thank you. One quick follow up, your earlier discussion about how every school district logs where their students are exiting.

Every school.

Every school. Okay. Am I correct in understanding that school districts are not required to report that data to the Department of Education?

No. They simply have to report an exit code in the student's record in CALPADS, which then is reported up. That exit code, though, can be very high level. It can be just transferred to another school without specifics of state, county, those kinds of things. What's key about that log that the office may, the principal, secretary or attendance clerk keeps at the school site, is it's got address and everything. We know exactly where they're going. Right. As opposed to just that they left school A and they've gone to school B. The exit code would distinguish whether it was in the district or not.

But if we just wanted to identify trends like are they going out of state? Are they going to private or parochial schools? Does the CALPADS data address that?

I would have to double check for you and get back to you on what at the state level is the minimum required exit code to use? Some districts develop their own codes for that internal reporting, and then they are rolled up to a minimum that the state sets. And I would just need to double check with my folks and folks at the Department to confirm the minimum that is reported.

Okay, thank you.

Okay, thank you. Thank you again for that report. That concludes our agenda for today. Do we have public comments? And you'll get rewarded if you pull back and maybe put your comments in writing or potentially wait till the real hearing, because we do have a caucus that we're 10 minutes late to with an important agenda item. So remember, power of incentives here. Teachers saying if you just do what we say, you'll get a passing grade.

I'll keep it super brief. Kimberly Rosenberger with SEIU. We really appreciate the conversation today, especially highlighting that one time funds made it difficult to make the appropriate investments in the workforce. We are really concerned about workforce. It's been a key issue at both Sacramento and LAUSD with our pending strike there and the past one last year. We are especially concerned about the TK situation, pausing the ratios.

As the Chair mentioned, a lot of the money that's coming into the school system is going to be because of TK. We would suggest strongly that that money go towards helping reduce the ratio so that we don't deal with burnout and we can address retention. Thank you.

Hi, Katie Hardeman with the California Teachers Association. I'll be brief. We just want to strongly support the COLA for the LCFF and hopefully that can provide stability for our schools. Thanks.

Ada Naymack with Children Now. And yes, we'll submit something in writing. We really support the TK proposal. We'd like to also see the teacher ratios get down lower to 10 to one. Thank you.

Good afternoon. Cristina Salazar with Californians Together, but also on behalf of the California Association for Bilingual Education, asking for funding for a Bill that was signed last year. AB 1868. 900K initial investment and 60 to 90 ongoing for data desegregation. Thank you.

Xong Lor with the California School Employees Association. We support the governor's proposal to fully fund the 8.13% COLA in addition to the Universal School Meals and the Universal Transitional Kindergarten program. But we do have concerns with the Trailer Bill Language requiring additional - that creates additional requirements for the second adult or paraeducator in the ATK classroom. It has not been articulated to us what problems these additional requirements are trying to solve.

A TK classroom has a credentialed teacher who leads instruction, and the paraeducator is there to assist the teacher. And our paraeducators are well qualified by their school districts - measures to do the job already. So this proposal will only create barriers to entry and will exacerbate our educator workforce crisis. So we ask that when the time comes, you reject this proposal. Thank you.

Okay, thank you. Do we have public comment on the line, moderator.

To register comments, press one, then zero at this time. You'll hear an indication you've been placed in the queue and an AT&T specialist will provide you with your line number. You can remove yourself from your queue by repeating the one then zero command. We'll first go to line 11. Go ahead, please.

Good afternoon, Martha Zaragoza-Diaz, representing the California Music Educators Association. We would like to bring to your attention the need for strengthening the fiscal oversight and accountability of all sources of funding for arts education and its discipline. We will be providing written comments on this and other issues when Proposition 28 will be discussed prior to the March 29 hearing. Thank you.

Thank you.

Line 15.

Hello, Kelly Reynolds. On behalf of Early Edge California, we thank you Chair McCarty and Committee Members for hosting today's meeting. We'll also keep it brief. Early Edge thanks the Governor for his continued investments to support expansion of transitional kindergarten and recognize that as more four year olds can serve in TK, we need to continue to increase investments and support to support the infrastructure of the full mixed delivery system. Thank you again for this important hearing today.

Thank you.

Line 13.

Hi Elizabeth Esquivel with the California Association of School Business Officials. We definitely support the fully funding the statutory COLA. We oppose the reduction of the $1.2 billion the discretionary block grant. We also wanted to note that given the agenda today, we appreciate the recognition that the CBO capacity on the field does not meet the demand. CASBO, along with ... that 200 CBOs are in the first or second year of the role, 100 of which are in the first six months.

On the other end, there are about 250 CBOs that are within one to two years of retiring. And all of this is happening with declining enrollment, expiration of Esser funds, which creates a complex environment. And we believe that qualified CBOs are critical. But we understand the need for additional training on the field and support funding for these purposes. Thank you.

Thank you. Okay. Thank you.

One moment please. Do we have line 16? Go ahead.

....

Thank you.

We have no further lines in queue.

Thank you. We will adjourn.