Senate Budget and Fiscal Review Subcommittee No. 1 on Education

We believe that California has more resources to address the issues around accelerating academic achievement, meeting the mental health needs of our students, and making sure that they're on great pathways for great futures. And so we are leveraging all of those programs.

And we're grateful that the governor's proposed budget continues to say that funding for education should be preserved because there are many challenges that we must work through despite all these programs that we have. You know, as you talk about the fires, you know, our hearts break for those who've lost loved ones.

We have spent a lot of time in Altadena and Pasadena and Sierra Madre and other places where we've seen structures burned down to the ground, homes lost, schools, businesses. And California will have to undergo one of the most massive rebuilding of infrastructure experiences that we've ever seen.

And we'll need the state government and we'll need the Federal Government and we'll need the business sector to help us rebuild. As you point out, all of this is happening at a time when there are threats to abolish the US Department of Education.

You know, someone who, for whom education literally saved my life, helped me overcome the loss of, you know, my parents when I was six years old, growing up in a household with no food. Education was always the constant. And I know that for both of you, education has been important. You've been champions in your own rights.

And these institutions here in California have preserved and protected education. And we believe that the U.S. Department of Education needs to be protected because. Because of what it means for Californians, what it means for Americans as it means to protecting the guarantee for providing special education. These aren't partisan issues. These are issues that affect every American.

And we're engaging in conversations with electeds in this state and in other states about preserving special education funding and funding for homeless students and funding for higher education. Our CSUs, our UCs, our community colleges, they need us more than ever. They are facing difficult financial challenges, just like our Pre K through 12 schools are.

And the things that are in this budget speak to the needs of our schools while they're facing declining enrollment, their ability to have access to the COLA that is proposed, the block grants, these are tremendous programs that our schools need.

And we have sent a message to our schools that in spite of the attacks that we're hearing on the US Department of Education, that we will work to protect it and to ensure that every student in this state gets a great education. We have said the same thing for our immigrant families in this state.

It's not a surprise, you Know, I'm descended of immigrants from Panama, Columbia, Jamaica and Detroit, Michigan by way of Mississippi. My grandparents came here with a simple dream. They cleaned houses to make a living and they wanted their kids to be able to get a great education. And thankfully, those opportunities have been provided.

And the message that we've delivered to our immigrant families is that we will support you because we know that many of our families in this state are mixed status families. And even those who are citizens are fearful the threat of deportation at a school community has suppressed attendance.

And it has the potential, in addition to creating the disruption for students who struggle to do well because of the fear, it has the potential to undercut our state by hundreds of millions of dollars. Because as you all know, the way we collect revenue in the state is dependent on average daily attendance. And so we've worked with our school districts to help them work with families to feel safe.

We have sponsored legislation that we think clarifies that there's no role for Ayes immigration on a school campus or within a 1 mile radius of our schools because of the disruption to families and because of the impact that it has to how we get revenue for our schools. And so we're having those conversations with our schools.

We are supporting them, our school leaders, our school families are resilient. They are more than the sum of the circumstances that befall them. Sadly, disaster response has become the new normal.

We never thought that we'd find ourselves in the position to have to help our families find housing, find food, while we're also talking about what do we do to rebuild the physical structures where they learn.

And so I hope that as you all dive into the Governor's Budget, you will also look into questions about can we accelerate the resources that we have, like in Proposition 2, to build schools and modernize schools, can we accelerate some of those funds for the communities whose schools were destroyed?

Or as your staffing report lays out, the number of schools that were destroyed or experienced structural damage, can we accelerate those funds to help those who may need to act quickly?

Even while we're waiting for federal agencies, FEMA and others to come through, we think that this budget creates opportunities to continue to build on the growth that our students are beginning to experience in math and reading? We think that the reading coaches grants proposed is another place to drill down.

We have some ideas for how we think that might be best implemented. We think that this is an opportunity for us to look into programs like dual language immersion programs.

And while we know that the discretionary block grant gives districts discretion, maybe that's a place to say that we make sure that our kids are learning another language because we know that prepares them for the future. We know that it supports brain development. We know that it makes them competitive in a global economy and that it prepares them for the future.

And that we leverage those investments for programs that we know not only are preparing our students for great futures, but a program like dual language immersion, we think will help parents make decisions who have gone away from our schools to come back to our schools so we can help our schools offset the declining enrollment that they are currently dealing with.

It's forcing them to have to make layoffs. It's forcing them to have to consider consolidations. And we think that a program like dual language immersion is the way to go. I would encourage you, as you continue to review the budget, to think about how to continue to build on the expanded learning opportunities that are provided.

I think that now is a good time for us to be offering incentive grants to school districts to say you will get these grants if you're going to make a longer school day or a longer school year.

Because we know that when you look at places like Compton Unified School District that has seen improvements in reading and in math, when you ask them how did you get there, they said it was the extra tutoring in the longer school day. And these things can be negotiated with our bargaining groups.

They found a way to do that and they're seeing the benefits of the extra tutoring. And so to me, it's a great opportunity to say to school districts, we'll provide you with the tools to make a longer day as an incentive to help them on top of the resources that have been provided.

And then of course, just continuing to provide robust professional development for teachers for one to one aides for anyone who's working with our students to learn to read around coaching programs for reading and math. You know, it's proven that professional development is one of the key ingredients to helping students be successful anywhere.

These are some of the things that we will lift up in the budget that we think will help us as we continue to move forward and to make them complementary to some things that we're leading. At the Department of Education, we're deeply engaged in the conversation about educator housing.

We know that there are many educators who cannot afford to live where they work. And that creates a huge threat to the success of our students.

Because the churn if you can't stay in the district and you have to move away or you're driving two hours to get to your job, we believe that there's a unique role that schools can play to actually help address this issue. Our schools have 75,000 acres of land that's ready for development right now.

In every county in this state, there is surplus property that could be used for building housing, affordable housing. If the school districts that have the surplus Property built only 15 units on those parcels, it will result in more than 2 million units that would be available by the year 2030 for teachers, for classified staff.

It could also be made available to our workforce and other professions, our first responders, our nurses and others. And so while we face these challenges, we think that there are unique opportunities in California.

We think that this budget is thoughtful and with intention provided by the Legislature, and that we would like to help direct the implementation of some of the key programs. We think that we can help our schools continue to ensure that our kids get a quality education despite some of the challenging circumstances that they face.

I don't want to stand between your travel plans today, and so I'll put a pin in it there and let you know that the Department of Education stands by to work closely with the Members of this Committee going forward on the education budget. And we'll be happy to take any questions that you might have for us.

Thank you. There's actually four really talky issues that stand between us and our travel plan. Do you have any questions, Senator Ochoa Bogh?

Budget related. Thank you so much for being here, Superintendent Thurman. It's a pleasure to have you here and actually have direct access to the person heading our Department of Education for the state. So the following question I have is the 2024-25 and proposed 2025-26 budgets have Proposition 98 General funds per pupil spending at nearly $19,000.

This is an increase of about 59% compared to the 2019-2020 per pupil spending levels. Despite this growth in spending, the 2024 California Dashboard State Performance Overview shows that students are 13.2 points below the English Language Arts standard, 47.6 points below the Mathematics standard.

Only 45.7% of our English language learners are making progress, a decline of 3% from 2023, and only 45.3% of our high school graduates are college career prepared. Additionally, state results from the national assessment of Educational Progress, known as the nation's report Card, were recently released, and California scored below the national average in all four measurements.

While some might argue that poor performance of our students is the result of residual impacts of the COVID 19 pandemic. Eventually we need to ask, what is our education system doing well and what about it needs to be reassessed to best serve our students?

So I ask you, Superintendent Thurmond, what would your explanation be for the poor performance of our California students despite historic investment in education?

Thank you, Madam Vice Chair. You know I'm grateful for those investments. But you and I both know that many of those investments are recent investments, one time investments.

And when you try to juxtapose them to the long term poverty that Californians have experienced, the number of homeless students that we have, we have 240,000 homeless students in our state. There are 10,000 of them who right now are unaccompanied and on their own.

And so, given these challenges and historic achievement gap that has existed in this country for more than 60 years, it's going to take time to see the full improvement for our students. But we're seeing trending in an upwards direction. But we never rest on our laurels.

We always are going to work to make sure that every student is getting the best experience that they can. It is why we have convened 250 school districts together to work in what we call the cohort to move the needle in reading and math proficiency. We're meeting with them on a regular basis.

Actually, we're having a meeting with them just today. And this represents 2 million students across our state that we are working with as a cohort to see how we can move the needle on a statewide basis for our students.

As I pointed out in my earlier remarks, we have many districts that have seen individual success, like Compton Los Angeles Unified School District. Many districts have seen success, but we want to see success for all of our districts in our state.

And so this cohort of 2 million students we're working with to maximize those same investments that you asked about today. The reading coaches grant, the Learning Recovery Block Grant, our expanded learning resources and reading coaches.

And we're working to make sure that these aren't individual grants, but grants that are aligned and we have the ability to see the impact of what it means to work with them to have success. These are multi year strategies though, to see things move in a positive direction.

Every state that has seen massive growth has seen it happen over time. And we're asking the state to make the long term investments in math, in literacy, in science, in the kinds of things in cte, the kinds of things that we know will help to prepare our students for the future.

We'd like to invite you, Senator to join us when we visit some of the school districts in your Senate district that are part of this cohort to move the needle so that you can meet them, hear their stories, hear what they're overcoming and hear how they're approaching this level of success.

And Chairman, we'd be happy to also visit some schools in your district, but because the Vice Chair had raised the question about what will it take to move the needle.

We wanted you to know about this initiative and that we would like to visit with you and them so that they can be encouraged by you in their efforts because they're out there doing this hard work. While they're also dealing with declining enrollment, the cost to provide education continues to rise.

It is much higher than a 2% COLA that is being offered to them. And as they lose students to declining enrollment, they're losing revenue. And so they're finding ways to make tough decisions with the resources that they have and the additional investments that they have been given.

And we have to give them time and support to do that. But we're holding the bar high, which is why we created the move the needle effort.

And we look forward to a chance to work with you on that, as I said, with school districts in your Senate district so that they can hear from you and be encouraged and know about your commitment to seeing their growth from I know you're a champion for early education from early education all the way through higher education.

Okay, perfect. So with that, with that context, and I understand the onetime funding and the funding that going to take a couple of years to do that. First, when did you start this cohort?

And two, how would you explain the performance of our students within the context of having the Local Control Funding Formula with the unduplicated funding that the schools have been receiving since 2013-14 to address the special needs of our unduplicated children. So our foster youth, our English language learners, and our children that come from low socioeconomic backgrounds.

So the state has been doing extra funding for those particular students for extra services since 2013-14. So with that in mind, how do you explain the performance?

Well, I would just point to the fact that the Local Control Funding Formula, why it is helpful is does not fully Fund the cost of public education. It never has. I served on a school board and the first night that I was sworn in as a school board Member, I was asked to vote to close 10 schools.

Many of those schools were performing well, serving diverse bodies of students. But the cost of education is great. The Local Control Funding Formula has provided additional Resources, but it does not fully Fund the cost of education.

Education, I can provide you research studies from Stanford University, from UCLA, from any institution of higher learning that has said that for decades California has underfunded education in our state. And largely it is tied to the volatility of how we Fund our budget in this state.

That we are tied to revenue that fluctuates on a regular basis has contributed to our situation. We need a steady source of income for the California budget and in particular for education in our state for Pre K through 12 and for higher education.

And I'm happy to meet with you if you want to go through the details to see what percentages of what lcff, what the Local Control Funding Formula provides. But it has never fully funded education. We're grateful for it, but it has never fully funded education. California education has been underfunded for decades.

And so we're catching up and we're using one time investments and our schools are being creative in how they are applying those dollars to find ways to move the needle in the right direction for student proficiency.

We will never make excuses for our students students because they have the ability to perform at a high level and we have to lead with rigor for our students and provide them support when they need it. Hence I mentioned the tutoring programs and that's what our schools are doing.

In spite of the challenges and the hard financial decisions that they have to make, they're leading with rigor and support for our students and our students will continue to thrive in the state.

Thank you, sir. And there was one last thought, if I may. So right now it's approximately the state is spending about and I'm not historically, because I wasn't here 10 years ago. So please help me out. Senator. You might know more than

I can tell you how much we were spending on fire and water 10 years ago.

But historically and right now we're spending about just under 40% of the California's budget on education. In your professional opinion?

Yes.

What would be the, the considerable true investment that California should be spending on California, on California students to fully fund education?

I'm not going to throw out a percentage without having gone through those numbers, but I'm happy to provide that to you.

But as I pointed out earlier, we have to spend even more on professional development and training to support our staff, to make sure that we have more reading coaches and specialists to support our staff, that we have to have programs to offset having 10,000 students who right now are in school and don't have a place to lay their head.

Our state is different from every other state and we continue to promote rigor and support for our students while we try to work through the challenges that we do. That's why we've needed to have a universal meals program.

Because we have students who show up every single day to school, who don't have clothes, who are hungry, who have housing that is not stable. And as we, and you know, they may have families who are working 2 and 3 jobs just to make ends meet.

So while we work through those challenges, we have to make sustained long term investments in professional development and proven programs that have helped students to improve their proficiency in reading and math. We have to have the extra tutoring programs to support them. We have to find ways to overcome our teacher shortages. Hence I mentioned the educator housing.

We have to make sure that we can fill the gaps of a well prepared workforce to take the jobs and that we find a way to make sure that our students get access to pathways that prepare them for great futures.

Whether that's computer science or whether that's someone who wants to enter into a an apprenticeship training program and work in a skilled and trained environment where in some cases they'll make more money than someone who has obtained a degree. But we have to make these investments over the long term and that's where we're moving.

As I said, we're working with these 2 million students. This cohort is new within the last year because we've seen the trend where many districts individually are making improvements, but we're doubling down to say that we're going to help the whole State of California to be able to make those improvements in the proficiency in math and reading.

It is a long term investment. We invite you to be on that journey with us as we help those districts along the way.

And I let me just finalize with the fact that you're addressing a lot of the issues that we have in California, which is in regards to the cost of living in California, which is impacted a lot of the times due to policy decisions that are being made at the government level.

So I just wanted to ensure that I completely understand the point of view and the obstacles our teachers and our families are having to face in the State of California.

And I'm working very hard to advocate to reconsider many of the decisions that the Legislature has made in the past 1020 years in order to that have impacted the cost of living, making it very difficult for the quality of life for our families to survive and be successful in the State of California. So I completely agree.

I think part of that's not, I mean the root of the problem is the cost of living in California that's impacting our families that you're addressing right now that they're facing within the school.

And we're going to be continuously working on that in our, in other committees and in legislation as it goes through to the, to, through the legislative process. But I do, I do want to make sure that, you know, we are taking in consideration the fact that we are spending a lot of money on education.

They have been and I'm referred to as a very frugal Senator on many, many fronts on a personal and professional level. But you know, we have to be creative also. We can make excuses about not spending enough money, not having enough money.

And I can tell you that after four years, this being my fifth year in the Senate, the state is not fully funding many, many programs in our state.

And so when I make the reference about, you know, spending 40% of our budget on education and yet we have so many other state departments that are catering to the needs of Californians who are also pleading for more money.

We have to start thinking creatively and start thinking about what is working and what is not working, what is efficient and what is not efficient, cost effective and not cost effective.

Because right now, especially with the budgets that we have, I'm extremely concerned that there's incredible need across the state and yet we don't have enough funding to fill every single bucket.

Senator, I think we have a revenue problem and I know you're not advocating that we spend less on education. I think that would have disastrous effects at this time. And I would just give you one example, just.

Oh no, no, let me correct you. I'm not, I'm not at all. I'm just stating that we have to be creative and we have to be very, think outside the box about what is working and not working as we move forward in our budget.

Because I want to make sure that we have the best use of our revenues moving forward and see the progress in the students outcomes. And we are going to be working.

I know we have, we share the same, the same concerns as far as ensuring that California's can afford to live in our state that can have access to the resources that need. But hopefully that's a band aid. I wish we had a state where we didn't have a need for all of these services.

I wish people could be more self sufficient and be able to work normal hours and have a quality of life that they deserve. So I completely agree with you. We're going to continue on that.

I just wanted to make sure that we have this discussion because it is a grave concern to me about the progress our students are having and how much more money we're going to be needing to meet this needs.

And at the helm of the, of the Department, I just want to let you know that we are partners, but we really do need folks to think creatively and start assessing what is working for our students and what is not working and figure the, you know, how to best proceed within that space. So thank you.

I appreciate your push for creativity, I really do. And I appreciate your clarification that you weren't when you were talking about being frugal and how much money we're spending, that you weren't making a call to cut what we, what we spend here.

Because I would only remind you that just a few years ago we learned that a million students in this state didn't even have a computer, let alone access to the Internet. How can we prepare them for great futures when they don't even have the basic tools in a state that has the wealth that we do?

We have such wealth to disparity in the state. And if you look at what happened to many students during the pandemic, some of their needs were exacerbated and they couldn't even get access to a computer to be connected to a teacher or a counselor.

And so while it's true that we need creativity, you know, we were just a few years ago somewhere hovering around 39th in the nation in per pupil spending. And so I'm grateful for the one time investments that we've seen in the last few years.

But we've got to make long term investments in our students and I think that you'll find that they are worthy of it and will help them to overcome many of the challenges that they face.

And we're deeply committed to promoting academic success for our students, giving them access to mental health and access to great career pathways so they can get those good paying jobs to be able to afford to live in our state.

Thank you. I was going to ask a couple of questions, but in the interest of time, I won't do that. But, but I would say snarkly, I do not need an invitation to visit the schools in my district. And I know you.

And though let me make an extended comment on how my visiting the schools in my district makes most of the points that you were just making. Because if you looked at Covid it was the poor students in Salinas that were the ones at Taco Bell, using the computer and the connection to get there.

When I went to Parkfield, which people might recognize because it's the earthquake capital of the universe, they had 11 students, I think in K8 and they had one teacher. And during COVID what she did is she set up a zoom room for each grade and so she would just go back and forth.

And there were only like two in 1 and 1 in the others. And that, that was the reality on the ground that you had to see. And then Santa Cruz and Monterey have both gone to the voters for housing. The voters have overwhelmingly approved it there in the throes of, of constructing teacher housing.

I visited the three dual immersion schools in San Luis Obispo county and had the experience of interrupting a class that was learning fractions. And I was really glad I wasn't quizzed in Spanish on fractions. But they did ask me questions and I answered them in whatever language I, I got. And I saw the people it was drawing in. I did have the experience.

And they Baywood Los Osos, where they had every grade out on the playground and the first graders had flags and in Spanish I gave them a little talk about their banderas and they look at me blankly and the principal walks over and said, the first graders haven't got to Spanish yet.

They don't have a clue what you just said. And so it was seeing I had meals in San Luis Obispo and in Watsonville in the nutrition programs. I saw the, the pre-K, TK and the real challenges in the Alisal District in East Salinas. I went to family resource centers in the schools in Pajaro and Alisa and in Paso Robles.

And when I went to Marina High School, which is in one of the wealthiest areas in the edge of the Monterey Peninsula in the universe, their homeless population is so dramatic that they have washers and dryers and showers and they give kids packs of food that they take out on Friday and they bring the pack back empty the, the next week.

And the, the number that were sort of in that category was phenomenal. And so. And you know, in my home area, just above my house is a small rural district, Bonny Doon, where 27% of the students lived in a house that burned down.

So 27% of the students were burned out of, of their homes in the school district. And they still, they've only had 25% rebuilt. It is so you look at every single thing that you talked about, and I see it through throughout my district. And I see the challenges and I see us targeting on each one of those.

And it's hard to talk about it in the aggregate if you don't look at each one of those things individually and try to address them to make the numbers go up in the aggregate.

So you just teed it up perfectly with your broad comments that touched each one of those bases and you teed up our hearings very well because we will now have to get into the weeds on every single one of those things and do what we can to make sure that we push the kids ahead.

So let me thank you for being here and we look forward to working with you as we move through the the budget process.

Thank you, Chairman. And thank you again for what you said about Pothara Valley and the flooding and the things, the conditions that your constituents have had to go through and for your leadership in supporting the folks in the community and the way you stewarded this community.

I think it calls and speaks to the very creativity that we were just talking about because in the last two years we haven't had revenue to work with and California schools have had stable funding in spite of that so that we can make those long term investments. Investments. Thank you again. Thank you. Thank you.

Thanks for mentioning. Okay. We appreciate you being here. Thank you. We're going to move to a less complex item. We're going to go to the Proposition 98 overview and structure. It's issue number two. We have the Department of Finance in the Legislative Analyst Office.

And I I believe we have Alex Shoap from the Department of Finance, Ken Kapphahn from the Legislative Analyst Office. We'll start with the Department of Finance. We'll go to the Legislative Analyst and then we'll have any questions or comments. Welcome to the Committee.

Thank you Mr. Chair. Senator Alex Shoap with the Department of Finance. So the Governor's Budget forecasts that the Proposition 98 guarantee amount for 25-26 will be 118.9 billion, so 3.6 billion more than forecast at the 2024 Budget Act. 23-24 remains in Test 2, while 24-25 and 2526 are both in Test 1.

In the three year budget window, the Governor's Budget shows an increase of about 7.5 billion compared to the Budget Act. 23-24 of course remains at the statutorily suspended level of about 98.5 billion. The projected maintenance factor obligation at the 2024 Budget act that was approximately 8.3 billion which was created by suspending the guarantee in 23-24.

So that amount is revised to about 7.9 billion at Governor's Budget. Then the projected maintenance factor payment in 24-25 that increased to about 5.6 billion which is up from 4.1 billion at the 24 budget act.

So while the guarantee increased by about 3.9 billion in 24-25 to 119.2 billion, the Governor's Budget proposes creating about 1.6 billion in settle up for one time purposes and funding the current year at about 117.6 billion.

So the 1.6 billion is an estimate that reflects uncertainty in revenue estimates and could be revised at the May revision depending on updated Prop 98 factors. This proposal is meant to be a proactive measure to manage the budget and to help avoid the over appropriation of Prop 98, which of course is what occurred last year for fiscal year 22-23.

So depending on the final calculation of the guarantee for 24-25 at certification in the 2026 Budget act and pursuant to existing law, any under Appropriation of Prop 98 would be repaid in full either at certification or according to a statutorily authorized payment plan.

Finally then the guarantee was re benched to reflect the continued implementation of universal transitional kindergarten moving quickly to ADA Average Daily Attendance the percentage change in average Daily attendance from 24-25 to 25-26 is expected to be about 0.7%, so a slight increase.

This is driven by a combination of transitional kindergarten enrollment and improved attendance in years following the pandemic Moving to the Public School System Stabilization Account, the state's Rainy Day Fund for schools.

The 2024 Budget act projected that the rainy day Fund would be fully depleted by a mandatory withdrawal in 23-24, then followed by a discretionary deposit of 1.1 billion in 24-25. So that mandatory withdrawal that remains unchanged at Governor's Budget in 23-24 and then increases in capital gains revenues result in a mandatory deposit of about 1.2 billion in 24-25.

And then just per the language, the provisional language in that discretionary deposit budget item that was created last year, that previous discretionary deposit amount is used to fulfill the trued up calculation. So the total additional need in 24-25 that would be about 103 million.

There is also an additional discretionary deposit of 376 million in 25-26, resulting in a balance of about 1.5 billion at the end of that fiscal year. Just to note right this was originally included in the Governor's Budget as a mandatory deposit, but upon further review of that Reserve language no mandatory deposit would be required in 2526.

But maintaining this amount as a discretionary deposit that would continue the 24 Budget act commitment to rebuilding the Reserve. So then with those amounts updated, School District Reserve caps are not triggered any year within the three year window.

Finally, the Governor's Budget of course proposes several budgetary actions just to highlight a few on the K12 side, that includes an ongoing increase of 2.5 billion for the Local Control Funding Formula LCFF to reflect a 2.43% cost of living adjustment and population growth adjustments, an ongoing increase of 1.8 billion for the LCFF to support transitional kindergarten expansion and adult to student ratio reduction and then a one time increase of about 1.8 billion for the student Support and Professional Development Discretionary Block Grant to provide LEAs Local educational agencies with additional fiscal support to address rising costs and Fund statewide priorities.

On the community college side, there's an ongoing increase of 230.4 million to Fund a 2.43% cost of living adjustment for the student centered funding formula SCFF a one time increase of 168 million to support the completion of the statewide technology transformation project and a one time increase of 162.5 million, 29 million of which is ongoing to scale a common cloud data platform across the community college system.

Then finally, just to end it, we would note that for deferrals, the Governor's Budget pays off the 2425 deferrals. So that includes 246.6 million for the Local Control Funding Formula and 243.7 million for the student centered funding formula. And that concludes my remarks. Happy to take questions. And we have our team here, too, for any programmatic related questions.

Thank you, Mr. Chair and Madam Vice Chair. Ken Kapphahn with the Analyst's Office. We have a handout that covers our key points. I think the Department of Finance gave you a pretty good overview of the moving pieces here. So I want to draw just three issues on the Proposition 98 calculations. First, the increase in Proposition 98.

The number here to really focus on is 7.5 billion. That's the increase across 24-25 and 25-26 combined relative to this year's enacted budget level. Of that amount, 3.9 billion attributable to 24-25. That reflects higher revenue estimates. The other 3.6 billion attributable to 25-26. That reflects growth in revenue, General Fund revenue, growth in local property tax revenue and.

And an adjustment for transitional kindergarten. Second, and turning to page two of your handout. We think the governor's General Fund revenue estimates are reasonable. The state has had strong tax collections since June of last year. Personal income tax withholding is growing at an annual rate of around 10% right now. Corporate tax receipts have been strong.

And the Governor's estimates are consistent with those trends. The big caveat here is that seems to really be building upon a huge run up in the stock market over this past 16 months. Stock prices are very high right now relative to corporate earnings.

And that creates a significant risk of a reversal that could reduce revenue estimates very quickly. The other source of forecasting uncertainty is the extension of tax payment deadlines in Los Angeles County. That alone represents about 20% of the state's personal income tax base.

And so we'll be doing our next revenue updates, our office and the Department of Finance, without the benefit of complete information. Third, to the extent that revenue does change, that has significant implications for the Proposition 98 calculations in 24-25. In particular, for every dollar of higher or lower state revenue.

That would change the Proposition 98 guarantee about 95 cents. That is an anomalously high level of sensitivity. That's actually only happened twice in the history of Proposition 98. And it has to do with the configuration of the Proposition 98 formulas. Test 1 is operative and the state is paying Maintenance factor.

This obligation it created last year when it suspended the minimum guarantee in 25-26. A little bit different story. The Proposition 98 guarantee would change about 40 cents for each dollar of higher or lower revenue. That's more typical level of sensitivity that the state has seen in the past.

So shifting gears now and turning to page three of your handout, I want to talk about the governor's spending proposals. So after accounting for the increases in the minimum guarantee and some other smaller adjustments, the Governor's Budget has 7.8 billion to spend for new spending on schools. The budget would allocate that to nearly two dozen proposals.

All of them are listed on that page of your handout. You'll see they range from less than $1.0 million to nearly 2 billion. And you'll cover all of these in subsequent hearings.

But taking a step back, this budget is really focusing on four areas within education, the expansion of transitional kindergarten, math and literacy initiatives, teacher training and recruitment, and after school programs. And in contrast to some previous budgets, these are all really repeats or expansions upon existing state programs. There's relatively little here that's completely new.

So turning to page four in our assessment, overall, we think the architecture of this plan is a solid starting point for you. The Governor's Budget has a mix of one time and ongoing funding.

So of that new spending, 4.4 billion is for ongoing augmentations that could help districts sustain programs and address some of their longer term challenges and cost pressures. The other 3.4 billion is for one time activities that could help districts address some of their more Shorter term costs, one time priorities.

And that seems like a reasonable mix to have both kinds of spending represented. A little bit more weighted towards the ongoing.

But related to that, an important feature of the Governor's Budget is that if we look across all school and community college spending in this budget, There is about 2 billion in ongoing Proposition 98 funds that are being used for one time activities.

And that's important because it gives the state a buffer if Proposition 98 funding declines in the future. The state can accommodate that just by allowing those one time expenditures to expire. It doesn't have to immediately reduce ongoing programs or resort to payment deferrals. The budget also has a mix of flexible and targeted spending.

About 4.3 billion of the proposals would be relatively discretionary grants for districts. That includes the cost of living adjustment, discretionary block grant. There's 3.5 billion in spending with some strings attached to it, either spending requirements or specific levels of service.

Districts have to provide that approach, we think is reasonable because it could allow districts to address a few core state priorities without becoming overwhelmed with a whole bunch of new state requirements in the coming months.

Obviously, you might make different decisions about some of the individual proposals or the areas of focus, but those structural features seem like they're important to maintain. And then lastly, turning to page five, the other big decision before you in this budget, obviously is the governor's plan to delay that 1.6 billion payment.

And I think you got a good overview of mechanically how that works. So this year's Proposition 98 guarantee is 3.9 billion higher than the enacted budget estimate. This budget would provide 2.3 billion of that amount as part of this year's budget and then address the remaining 1.6 billion as part of next year's budget.

So a couple of factors I think motivating that proposal. One is the volatility. If the state hasn't provided the the full 1.6 billion, it's less likely the state would commit to a school spending level that would be hard to maintain if revenues come in a lot shorter than we think.

The other important feature of the proposal is that it provides, in a sense, some temporary cost relief for the state budget because it's delaying costs into the future, but gives the state a little bit more to spend on non school programs this year, but higher costs to address in the budget after that.

Putting this in a little bit of historical context, it's not unprecedented for the state to avoid paying settle up immediately. The state has delayed payments in the past and in some cases those have been for much longer than what the Governor is proposing.

But it is still a break from the usual practice, particularly what the state has been doing since the end of the Great Recession. We think this proposal is building on a reasonable concern about volatility. It wouldn't be a budget hearing if the LAO wasn't talking about volatility. But there are some factors that make 24-25 a unique challenge.

Our reliance on the stock market, the tax extension deadlines, the very high sensitivity of the Proposition 98 guarantee, those all make this year more challenging than some years in the past.

We think you have three other ways you could address volatility and I think if you understand those, that will help illustrate some of the trade offs that are involved here. So I want to drill down into what are the alternatives. These are listed on page five of your handout.

So the first alternative, make a 1.6 billion discretionary deposit into the Proposition 98 Reserve in 24-25, instead of delaying that until delaying 1.6 billion until next year, if revenue meets expectations, great. That deposit can remain in the account. That would help schools the next time there's a downturn.

If revenue falls short, the state could simply rescind that deposit or reduce it without having to make any reductions to the funding that schools have already received up to that point.

A second option would be to make an appropriation for schools and community colleges this year, but delay the disbursement of those funds until the end of the 25-26 fiscal year, essentially until June of 2026.

That appropriation would be contingent on revenues meeting expectations and could be reversed if revenues fall short of the estimates that are in the Governor's Budget right now.

That option is conceptually similar to the first alternative in the sense the main difference is that with that option, with the appropriation option, you'd be deciding now how to use that 1.6 billion, whereas in the first alternative you'd be saving that until some point in the future when the state faces a downturn.

Third option here would be to suspend the Proposition 98 guarantee. A suspension obviously requires a 2/3 vote, but it would allow you to set school funding at any level in 24-25, and it would not create a settle up obligation.

Instead, the state would create something called maintenance factor, essentially an obligation to accelerate school funding more quickly at some point in the future when revenues are stronger. So turning to page six here, all of these alternatives, as well as the Governor's proposal are assuming the state will eventually Fund the Proposition 98 requirement.

So from a state budgeting perspective, there's no free lunch here. They differ mainly in regards to their timing. When is the state going to recognize that cost and when is it going to decide how specifically it's going to use that 1.6 billion? Our main recommendation here would be to address volatility proactively.

All of the options on the table before you would do that. We think the Reserve deposit is the most compelling option here. That would allow you to avoid the payment delay.

Maybe more importantly, it would allow you to not have as high of costs in 26-27 a fiscal year when the budget is likely to be facing a tighter to be tighter than it is this year. It also minimizes the complications for districts as they're going to plan their local budgets right now.

The trade off, of course, is that if you go with that option, that does mean higher costs right now because you're funding the 1.6 billion and that could mean more reductions to the non school programs in the budget as part of this year.

So I think your decision there will come down to not only your priorities for school funding but also your overall plan for getting to a balanced budget this year and in the years ahead. I'll pause there and we'll save the rest of our comments for the next panel.

Thank you very much. A couple of quick comments and then I want to get into the questions about what you both just testified. And Mr. Shoap, you mentioned the student centered funding formula and I just want to say I think we going to want to dive into that deeply when we get to community colleges because I think we have kicked the can down the road. We're not sure of the outcomes and whether they match.

And there's 21 community colleges that are going to take a hit this year and I don't think that's the right outcome. And I would like to figure out a process that we get to that and get some kind of permanent solution that addresses that. But we will do that in community colleges.

And the other comment is that when we had the full budget oversight hearing, I expressed concern about the gap at the 1.6 billion. And part of my concern is that it we could be getting some bombs coming our way from the Federal Government and find it really hard to restore a bunch of things that we want to do.

I mean in higher education there's UC and CSU, but if we start in a hole and then suddenly have a big gap from the feds, it makes it much harder to fill that hole. And so that is my concern about the fact that we're not sort of at that level. But that's a comment.

So I then wanted to ask a couple of things about just the revenue projections because it was both of you mentioned the delay in the income taxes and the fact that it could be 20%. And the reason that there's this big concern about volatility is what happened the last time that there were delay in income taxes.

So how are we going to deal with it when we get to to the May revise in June? What kind of estimates are we going to have that we're going to try to base the budget on before June 30th? You look like you're leaning into your microphone.

Well, if I can use a little bit of an analogy here, Senator Laird, it's a little bit like you're driving down the highway and your speedometer stops working. So you start looking outside the window and seeing how fast things are going and you make an estimate of your speed based on that.

So we track state tax collections, you know, consistently and look for the trends in the data, and that tells us if we're on track, if we're coming in short or higher, and we adjust our projections based on that. The Department of Finance also looks at those very closely.

We can look at other measures of the economy that help us get a sense of what's going on, the labor market, stock prices, how California companies are doing, job growth, other things that are significant factors for state revenue. But as you correctly pointed out, sometimes you can look at all those factors and still miss a broader trend.

That's what happened in 2023. We thought the state economy and state revenues were on track. We didn't have data, and so we didn't. We weren't cognizant of the big decline that was happening until several months after we had passed the budget for the year.

Mr. Shoap, do you have anything to add on that?

I certainly don't have as good of an analogy. I think I would have to probably circle back, you know, with our forecasting folks to get a kind of better explanation on our end.

I think that one thing I would just note generally, of course, I don't, you know, given the timing, you know, with like the fires, you know, I don't think think that our settler proposal necessarily had that in mind. We were already sort of looking at the kind of, you know, the broader uncertainty.

I think that this proposal does kind of help sort of speak to that and kind of. Right. Because of the issues that we saw last year, of course 24-25 you.

Know, but that was between the years and this is between January in the May revise, which to me seems a little different. Although to your, in your defense, you're exactly right. You made this proposal before the fires. It was of a calling out of volatility before the fires.

Yeah, right. Right. And, you know, I think that we also kind of, you know, I think we do want to, you know, try to, I think, learn some lessons from sort of what we were. We were facing last year, obviously.. 24-25 is the current year. Now.

It will be the past year next year once we get to that point. There are statutory restrictions on lowering the guarantee, you know, so I think that this is really meant to kind of sort of.

And then to advance one question from an agenda item, we've been talking about income taxes, basically. But the later item, and we will consider it separately, but on the fire says a roughly $30 to 60 million hit to property Taxes. How will that reflect that seems like a really small amount against the total guarantee. But how will that reflect when we have to balance that out in the.

Yeah. So that was that estimate. Was, was our estimate. So I'll take that question. So that will be. That will materialize as a reduction in the total pot of funding for schools under Proposition 98.

Like you said, it's modest in the context of all of the property tax revenue schools are projected to receive in 25-26 more than $34 billion. But it still is a dollar for dollar reduction, holding all of the other factors constant.

Okay, and then let me ask the finance Department, the Legislative Analyst laid out a few alternatives to address the volatility. Would you like to comment? That's not the correct question because you'll just say, no, I would not like to come out. Would you have a comment on this?

I think, you know, I don't think I can speculate too much, you know, without seeing additional details. Of course, you know, we're always happy to review alternative proposals when they come to us.

I think sort of the generally what I can say and maybe like the difference, I think between Leo's proposals, ours is that I think the Laos proposals probably would mitigate. Right. The risk of revenue decline within the guarantee. But the difference then I think with ours is that they're still creating some sort of expenditure within the guarantee.

So that would necessarily lower the amount of non 98 that is then available on the other side of the budget.

Even though I know better to get into a back and forth. Would you like to comment on that?

Well, I think that actually is a pretty good synopsis of the trade offs. I mean, like we said, the state, if revenue comes in at the level that the Governor's Budget is estimating, the state will have to pay this 1.6 billion.

So then the question is when is the state going to pay it under the alternative that was we thought was most compelling, the Reserve deposit that would be paid right now. So the state would have to come up with that 1.6 billion, but it could reverse it next year if revenues come in short.

But it still has to pay that funding now that it wouldn't under the governor's proposal. Then the benefit of that though is if we pay it now, we don't have to pay it in the future in 26-27 when the state's likely to be dealing with a significant budget deficit that year.

So no real disagreement on the trade offs. That's just kind of the choice that the Legislature has to make.

And I think one thing I meant to say in, in my opening comments, and we actually have a returning Member who knows this but would have wanted to say it for the new Member, is that we have these hearings every week and we do not take vote.

But what we do do is air issues like this and send signals either to the Senate budget negotiators or to the overall group of stakeholders negotiating the budget, where we would like to go so that people would understand what our priorities are going to be.

Because it's confusing to the public why we would have 10 budget hearings and never take a vote. And yet they're really meaningful in terms of airing out the issues and giving directions. I mean, I remember last year when we're doing the library budget as part of this, the Governor's, the administration's recommendation was to claw this money back.

And in the hearing it became clear that a lot of it is out the door and was being used and they acknowledged it. And when the May revise came out, it included that change. And that's what the purpose of this is. And so I would just say I like the alternatives.

There is a matter of uncertainty, of course, there's tradeoffs. But I think we're going to have to look at those kinds of things when we get to May, provided we don't have another big fire, we don't have a huge cut from the feds or all the other things that might influence that.

The other question I had was there was some suggestion that that as revenues have started to come in and you look at May, there might be a slightly lower cost of living adjustment. I think it might have been your estimate. So maybe we should start with you and see if finance wishes to say anything.

Yeah, sure. So just a little bit of background. The COLA rate is calculated using a federal price index. It's designed to capture the changes in the cost of goods and services that state and local governments across the country purchase. And it looks at the percent change over the previous year in theoretically, employee compensation is the largest component of that index.

I think what we've seen in practice is that the index has been somewhat idiosyncratic and it often seems to move up or down for reasons that don't seem well connected with what's happening in the broader economy or broader inflation trends.

One example of that is the index seems to be unusually sensitive to changes in energy prices, even though that's not a big part of a typical school district budget. When we so our we do have a lower estimate of the cost of living adjustment.

I think ours is 2.26%, just slightly lower than the 2.43% in the Governor's Budget. That's based mainly on additional data that was released by the Federal Government at the end of January. We now have seven of the eight quarters of data that affect the calculation that last quarter came in a little bit lower.

I think so based on that. And our projections for the final quarter were just a little bit lower than the Department of Finance. But there's no, I wouldn't call it a significant difference from their projections. And we'll get the final numbers in April ahead of the May revision.

Great. Thank you. Do you have any comment on that?

No. We reach out to our economic and forecast, if folks haven't heard back yet so we can circle back with your staff. I'm sure they're idiosyncratic as well.

So Senator Ochoa Bogh, I apparently took one of your questions. Do you have any remaining questions?

Let's see in your analysis... this is for the LAO. In your analysis of the proposed budget. And it is noted that the Governor does not propose any significant new programs and instead primarily expands on existing programs.

It is also suggested that the Legislature focus our review of the expansions on whether or not the underlying problems remain unaddressed, if the programs are meeting their objectives, and whether additional funding would allow districts to address the problems more effectively. Can you suggest ways to proceed with assessing these investments for their effectiveness?

In light of the concern raised on the previous issue with student performance lagging despite historic investments in education funding, it's essential that we take comprehensive look at recent and future investments.

We actually will have a few specific ideas. If I may, I hate to put off a question, but a couple of my colleagues in the subsequent hearings will be looking at some of those issues very specifically for the specific programs.

In some cases, we do have outcome data for, for example, how many teachers might have been trained or what we're seeing with how many students are being served in after school programs, for example, and how that's rolling out.

So I don't have a good specific program example, but those are the kinds of issues that you'll see from us and we'll be talking about in some of the subsequent hearings where we drill into the specific, specific proposals.

Okay, thank you.

Does that complete your questioning?

Yes, sir.

Okay. Thank you. Really appreciate the discussion here. And I know this is at the center of what all the rest of the things what we'll do and we'll just see how this goes until we get to mainfield. So thank you for being here today.

We're going to move to issue number three, which is the Local Control Funding Formula and we have, I believe, Katie Lagomarsino from the Department of Finance, Michael Alferes from the Legislative Analyst Office, and Aaron Heredia from the Department of Education. So we'll begin with the Department of Finance.

Welcoming Good Morning. Hello. I'm Katie Lagomarsino with the Department of Finance. I'll be going over the Local Control Funding Formula. As noted during the p.98 overview, the bulk of unrestricted funding for local educational agencies is provided through the Local Control Funding Formula or LCFF and is distributed based on the number of students served.

It includes additional funding based on the enrollment of low income students, students, English learners and foster youth. The state fully funded the LCFF in 2018-2019 and has annually adjusted the grant amounts by a cost of living adjustment.

LCFF base grants are calculated on a per student basis measured by Ada according to grade span, with adjustments that increase the base grants for grades K-3 and grades 9 through 12.

For school districts funded Ada is equal to the greater funded ADA is equal to the greater of current prior or the average of the three most recent prior years ADA.

As a result, LEAs local educational agencies experiencing short term or single year declines in Ada are largely protected from funding impacts through the formula because they would be funded on the basis of which every year is greater through the calculation. So in the budget year for 2526 we see an increase of roughly 2.5 billion.

This reflects the 2.43% cost of living adjustment as well as average daily attendance percent change adjustments. Budgetary deferrals of 246.6 million for Tk-12 education that were adopted as part of the 2024 Budget act are also fully repaid in 2526.

The budget also includes an increase of 15 million in home to school transportation program costs for districts in the budget year. This brings total LCFF funding to 83.4 billion in 2526, including costs for TK expansion and TK ratio reduction, which will be discussed in more detail at a future hearing for the County Offices of Education.

In the budget year we see an increase of 13.1 million to reflect average daily attendance changes, the cost of living adjustment as well as other expenditures including differentiated assistance figures. An increase of 600,000 for home to school transportation. This brings total LCFF entitlements for counties to 1.4 billion in the budget year. That concludes my remarks. Happy to take questions the appropriate time.

Thank you very much. Now we're going to move to the Legislative Analyst Office. Welcome.

Thank you Mr. Chair. Madam Vice Chair Michael Alferes with the Legislative Analyst Office. I'll just be providing our high level kind of comments on our on the LCFF estimates.

As mentioned in the previous panel, we have a we're tracking based on the latest data, we think the statutory cost of living adjustments going to be slightly lower than what's proposed in the budget, reducing LCFF costs by about 130 million.

Secondly, we think that the costs associated with moving from a 12 to 1 to 10 to 1 staffing ratio for transitional kindergarten are likely overstated. And we lay out two options on page eight of the handout that was shared. You know, I'll go into detail, but happy to answer any questions on those.

And lastly, based on our initial review of data recently released for the California Department of Education on attendance in the current year, we think that current year costs in 24-25 are tracking a few million higher than the estimates included in the Governor's Budget.

And we estimate that the costs for the budget year LCFF will be several $100.0 million lower than what is currently in the budget. This would result in less one time funding available for spending on new spending and more ongoing, ongoing programs. With that, happy to answer any questions.

Thank you very much. Mr. Heredia, do you have comments? Yes, thank you.

Good morning Chair Members. On behalf.

Okay. Much, much better. Good morning.

It was not personal.

OH, that's quite all right.

Part of a legislative hazing ritual for people moving around. Okay, I was trying to be cryptic.

So you've heard. No, that's fine. I'm good for the spotlight. Senator Laird. So in any event, Aaron Andedia, on behalf of the state Superintendent, Public Instruction, Tony Thurman, I would just reiterate the Superintendent's comments earlier this morning in support of the Governor's Budget, continued investment for our K12 education system.

And I'm happy to answer any questions that may come up as we move along.

Thank you very much. Let me ask the Finance Department just under questions. The Legislative Analyst mentioned that they've released data that costs are likely to be a few $100 million more. Do you have any comments on their estimate? Were you given the dead one back? Here's the live one right there.

No. No. Yes. Katie Lagomarsino with the Department of Finance. Sorry, are you able to repeat your question?

I was asking that the Legislative Analyst said that the costs were likely to be a few $100 more and asked if you had a comment on that.

Oh, okay. I'm not sure if they were referring to data that had come out last week, but if that's the case, we're not prepared to comment as we're revising our figures.

Yeah. Just to clarify, this is based on the first principal apportionment data that was released by the California Department of Education on, you know, just tracks attendance from the beginning of the school year through.

You're still not prepared to comment, is that what you're saying?

Okay. Well, we'll be anxious to hear when you're prepared to comment. Are you prepared to comment?

Yes.

Kind of in a way, yes. I just. Just to elaborate a little bit on my colleague's remarks. Amber Alexander with Department of Finance.

Given the timing of the data release that my colleague mentioned, we will be reviewing that data as we refine our estimates and projections for the May revision, so would expect to incorporate it at that time.

Okay. And then, you know, we're hearing anecdotally, obviously came up in the opening statements, issues of students being afraid to attend school and sort of drop offs happening in certain places. How are you either confirming these anecdotes or figuring out how to. To react?

Yes. We are also hearing anecdotally that families are fearful of sending their children to school in light of deportation threats being made at the federal level, thus resulting in lower attendance at local educational agencies. zero, sorry. Let's see. Yes, we've heard the anecdotal reports, especially after the Day Without Immigrants protests earlier this month.

We've heard from districts who experienced large single day changes in Ada and at the statewide level. Since we received the principal apportionment data from CDE at set times. If there were a drastic change, we would expect to see that at the next principal apportionment data report in late June.

And we can't speculate as to what decisions families or individual communities might make in response to the Trump administration's potential actions. But we continue to monitor the situation and anticipate further discussions moving forward with the Legislature.

The only concern I have in what you just said is the report comes in late June. There's a few budget deadlines and events that happened before that. And so I would just like to make sure that that we have the best information we can when we're actually making the decisions.

Okay, I can hear myself. So just speaking to what provisions are in current law, I thought it might be relevant to share the CDE is currently reviewing just for your awareness whether or not material decreases of attendance that might result from concerns around immigration actions, et cetera, if that could be a qualifying condition under the existing Form J13A statutes which are under the Superintendent's authority to be able to approve and what documentation would be necessary to substantiate that request.

So depending on where that review lands, we'll obviously make sure that that guidance and resources go out to the field. Your staff people are aware of that. But also we would be remiss without mentioning the existing provisions law as well for LEAs to serve these students.

There were some changes last year in trailer Bill made to independent study law that allow for example students to be served on short term independent study as soon or as short as one day.

The previous minimum used to be three days as well as a provision for short term independent study agreements to be signed at any point during the school year, not not just before.

So those are two significant changes that we feel do allow LEA some significant additional flexibility to potentially serve students whether they're impacted by this particular issue or potentially others they may be dealing with.

As well as that there is some there are some provisions in current law for school districts with regard to students who may be children of whether their parent or guardian was deported and this school district maybe that they have to relocate into or if they are forced to relocate out of the country.

There are provisions to allow school districts to continue to serve them via in person or independent study. So just wanted to highlight that for the Committee as well as there are some existing provisions in law to help get at this issue right now that hopefully will get around some of the timing issues you mentioned. We hope so.

And then I should just note that usually at this juncture we talk about enrollment versus ADA and the reason we're not is to legislate of analyst is doing a study that will arrive next year sometime. So we have a one year holiday from talking about this issue.

And I am looking forward to that report because I think even though we theoretically have a holiday from talking about this, it it is in the context of the fixed pie of Prop 98 and I think a lot of the school interests think if we just move to enrollment they all get increases.

Well, half would get decreases and half would get increases. And I'm hoping that the report makes clear in a way that people could act at a adequately judge their interest going forward. Senator Ochoa Bogh had to leave. So I will stop asking if there's other questions because if I don't have them, there are no questions.

So let me just thank each of you for this discussion and I know we will continue to to look at this as we move toward May and June. And thank you for being here today. So we're going to move to issue number four, the fiscal health of school districts.

We have Mike Fine who's the Chief Executive Officer of the Fiscal Crisis and Management Assistance Team FCMAT and I think you're going to give us an overview. We have, we have a lot of detail and I would just look for the overview on where we stand here.

Thank you Senator, always good to be with you. And I will just hit some highlights. I did give you a handout and some charts that have the detail in it. I think with regard to fiscal status across the state, our school districts continue to generally reflect strong fiscal conditions.

However, we are seeing areas of weakness and those areas of weakness are deepening and in some respects are accelerating. With respect to timing, we see this in the headlines across the state each morning. Different district boards at this time of the year taking action to balance their budgets and so on.

The the issue really is that not every district is, is following the best practice. And so we have some exceptions out there. We have one district, as our data reflects, it has a disapproved budget this year that's been through the entire process with a budget review. Committee, the first time we've done that since 2008.

And the state Superintendent ultimately upheld the county Superintendent's decision. We are at. W That is Weed Union Elementary School District in Siskiyou County.

We have at first interim is our most recent update and as you're aware from. From the data we have some growth in the number of qualified certifications and growth in the number of negative certifications. The negatives are the ones that we're most concerned about and we have several on that list.

I would alert you, Senator, that one of those we do not believe will be able to recover sufficiently without the need for state intervention with a emergency loan. That'd be the first time since 2013. It's come. Their issues have come about very rapidly. While they are long standing issues, they are surfacing very rapidly.

It is a slightly awkward situation in that this is a single single. A single district county. But the county's financial condition is. Appears to be okay. Why the district's financial condition under the same leadership is not. And they have.

Feel free to say which one.

I will be happy to. It's Plumas Unified in Plumas County. And so we have a team there right now working with them. The CDE is the oversight agency and we're actively every day having conversations. They have already borrowed a significant amount of funds from their alternative liquidity sources.

And so a state emergency appropriation may be their only next option with regard to remaining being able to pay their obligations. As far as trends are concerned, they're the same trends we've actually been talking about the last couple years.

Declining enrollment is number one district's ability to adjust to declining enrollment in a timely fashion during the pandemic years. We continue to have declining enrollment as we're all very well aware of. But districts had a lot of one time federal and state money that allowed them to kind of kick the implications of that down the road.

Those funds are beginning to dry up certainly on the federal side. And so they're dealing with that now with staffing decisions and so on.

The COLA level, as already discussed today, while the state is absolutely honoring its commitment and its intention to fully Fund the COLA, I would remind us of the dynamic at the local level. COLAs that are below generally 41/2 to 5% at the local level feel like a cut.

And the reason for that is we go to bed on June 30, we wake up on July 1, and without doing anything different, our fixed costs are up about 4.5 to 5%. And so when COLAs are below that level, it feels like things are tightening at the local level. And then you add declining enrollment to that.

Utility and insurance costs are skyrocketing. 200% on utilities and over 700% on insurance, predominantly liability insurance. At the same time, Fund balances are for the most part at record highs, certainly well above where they were at the Great Recession.

So that's allowing districts some opportunity for stability, allowing districts to take some time to be thoughtful in their decisions. Cash balances are also relatively strong, but in some cases, Plumas is an example. They are significantly weakened. I would also just call your attention to the outline with respect to status of receivership districts.

We have a number of things going on there. I would describe Inglewood as making very excellent progress finally over the last number of years, but really making great progress there in their corrections. We have ongoing concerns about Oakland Unified, although the nearing full payoff of their loan.

The district solvency is very much in question and the county Superintendent has expressed in the strongest of terms concerns about that. They are scheduled to take action on their budget here in the coming days. South Monterey County, very briefly, is doing excellent, great relationship with their county. They're getting closer and closer to crossing that final line.

And I should comment that that school district moved into my district last December.

So I've been tracking that as the only threat there, and it's really not a threat, is a petition for territory transfer. They're working collaborative together. I would say that territory transfer is the appropriate thing to do, but it can't be done now. It needs to be done after the state loan is paid off.

And the reason for that is the security of the loan or is in property and it would be a default of the loan. Vallejo City paid off their final loan payment this past year. However, they've not exited receivership because they've not been able to adequately pass the the required fiscal systems audit. They're continuing to work on that.

They've had some challenges.

So I just always assumed that when somebody paid off their loan, they would move out of this.

Well normally that's, you know there's an additional requirement and that is they have to pass what I think is better termed a internal control systems audit. And in most cases those are done well before the final loan payment and they pass with fine. So it's never really been an issue before.

In this case it was done almost two years ago, year and a half ago with a a large amount of discrepancies in it. Deficiencies would be a better word. In the audit they are working through closing those gaps. They've had a change in leadership during the recent months and in recent weeks had a change.

Their chief business official tasked with this left and so they are looking for a new person. So a few hurdles along the way. But yes Senator, I I think when you get to the the expectation should be when you get to a point of making your final payment you should exit receivership. Thus all the prerequisites. So that should have been done at appropriate times.

That's the school district where I went K through 12 so I was looking.

Okay that that's my others that's my final comment other than I know that Senator Perez had questions about fire related hold harmless. I know there's the panel after me is going to talk more about facilities but I'm certainly.

Well I was just going to I had two minor questions and that was one is just do you have early indications about sort of the fiscal health of districts by fire?

I will actually be in Pasadena Unified's board meeting tonight. We'll head at the end of this hearing head to the airport to attend their board meeting. They both LA Unified and Pasadena Unified are have significant declining enrollment. That's pre fire. All everything I'm going to say is pre fire.

They both had plans for staffing adjustments ahead of March 15 and reductions in force. They have other budget mitigation matters they are working through for la. They have made a decision not to pursue those right now and delay those.

They are fiscally they are running a deficit currently a sizable deficit but they believe that they can put that off for a year. Pasadena on the other hand is a little tighter situation.

They are also running a deficit but they cannot put off their original plans any longer and so they are acting scheduled to act tonight or at least to consider tonight reduction in force. It's fairly sizable about 150 staff Members. Both districts are stable. Both districts from the fires perspective will continue to be stable.

We have Erin alluded to the J13 a process will protect them for this year. The Governor's Budget certainly sends us a message and certainly the Senate in meeting with the pro tem on Friday and Senator Perez and others. Senator Allen, a clear commitment to long term stability with respect to the fire.

We're working through those details right now. I believe the intent will be for us to beyond a per Ada hold harmless type of approach on the short term would be to identify any extraordinary costs outside of the facility world.

So on the operational side, any extraordinary costs that any of these districts or charter schools have experience and bring those forward as potentially where the state may share in some of that that burden. The difference in this disaster we're getting pretty good at disasters.

As you know, the difference in this disaster is the percentage of kids that are in charter schools. The bulk of the kids displaced in these fires are actually charter school.

It's a mix of affiliated charter schools versus independent but but they're nonetheless in charter schools and we have some different rules around charter schools that we're also working through and considering.

Thank you. The other question I had is just sort of half anecdotal and that is when you look at the list, it's generally these urban areas, it's been Inglewood, Oakland, I think West Contra Costa for. A while, long time. And now I'm hearing Siskiyou Plumas, is there a trend to smaller, sort of less stable school districts?

Yes sir, there is. As noted in my my outline, it's generally small and tiny districts are having the most difficult time dealing with declining enrollment. A district of 100 kids that loses four families is a significant percentage of their enrollment.

And they already in some, in some districts we have one teacher teaching K through 3, another teacher slash principal teaching teaching 4 through 6. When you lose the revenue of a couple families, they're truly nothing to cut. Right. They're already operating at a very minimal.

So their ability to absorb that revenue reduction that's associated declining enrollment, they simply have less ability than a midsize or a larger district. And so we've actually for the last couple years forecasted that would be the smalls and tinies that would show up on the radar screen initially.

The, the larger districts, the larger districts by far have more kids that they're losing, but they also have more flexibility in their cost structures to deal with that loss of revenue. Okay, well thank you.

I appreciate the report. And while we talked about a lot, there was a lot in the written that was great for us to have and we'll just continue to to work with these. Thank you for making time and safe travels to Southern California.

We will move to our last issue and we will have the opportunity for public comment at the end of it.

The end of the five issues is we have Brooks Allen from the State Board of Education, Jessica Holmes from the Department of Finance, Rebecca Kirk from the Office of Public School Construction, Aaron Heredia from the Department of Education and Juan Mireles from the Department of Education. Nice to see you out of the zoom.

We had the State Allocation board yesterday at 4:00. Yeah. Yeah. So let's go in the order and just welcome. I think we're anxious to hear an update and sort of the impact of the fires and we'll, we'll start with Mr. Allen.

Welcome, Senator. Thank you, Aaron. Made sure I had the mic that worked. I'll make my comments very briefly just to begin and save for any questions. Primarily here to respond to talk about actions the Governor took in the opening days in the immediate wake of the fire.

As you know, the Governor and the entire, pretty much the entire cabinet moved down to Southern California. And no priority was more important than trying to make sure to resolve and provide stability for families who are being displaced by those fires.

And through a series of Executive actions took took action very quickly, unfortunately based on a set of precedents that's becoming all too common given the number of fires and disasters that we've had in the state to build on past presidents for what districts needed. Alluded to earlier,

Mr Fine referred to the challenges charters face that can be distinct as well as ultimately trying to ensure that families had a place to go. So whether it was talking about class sizes, whether it was talking about residency requirements, whether it was talking about whether you had to worry about material revisions for charter schools.

Governor acted very quickly and working closely with our colleagues at the California Department of Education and others to make sure that we had the right set of protections. And we've been working really with the most affected districts.

We talked about LA and Pasadena as well as the charter schools on a day to day basis to respond and make tweaks where necessary and be happy to answer questions about those that come up.

Thank you very much. Move to Jessica Holmes of the Department of Finance.

Hi there, Senator Larozy, Mr. Chair. Jessica Holmes, Department of Finance. So I'm going to speak a little bit about the fiscal response to fire impacted schools, specifically the Ada fiscal response. I'll leave, I'll leave the facilities fiscal response to my colleagues. Unfortunately, as Mr.

Fine noted, this is not the first major fire or other disaster our schools have faced. And the state has many mechanisms that have been put in place to protect school funding and help schools recover in General.

I would also just like to take a moment to note that one thing that I had the pleasure of going down to Southern California and seeing the the response there and one of the things that I saw this time around with this disaster that I hadn't seen before was a great number of folks who county superintendents, school district superintendents who have experienced devastating fires coming together to help support the county sups and the district sups that are experiencing these fires.

So I thought that was, you know, really positive thing that I wanted to mention. So I'm going to discuss a little bit about the fiscal the fiscal recovery. I'll discuss it by fiscal year and provide some comparisons to previous fire emergency.

So namely the Tubbs fire that was in Santa Rosa in 2017 and the Camp Fire in Paradise in 2018. So for the current year, LEAs whose ADA is impacted or who have had to close school due to the fires are protected by what's called the J13A waiver process. This is our emergency ADA waiver and this is administered by the Department of Education. And I'm sure my colleagues from CDE can speak more to that.

This process is available for both public charter and non charter schools and ensures that schools are funded for any emergency related lost Ada or declines in enrollment or I'm sorry, declines in Ada or Lost Ada. This process was used by the LEAs that were impacted by both the TUBS and the campfire.

I would also note that there were property tax backfills in both those situations as well. Obviously the timing of this fire, we're still taking a look at that at the Department of Finance, but that is a precedent that has been set. So that's the current year. They're essentially covered for the 25-26 fiscal year.

I will say without legislative intervention. LEAs have inherent protections through LCFF through the use of either the prior year Ada or the three year rolling average. However, I would note that these protections are not equally available to charter schools. And as Mr.

Fine noted in his presentation, the majority of the schools impacted here, the majority of the public schools are in fact charter schools. The Governor's Budget therefore includes intent language to provide an additional year of Ada hold harmless for fire impacted schools. This is intent language due to a couple of things.

One, the timing of the fires and the development of trailer Bill Language. But also there's going to need to be some refinements here because where these fires were, you know, this wasn't an entire in Pasadena's case, it was an entire district that was impacted. LAUSD was a small part of the district. There are charter schools.

So there's a lot of differences here from prior events that, that will require some refinement of the language and we intend to work with the Department of Education on that. I would note that this, this practice would be consistent with what we did in both the tubs and the campfires.

That leads us to discussion of what happens in the future years. Because for folks who have gone through these kinds of situations before, understand that this is not a one or a two year process. This is a many year process.

And for some of these districts or charter schools, they may have permanent declines in their ADA or permanent impacts to their ADA because of the fires. One of the best examples that we have on how the state has been responsive in the fiscal needs of these types of schools in the past is the Paradise Paradise Unified situation that we had when we had the campfire in 2018.

In that case, we funded the Fiscal crisis Management and assistance team to go into that district and help them develop a multi year fiscal plan.

With that plan and recommendations provided in it, the Legislature and the Administration made supplemental payments to that district over a course of several years to help provide them with sort of an ease down to their new level of normal funding. Initially those recommendations were for a three year payment plan.

Throughout the time that paradise was doing its rebuilding, we revisited that plan with FCMAT and with the district and subsequently determined that additional years of payments were necessary in order to give them that soft landing.

We anticipate that a similar process may be applicable here in this particular case and are looking at some options to Fund FCMAT to do that kind of work for the fire impacted schools in the May revision. But we'll have more information for you then. With that I'm happy to answer any questions.

Thank you. Appreciate your comments. We'll move to the Office of Public School Construction.

Thank you. Senator Laird. Mr. Chair, Rebecca Kirk. I'm the Executive Officer for the Office of Public School Construction and over the last couple of months I've also been serving as one of the two co chairs on the school's task force responding to damage and the destruction of a number of public schools coming out of the fires in both the Eaton fire and the Palisades fire.

As. As I know you're aware, there were eight public schools that were displaced due to the destruction or significant damage of their previous school facilities at the time of the fires.

On the school's task force, we've had ongoing outreach and support provided to all of those impacted, or I should say both impacted school districts as well as the numerous impacted charter schools, because seven of those eight facilities were actually occupied by charter schools at the time of the fire, which, as many of our colleagues have noted, adds to some of the complexity and unique nature of this particular disaster.

Through that process, we've had really phenomenal interagency coordination which Ms. Holmes referenced. Federal, state, local partners, all really coming together and working on this important issue. To respond, just at the state side, we've had about 10 different state agencies actively engaged in responding to various challenges coming out of these fires.

In part, Executive Order N625 called upon several state agencies to work together in helping the local educational agencies develop a plan on how they would establish or discover an interim school site in the meantime when they had been displaced.

I am very pleased to share that as of February 14, not only had such plan been developed, but, but moreover, actually executed. And as of February 14, each of those eight public schools that had had students displaced by the fires had resumed instruction. Seven out of eight in person instruction.

So we've really seen in part, and this will segue more into the facilities side as well, but we've seen in part sort of three distinct phases develop. I'd say one was that identification of interim school sites, how to get the children back, ideally in person, learning as quickly as possible for the remainder of this current school year.

At the Office of Public School Construction. We've also been engaged in ongoing and continuing outreach with the impacted districts and charter schools to look at what funding options are available for them in kind of the next phase in terms of interim school sites, where perhaps where they are on a temporary basis right now may not be where they need to be or want to be, ideally in the coming months and years while they undertake a longer term, perhaps construction of permanent facilities on the interim school site.

Proposition 2, passed by voters in November, does provide new authority to the State Allocation Board to specifically consider requests from school districts impacted by natural disasters for which the Governor declared a State of emergency.

Clearly the case in this scenario, those requests could be for assistance with procuring interim school sites as well as any other assistance that they may need in response to that disaster, given the proximity of when this disaster occurred relative to the passage of that new authority.

We are concurrently in the process of working on regulatory development, but I think also responsive to some of the comments that Superintendent Thurmond made in his opening earlier in this Subcommitee hearing. He spoke to ways that perhaps Proposition 2 funding could be expedited or serve as a means of helping school districts impacted in this case.

So I am pleased to say that less than one month after passage of that Proposition in December of last year, the State Allocation Board adopted a policy in the meantime, before we have formal regulations in place for how to consider such requests from school districts to stemming from exactly this type of scenario.

So we already have a process in place by which the districts can request that assistance. Just last night in our State Allocation board meeting, as Mr. Chair is well aware, the board also took action to Reserve the remaining General Fund authority that was already available to the school facility program as a means of considering future requests that may come from the impacted districts for assistance under those new disaster assistance provisions under Proposition 2.

That would expedite the board's ability to provide funds in that case by about four to 10 months compared to waiting on bond authority to fund such requests. We are continuing also ongoing outreach to the school districts.

They have numerous steps involved in moving toward rebuilding or repair of permanent facilities as well, not the least of which initially debris removal from the damaged sites. So I'd be happy to answer any questions there as we've continued to work with them on identifying funding sources moving forward as well.

Thank you. Thank you very much. And Mr. Heredia, do you have anything you'd like to say?

No additional comment. Just happy to answer any questions and assume my colleague will share the same.

Is that true with you, Mr. Mireles?

It is, Senator.

Great. Okay, thank you. That's my kind of hearing. Let me just ask a few follow up questions.

And I think the interesting thing out of the State Allocation Board is there is this, I don't know what maybe the word is, expediting of Prop 2 bond funds for the purpose of backing up some of the construction on the fires. But I don't feel like it's widely known out there or been covered.

Is there an intent for people to really understand that that's happening? I mean, the State Allocation Board to most people is fairly obscure. I think one person was saying, I'm even a Member. And that's true. Yeah.

Yes, Understood. Yes, absolutely. There is intention to make sure that that message is widely shared. In particular, LA Unified, Pasadena Unified, the districts that had the facilities that were destroyed or significantly damaged in these fires.

We've had early and continual engagement with both of those districts, not only on identifying broadly what I, what unmet needs they may have, but also specifically on their facilities needs and opportunities for Fund under Proposition 2.

So we've had Individualized meetings with each of those districts, several in fact, focused on looking at their facilities funding options under Prop 2. With the recency of the action just last night, that is something that I intend to ensure the districts are both aware of as well.

But from our most recent conversations with them, we did understand that they do have intent to submit in the coming months requests under that new Proposition to bond authority. So they are familiar with those provisions.

And just for everyone else you mentioned, also they might be in temporary locations before reconstruction or new construction. How is that best financed to help them in this emergency to do that?

Yes. Mr. Chair, in many cases the students that were displaced from damaged and destroyed school sites were able to be accommodated at other existing facilities within the districts. So the districts to their credit, were really able to accommodate students very expeditiously.

In many of these cases, some of the charter school students who were displaced and were not able or ideally accommodated in existing district facilities opted to move into interim locations elsewhere, perhaps commercial sites.

In some cases they're looking at that in many cases as a short term option, at least focused on the remainder of this current school year moving forward. The Proposition 2 authority does allow, specifically the board, the State Allocation Board to consider providing financial assistance to school districts that had impacts in exactly this type of scenario for interim.

It. It's phrased in statute, interim housing, but to avoid some confusion, it's really referring to interim school sites. So in, in that case they can come in, for example, for a request for financial assistance in procuring portables, site work and placement of those portables on, on the school sites, etc.

Just anecdotally, because there's so much anecdote about all this, there seems in the complexity of our school system operation to be all these issues that came up from that, which is there might be a basic aid school that needs to, to take people and that's a different funding model.

There might be people that were attending class remotely where their house was fine and their area was fine, but where they were attending remotely was destroyed. Has it been a challenge to deal with all the anomalies like that? As this has moved forward, we'll go to our anomaly expert.

Been called much worse. In short, I think this is really what underscored the importance of what miss Kirk was talking about in terms of having all the agencies get together very quickly and figure out how we deal with all of those anomalies and things that would come up.

And so to where we've heard folks that spoke about, hey, we need more additional Flexibility around independent study. We're able to have things waived through the Executive order process. That's exactly why we want to have that to move to those pieces quickly. To the extent that we had schools that had very specific situations Ms.

Kirk was referring to, some of our charter schools were moving and literally hour by hour, day by day, we were hearing different plans that they were talking about what doing. Folks were able to coordinate and ensure that, you know, flexibilities were provided.

So if that meant the charter school needed to locate outside of district boundaries, which typically would require material revision, for instance, we were able to get that wave. So they had the flexibility to do that.

Or in the instance of share an anecdote, we think about Palisades High School, which was our largest site that was affected by the fires and so had the largest number of students to seek to accommodate. The One school that Ms. Kirk referenced is still virtual at this moment, although they, they're moving forward with a temporary location.

They need to try to figure out, hey, would that potentially trip us into a non classroom based situation? Because we were just worried about days and times.

So we're able to get that waived to make sure that folks this year for the 2425 year, they wouldn't have to worry about those types of things when they're affected by the fire.

So there's certainly been, I think, a lot of circumstances that are unique and we're just trying to take those up literally on a day by day basis and trying to make sure that that coordination is tight.

And there was some mention of previous fires. Are there things that we have learned that immediately were able to apply in this? Mr. Mireles?

Thank you, Senator. Unfortunately, we've been involved with schools since 2017 that have been impacted by disasters. What I can share with you is that every incident is different. Each situation is different, requires different solutions for different challenges. We have the benefit of evolving and learning from the prior incidents.

The EOs that we have now readily available have been, you know, based on learning experience that we had in the past, we have a much stronger state agency, federal agency, collaboration and local. We've been working really closely with the LA County Office of Education. So we've learned a lot from that.

We do know that in these situations, it's very typical for families that have lost their homes to move outside of the district boundaries, outside of the city, outside of the county. They're trying to find locations wherever they can.

And that has an impact not just to, you know, those schools, but, you know, where they're going to so having all of these past incidents, having built up a lot of prior Executive orders, have been really helpful because they've been available right away to help with these situations. And that's been, I think, over a process of evolving with the state, county and federal partners.

Well, I was trying to get an update on one of my schools before this hearing, and it's which Mr. Allen will be familiar with. In the Bonny Doon school district and in the CCU fire in 2020, they lost 27% of the student body, lived in homes that burnt down.

And yet because of this Lockheed installation, their basic aid school district, so they weren't subject to the rolling enrollment stuff. And it turns out that they still are basic aid. And I kept saying, how can that be?

The one installation is of such value that even though there was a loss and only about a quarter of the homes have been rebuilt, it still is. And they're sitting here trying to figure out how to balance all these issues and.

And in this whole overall subject, I want to fit them in and make sure that they're not missing. And I'm curious too, because I think it might have been the oversight here.

The first budget oversight hearing, there were discussions of paradise and the fact that it's seven years and some of the schools haven't been built or just being rebuilt.

And I recall having been up there multiple times in the first 10 days after the fire when we had the Governor and the Secretary of Interior, we took him to an elementary school. It was just the jungle gym. The jungle gym was the only thing that was there on the playground.

And I'm thinking that must be the school or one of them. Is that true or are they just sort of seven years out and they're still not totally reconstructed? Do we know.

They have reconstructed several of the schools and built out. What I can share, Senator, is that under normal conditions there is a process, right, to build schools in California. And normally it starts with the planning process, which is usually developing facility master plans. Obviously, during disasters that's not a factor.

But then you get into the design phase, hiring a design team and designing the schools and then actually going into construction. A big factor too is also funding. Normally the first funding that's available is insurance, and it depends on what the insurance cover. Right.

And then working with the insurance sometimes takes a while to find out what funding is available. Sometimes FEMA can come in and provide reimbursements if the insurance doesn't provide enough. And there's also the state program that can come in and provide Funding. So there's a lot of these factors that go into the whole rebuilding process.

You know, it depends also on the type of school, the size of the school. So there's a lot of local factors that come into play and then also need. . We talked about, well, what is, you know, the need to rebuild at that enrollment level, pre fire or post fire, they may not have the capacity that they had before the fire. So a lot of these factors come into play when they start talking about rebuilding.

But again, and I mentioned this earlier, every situation is different, but there is a process that normally has to go through. And the driving owner of this is the school district. Right? They're the owners. They're the ones that contract the hire out with these architect instructors.

I think this is where I have some exasperation and it's when you started to name all these things and I flummoxed poor Ms. Holmes in the oversight hearing because I was trying to do the analogy to design sequencing in roads.

And you know, if you do Caltrans, they have this five year process that it's as you, you know, and you think this is going to take the rest of our natural life. And they, they just keep keep moving.

And then when the highway went out, the bridge went out in Big Sur and people were.41 miles of people were cut off completely. They did it in five months. They ordered the steel before the design was totally finalized.

They didn't wait to do one thing and then the next thing, and then the next thing, they stacked them on each other and they moved them. And that's what I was trying to suggest in the previous hearing that unfortunately Ms. Holmes was the one having to answer the questions.

And it was, well, the architect, you have to do the architect and you have to do the plan. I just don't understand why there isn't a way that people knock heads and stack it and say we're going to do this in half the time or something like that. And I get the financing part.

I mean, Cal Poly's Swanton campus completely burned down in the CCU fire. And we stepped up from the state to. They had the estimate of FEMA, the estimate of insurance, and the state stepped up for the third part, gave them fiscal certainty so that they could move ahead and do it. I'm just.

You're from a diverse set of agencies. I am looking for some guidance on how we can take action that expedites this. And I get that people aren't sure what they need to do and there's money that's still out there. And the State Architect apparently is sometimes not connected to the rest of the universe. And so it's like, how do you do this in a way that you can really push this?

Senator, I'd just like to say I was not at that hearing. And you have never flummoxed me. I believe that you were flummoxing my colleague here, Rebecca Kirk, as I, as I did listen into that hearing and.

Well, I really appreciate you stepping up for her. I want to make sure that's on the record. Well, if we start to get into the you all look alike thing, I'm in trouble. Mr. Allen, you look like you're ready to venture near the microphone.

I am, but I think we're all leaning in for the same reason, which is and go back to Ms. Mireles comment about we learn from previous disasters, right. And I think one of the key points is about trying to have very tight coordination.

And just as one quick example, and certainly share some of the expertise on the funding side from my colleagues.

But we talk about debris removal, for instance, and we're able to work very quickly, working closely with the school districts with a huge credit to Office of Emergency Services and FEMA and the US Army Corps of Engineers, who change what would be standard protocol and create exceptions to step in and actually expedite debris removal on the school sites, where we have multiple sites now that post fire and we're seeing here at the end of February, already have completed debris removal on those sites because we were able to get not just FEMA stepping up and saying, Hey, 100% reimbursement.

Governor secured that with President Biden at the time, but to also say, hey, we're also going to move beyond standard procedures and we're actually going to get the help of the Army Corps of Engineers to come in and expedite and move very, very quickly, to which our school districts, who had anticipated along the lines you were referring to months of meetings and process, there was a very positive reception saying that's not a typical order of business because we understand the urgency here of what comes next.

But with that, no.

And I was secretary of resources for TUBS for the first part of paradise and other stuff. And that took forever and there whole process.

I, I mean, I've been impressed with the Administration and the Executive orders on the cleanup because the, the thing was, it's left to people and if they don't do it, somebody does it and all this stuff. And that takes forever. And that was set aside in this by doing that.

So, Mr. Chair, if I may, especially as an attempt to redeem myself after.

the Department of Finance person fingered you.

I don't want to be just remembered as previously flummoxed. So I'll just add. We work at the Office of Public School Construction hand in hand, very closely, not only with the Division of the State Architect that's under the same Department of General Services organizational structure that we are, but also with Juan's team at the California Department of Education.

So the three agencies were the three primary agencies involved in school construction projects in California for public schools. We do work together very, very closely. In fact, just as a little bit of a humorous anecdote perhaps, there were provisions of Proposition 2 that specifically required the three agencies to work together.

And at 1.0 the question was raised, does that present a challenge? And we all sort of laughed and said, considering we talk almost every single day, no, we already do this. So we do, on a regular basis, ensure and maintain commitment to trying to make sure that things can go as smoothly and expeditiously as possible.

But in particular, and given as many of the colleagues here, I've spoken to the fact that we unfortunately have several precedents to look to in terms of public schools having been destroyed, destroyed by previous wildfires, and seeking to reconstruct through that process, I can say that we've been working together even more closely in how to expedite that.

So I know, speaking for myself at the Office of Public School Construction, we've had, as I mentioned earlier, direct individual meetings with both school districts on their future funding options, both Shorter term on interim school sites as well as longer term reconstruction.

The Division of the State Architect I know has also been meeting with those school districts and to the extent they already have architectural firms hired working with them in looking at what those options are. I know on the Shorter term side for interim sites, DSA was. Sorry, Division of State Architect was also very instrumental.

I knew you weren't talking about the Democratic Socialists of America

Or Disaster Survivor Assistance, new federal DSA, I've just learned. But. So, yes, the Division of the State Architect has also had individual meetings with the impacted school districts to start talking through those issues.

And they were instrumental very early on in this process, not only with assessing the damaged school sites right off the bat after the fires, but also with helping to compile information on portable manufacturer inventory that was already DSA cleared and certified for construction. So really sort of just in a, in a way wanting to reference the coordination.

Well, let me just say I truly appreciate that and we Never have to ask you to ask us for things. But if there is a time we need trailer Bill Language or something to expedite the coordination or the stacking or to do something, we're here because I think that's.

Unfortunately this is going to happen again at some point and, and we probably need to make sure that we're not doing a whole series of one offs. We start to learn in a way that, that, you know, we're ready. So just let us know if there's something and we will work with it.

Do any of you have any closing comments? Because this is just a great discussion.

Just to close on that point, Senator. Each of our agencies are prioritizing these projects and we are working closely. So you know when. So it's not like, you know, we're going through the normal course of business. You know, these are going to be prioritized. We're already working with them directly. We work together.

So they're not going to be delayed anyway. In fact, they're going to be priority prioritized and we're working together so they don't have to wait for certain reviews. We're going to do them together so that we can get them approved and get out of our agencies as soon as possible and they will be prioritized.

Great.

I would also just like to add, I don't think it's just the state that has gotten better at this and faster. Our entire school system has been learning. For example, we spoke with the folks at Palisades Charter High School and the discussion was about distance learning, about virtual learning.

And we have a vocabulary now that we didn't have pre Covid. The question was, you know, what kinds of requirements are we going to be subject to in order to be able to earn funding for our virtual learning? And we talked about, you know, distance learning under Covid and the requirements there.

And you know, they were able to pull out their old plan and put that right into effect. And we talked about, you know, engagement and synchronous instruction. And you know, this, this all happened very quickly. LAUSD was providing meals to families on the days that they were closed.

That's something that they started doing during COVID So there are ways in which, you know, the last several years it's not been for naught. There's definitely been learning and a change in culture in our system that makes folks for better or worse, better able to respond to these emergencies.

Thank you, that's really helpful. And it, you know, when we go back to the opening thing we were talking about housing and food and family resource centers and all the things that, that make it happen. Well. Well, thank you. And I appreciate it. And it's one of those things that it just drops out of the sky.

Just there's high winds and you're in this for months. And so just. I know that it's required a lot of extra effort, and I'm sure if Senator Perez were here, she would really express that. So thank you. Any last comment before we move on? Thank you. Appreciate it very much.

Then we were going to have the opportunity to take public comment. And sometimes there's people in the hallway that want to do public comment and I try to take a, a poll of who wants to Talk and then 20 people run in from the hallway and I'm not successful.

So is there anybody that is in the room that would like to speak at public comment? Could you show your hand? 1234. And one person in the hallway at the door. Then I'm gonna. We'll do up to one minute for a public comment each. And please come to the microphone and identify yourself.

Good afternoon. I think it's afternoon. Mr. Chair and staff and Members of the public paying attention on video, Pamela Gibbs representing the Los Angeles Office of Education. I'll bring up two items. One on item three in the agenda related to County Office of Education.

Request for funding for universal preschool for the technical support we provide to local education agencies in support of the mixed delivery system that was implemented in 2021. The funding is about to expire in June 26th, so we'd like to see the $35 million continue as it goes to item number five related to the wildfires.

Everything has been said again as the County Office of Education appreciate the last panel for constant engagement with our Superintendent and districts. Our Superintendent has met on a regular basis with all of the impacted districts so that we could convey to you in a large fashion the impacts that have been visited upon the districts.

So we did provide a letter requesting flexibilities. Most of those have been addressed, some in trailer Bill Language, some in bills that have been introduced. But we're still seeking immediate action to support employees. So I'll leave it at that. Thank you for your support, Senator and staff.

Thank you very much. Welcome.

Good afternoon, Sara Bachez with Children Now on item 1 and 2, just very appreciative of the conversation, discussion, commitment to fully implementing and funding transitional kindergarten so that we are generally age appropriate with smaller class sizes and investing in early literacy and math.

We also recognize and would like to recommend that the discretionary funds be distributed in an equity driven formula so similar to the Local Control Funding Formula that's tied to the unduplicated student count. And then we just believe that any new teacher recruitment and retention programs are tied to the supports that schools need with the greatest. With the greatest need based on their student demographics. So thank you so much.

Thank you.

Mr. Chair. Members, John Wenger here on behalf of the California Charter School Association, appreciate all the discussion around the wildfires and recognizing the unique challenges that we're having down there for our schools. Certainly appreciate the governor's action and his Executive orders to address the most urgent needs that our schools have down there.

Our understanding is that we have about 10 charter schools serving 5,600 students that have been forced to close or relocate and have been severely impacted by these fires. As it was mentioned, unlike regular schools, charter schools only receive funding on current Ada and we do not have the hold harmless protections.

And so we certainly appreciate the intent language on the governor's trailer Bill recognizing the hold harmless for our schools. And we'd like to continue discussions on that intent language and just ensure that all schools and students that are impacted by the wildfires are included in that final language.

It was mentioned about the Prop 2 potential solutions for some of the facilities challenges. We obviously love to be in that conversation and have charter schools included. And then finally on page 20, it was recognized some of the immigration challenges that we're facing in this state.

We've received a lot of calls from our schools concerned about attendance declines as it relates to immigration. We did a survey of about 100 different charter schools from October to February and found Ada declines that have about 25% for a Latino population, which is much more dramatic than the 5% decline we've seen in other populations.

And so again, with no hold harmless protections, those declines are pretty significant for our charter schools. And so we'd like to continue those conversations as well. Thank you very much.

Thank you. Mr. Chair Andrea Ball, on behalf of the California Association of Suburban School Districts, just want to comment, provide preliminary comments on a couple issues and thank you for the hearing. Appreciate the governor's proposals in the budget, Prop 98 for the discretionary block grant.

I did want to call out, we think, the LAO's suggestion on page 15 of the agenda to clarify the language that it is discretionary and also that it is available to meet fiscal liabilities. That language is important guidance to districts. We had similar language in a block grant several years ago and specifically called that out and that was helpful.

Also on the cost of living adjustment, that's very important on the lcff and we hope the formulaic cost of living adjustment does not go down and would suggest we consider funding above that formulaic proposal if it does go down. Finally, on the disaster recovery, I want to thank you for this panel.

I want to thank all the state agencies. Although our districts fortunately did not have schools destroyed, there was damage to schools in some of our districts like Glendale Unified.

So I also want to give a shout out to the LA County Office of Ed for the support they provided and the state agencies to get those to get things addressed swiftly. Thank you.

Thank you very much. Welcome.

Thank you. Mr. Chair. Michael Young, I'm head of the California Teachers Association, wanted to state that we're opposed to the proposal to underfund Prop 98 guarantee by $1.6 billion. We believe this proposal is unconstitutional and that. And we urge the Committee Fully Fund the Prop 98 guarantee without delay.

We also appreciate the proposed COLA for LCFF, but ask the Legislature to prioritize ongoing funding for the OCFF behind the COLA and to address in order to address the needs of schools and students. Lastly, we appreciate the governor's proposal, the proposed Ada hold harmless for LEAs impacted by the fires.

CTA will further urge the Legislature to also protect the schools and the teachers at these schools from layoffs during this difficult time. Thank you.

Xong Lor with the California School Employees Association. We also aligned our comments with CTA in that we have to ask the Legislature to reject the governor's proposal to Underfund and withhold 1.6 billion from Proposition 98 in 24-25.

We are also very concerned about the uncertainty of what's happening at the federal level and some similar to the comments that you made Senator Laird about the hole. We don't want a hole or a hole to be even bigger. I was also asked by SEIU California to align our comment their comments with rejecting the Governor's proposal to underfund Prop 98. Thank you.

Thank you very much.

Good morning, Mr. Chair. Dominique Donette on behalf of EdVoice.

And you can pull the mic up. Okay. There. So you're talking right in.

Okay, great. Dominique Donette, on behalf of EdVoice and our partners, families and schools in Decoding Dyslexia, we'd like to thank you for what you've already done for children and ask that you continue to protect educator investments around workforce and early literacy investments. We ask you to consider two revisions to the current proposals.

One, the current budget directs the state board to begin the instructional materials adoption process for ela. Eld. We recommend adding a requirement to this budget item that the updated instructional material list also aligns with the criteria outlined in ed code 44259. Also further targeting a portion of the $1.8 billion of the professional development discretionary block grant dollars.

We recommend setting aside a minimum of $200 million in block grant funds specifically to Fund training on effective means of teaching literacy and evidence based means of teaching Foundational reading skills aligned to the ELA ELD framework.

We understand the complexities of the political landscape and the budget, and we just ask that you continue to prioritize and strengthen academic policies that impact children from low income communities. They need you. Thank you.

Thank you very much.

All right, I'm going to do that, too. Thank you. Michelle Underwood. On behalf of the Association of Basic Aid School Districts, Schools for Sound Finance, I wanted to appreciate, Senator Laird, your question regarding issue five and community funded districts that are situated next to those two fires.

Beverly Hills Unified has taken in dozens of students displaced, and Santa Monica Malibu has received hundreds of enrollment applications, as you know, representing community funded districts. There are not Ada dollars that go with those students under the LCF formula for Basic eight districts.

So we appreciate the conversation of potentially additional revenues for any district that is taking in these displaced students. Thank you.

Thank you very much for your comments.

Good afternoon. Mr. Chair Dan Merwin. On behalf of the California School Boards Association, we are working on getting you our letter. But there is one concern in particular we would like to highlight today, and that is to echo the concerns of multiple organizations with the treatment of Prop 98. We would ask the Legislature to reject that proposal. Thank you.

Thank you. I appreciate your comments. That completes the public comment period of our Committee agenda, and that actually completes our business.

Let me just say, if anybody was listening or was here and didn't feel like they fully had a chance to express your opinion, you can go to the Committee's website or you can mail a letter to the address that is on that website and expand and revise your comments. We welcome them as. As we move through this.

Next week will be in the same time, in the same place, and we'll just be talking about higher education. So we will continue the march and with that, our agenda is complete. And Budget Subcommitee 1 on Education will stand adjourned.