Assembly Budget Subcommittee No. 3 on Education Finance

Good morning everybody. Welcome very too much - welcome to our Assembly Budget Subcommitee Number 3 on Education Finance. I am Chair Assemblymember David Alvarez and we are here to listen to the May revision proposal from the Governor's Budget.

We are, for this Subcommitee, obviously we have our K through 12 issues, community college issues and then our higher education UC, CSU issues. So just so everybody understands, we will be taking the Proposition 98 K-12, Pre-K through 12 proposals in the morning session.

We will break at noon and then we will return back at 1:30 to do the other higher education issues. And so if you are here for that second part, recommend that you return and share with us your thoughts and comments and questions for that segment.

We will be taking, during both morning and afternoon sessions, the public comment at the beginning. So this is a notice to anybody who wishes to speak on the May revise. All the public comments will be taken at the beginning of the meeting.

So we will do so now for K-12 Prop 98 and we'll do that same for the afternoon for higher education proposals. So again I want to thank all of you for being here.

I want to thank all of the Members of the Committee for their work, the Legislative Analyst Office, certainly our budget consultants for the work over the last several months. We are here to listen to some of the updates, the revisions that occurred from the January proposal.

We will also hear about some of the new proposals that are in this budget and we will discuss all of that and certainly any of the outstanding questions that were asked by Committee Members. We will be following up on those today.

So thank you to the staff from the Department of Finance and all the other departments that have come before us to help us better understand the proposals. And again today we hope to get even a clear understanding of what the budget is proposing. So again I want to say thank you for all of your patience.

There are a few things that we I think want to be looking at potentially. We need to look at the, I believe the $3 billion in flexible one-time funds that we have in the K12.

This is again for this section of the budget hearing on the, on the Prop 98 section. $3 billion in flexible one-time funds for public education and how we're going to be utilizing those and again some of the new proposals that were not in the original January budget.

So with that we will begin once again with public comment. Now. This is the section of the public comment for this hearing. We will not have public comment after this first panel. We will take public comment now. I invite you to come forward, opportunity for you to help us better prepare and frame our questions.

So this is why we're doing this in the beginning and we will do the same again for the higher education proposals at 1:30 o'clock. So with that, welcome, please state your name, affiliation and your comment.

Thank you. Good morning Chair Alvarez and Members, Lizzie Kutzona here on behalf of the Office of Kat Taylor and the Center for Eco Literacy here in support of the May revised budget proposal for School Meals for All which includes full funding for the program, including increases for increased participation and the proposed 150 million in one-time funding with the kitchen infrastructure and training program.

As the state continues to face cost of living concerns including rising food prices, School Meals for All is one of the simplest levers for the state to pull to address the cost of living crisis because it quickly puts money back in the families - in the pockets of families - when their children eat for free at school. Thank you so much. Appreciate it.

Thank you.

Good morning. Sandra Barrera on behalf of SEIU California, I'll align our comments with the office of Kat Taylor. As far as flexible and discretionary spending, there are two programs we think that need more support. That includes food service as the previous speaker noted, and custodial and maintenance funding for the community college side.

We understand that some of the funding is needed to support universal TK implementation. However, we'd like to fully understand the impacts of shifting those funds over to TK. Thank you.

Thank you.

Good morning. Kimberly Sanchez with NextGen California in support of the Universal School Meals Program under issue two and respectfully request that the Legislator retain the program as proposed in the Governor's May revise. This is an incredibly successful program in fighting food insecurity by meeting hungry kids where they're at at school.

Research shows that almost half of food insecure families in California do not qualify for federal school meal assistance, making this program truly essential in fighting childhood hunger.

A state funded evaluation by the Nutrition Policy Institute found that students, teachers and school nutrition directors all report that it is working and reduce stigma as well as embarrassment associated with eating school meals.

The researchers also found that kitchen infrastructure and trading funds have supported successful implementation of school meals for all, helping kitchens and staff to meet the high increase in demand for meals. Thank you.

Good morning. Thank you Chairman and Members for the opportunity to make this comment. My name is Kelly Wachowicz and I'm the Executive Director of CASC, a not-for-profit organization working for 80 years in the State of California to provide youth leadership development programs to students across the state.

I'm here to support a budget item providing a grant to the California Association of Student Councils and to make a clarification. The description provided in the issue three section of the agenda implies that a requested grant is intended to support a single youth conference when it is actually expected to support over 90 conferences and programs. 90 conferences and programs in every region of the state engaging approximately 5,000 students.

Our use of the grant proceeds will enable us to provide youth leadership training programs for underrepresented regions including the Central Valley and Inland Empire, to increase access for low income students, to support educational equity and to tailor leadership program to support students on career, technical and education pathways.

I want to read a quick statement by one of our students. This is Jaylen Hammond, a current graduating senior from Del Oro High school in Bakersfield, California and an expected graduate of Texas Southern University in 2021.

I'm sorry, but your time is up. Thank you.

Oh, I'm sorry. Thank you very much.

Hi. Good morning, Chair and Members. My name is Itzul Gutierrez with the California Association of Food Banks. We thank the Legislator for its leadership in establishing and upholding school meals for all and kitchen infrastructure grants which ensure students have the nutrition they need to learn and thrive.

We urge maintaining full funding for this program including kitchen and infrastructure grants which is essential to supporting California families and fighting childhood hunger.

The Legislator should continue to strengthen assistance for families and children by facing hunger by maximizing access to the federal drawdown of SUN Bucks program which is kicking off again this summer by creating an online statewide application and providing 6 million for summer caregiver meals pilot to ensure parents can sit down and have a meal with their children at summer meal sites located at public libraries. Thank you.

Good morning, Chairman Alvarez and Assemblymember Fong. I am Baltazar Cornejo at Brownstein. I'm here with our client Special Olympics of Northern California, also representing Special Olympics of Southern California.

We would like to first express our deep gratitude for our legislative champions and the Members who supported our budget request as well as to the Governor who has now included partial funding of our request in this may revise of $30 million to three years of fiscal years of funding.

We ask that the Committee not only support retaining the funding, but consider increasing the amount closer to the full amount that was requested by legislative champions, Assembly Members Stephanie Nguyen and Senator Angelique Ashby to a total of $40.8 million for three years.

This will allow us to expand our programming to more schools throughout the state and to increase our partnerships with regional centers and adult day programs to serve more students and individuals with IDD, thank you.

Good morning Chairperson Alvarez and Committee Members, Kevin Lee on behalf of Special Olympics Northern and Southern California, we are incredibly grateful to Governor Newsom for including us in the May revise at level funding and to Assemblymember Nguyen for her ongoing leadership in submitting our original budget request.

We also want to thank this Committee for your time and continued support. Our programs are free for all participants, which limits access to traditional funding, and yet we currently serve just 5.86% of DDS residents per DDS data.

That's why we're so thankful for the funding and we respectfully ask that it be increased to 40.8 million over the next three years to help us expand our reach and impact. And it's in line with the budget request from Assemblymember Nguyen and cosigned by many other Assemblymembers.

With your support we can bring more inclusive programs to underserved communities, strengthen partnerships with local organizations, and offer life changing opportunities to thousands more Californians. Thank you again for your consideration and for standing with us.

Chair and Members, Austin Webster with W Strategies. On behalf of Anaheim Union High School District and Scaling Student Success, we'd like to echo some support for the $15 million in school redesign that is contained in item number three.

On behalf of UnidosUS, we would like to offer support on behalf of the two funding items for English language learners throughout the K12 system.

On the community college side, on behalf of about six statewide organizations, we would like to express concern with the funding shift which ultimately results in about $233 million in ongoing loss to the community college system. So we ask that you all reject that proposal from the Administration. Thanks.

Good Morning Chair and Members, Sam Nash on behalf of the Los Angeles County Office of Education. I'm here to thank the Governor and Legislature for the continued commitment to California students in the 25 state budget.

We're grateful for the proposed $1.7 million discretionary blog grant funding, the $90.7 million for universal school meals, and the $15 million expand after school programs, all of which help schools meet urgent student needs and critical services.

We also respectfully request your support for a $35 million investment for Universal Pre K as TK expands to serve all 4-year-olds. County offices are leading the way and planning, training and implementation. With current funding set to expire in 2026.

This this request will create an ongoing LCFF add on to sustain and strengthen this vital work. Lastly, we urge your consideration of the full set of priorities outlined in our budget letter that we submitted earlier this week. Thank you.

Good morning Chair and Members, Heather Calomese with Edvoice. The overall investments of 545 million for early literacy and 264 million for educator workforce are important in order to uplift the academic outcomes for California students for early literacy.

It is imperative that California invest 200 million in professional development and evidence based reading instruction and align literacy instruction throughout the state with proven scientific methods to lift up reading outcomes for California's children.

Regarding educator workforce, we support full funding for the GSDG and NBCI programs and suggest for the student teacher stipend program that we urge you to prioritize the 100 million of the funds for student teachers serving in high need schools where the shortage of qualified educators is most severe. Thank you.

Good morning Chair Alvarez, Members of the Committee. My name is Mark Sanchez. I'm the Superintendent President of Southwestern College in Chula Vista, California. I want to thank the Committee for your, the Legislature for your support of access to California community colleges. I will say that access is in jeopardy right now.

The system is currently serving 20,000 students above what were funded by the state. And unless we're provided one-time funding for those unfunded FTEs, we are going to have to cut sections at the California Community College system. So I urge the Committee to please consider one time funds for continued access to California community colleges.

The demand is higher than ever. We have reverse transfers that are coming to California community colleges from the UC and CSU systems because they're not able to access their courses. We have students that are enrolling that have been laid off from the workforce. So the demand is there. These are real students.

And so I urge your consideration for one-time funds for unfunded fts for the California Community College system. Thank you.

Thank you Chair and Members. Mark MacDonald, on behalf of the Los Angeles, Los Rios, San Diego Community College Districts as well as the Los Angeles College Faculty Guild, I would say we're appreciative of the Governor protecting core funding for community colleges. Generally speaking, however, we have concerns with the proposal to shift funding away from community colleges.

We think this will just exacerbate the inequities and funding under Proposition 98. Thank you.

Good morning with the California Teachers Association. We recognize that this is a difficult budget and we want to acknowledge the Governor for protecting education funding. We appreciate the 2.3% COLA.

As we look to the out years and possibly more budget challenges, we urge the Legislature and the Governor to include to adopt a budget that includes finding additional revenues. We know that we should not be allowing billionaires and corporations to continue profiting and getting wealthier when on the backs of our students and teachers. Thank you.

Thank you, Mr. Chair. Jeff Baca representing the Riverside County Superintendent of Schools. We certainly understand the concerns being expressed by our community college colleagues regarding the Prop 98 shift, but we are supportive of that. To recognize the full implementation of transitional kindergarten, we're examining the impacts of the proposed suspension of the statutory COLA for state preschool programs.

We do have some initial concerns about that, but we'll follow up with that.

And then lastly, recognizing that you're facing quite a few challenges this year, we've received respectfully request that included in your deliberations be discussion about providing funding for some of the recommendations that were included in FCMAT's report on childhood sexual assault claims and the impact of those on local educational agencies. Thank you.

Good morning Mr. Chair. Dan Merwin. On behalf of the California School Boards Association, to reiterate our concerns from earlier this year, we remain concerned with the proposed maneuver to withhold $1.3 billion from Prop 98 with the intent that it settled up later. We believe that violates the spirit of Prop 98.

In addition, we are supportive of the COLA as well as the discretionary block grant, though ask that that does is expanded to include operational cost as well as rising costs on utk. I really want to thank the Committee for their work and the split issue.

I'm very supportive of seeing TKADA and the funding that generates fully allocated to the K12 side of the budget. But on the TK issue, we would also still raise concerns around the proposed teacher ratio penalties. Those are actually more punitive than they were under the 12 to 1 ratio. Thank you.

Good morning Chair. Sasha Horwitz on behalf of the Los Angeles Unified School District, we greatly appreciate Governor Newsom's budget proposals that maintain commitments to support the successful implementation of universal school meals, transitional kindergarten, expanded learning opportunities and other strategic initiatives. Specifically, we support the inclusion of the following funding for LCFF and COLA.

$1.7 billion for the discretionary block grant. 2.1 billion for UTK to lower the student to adult ratio. 500 million for literacy and math coaches, 200 million for evidence based literacy supports.

We share concerns that the proposal not to appropriate the estimated 1.3 billion in one time 2425 Prop 98 funding in the Budget act and not providing a COLA to the California State Preschool Program. We follow up with a letter outlining our priorities and other recommendations for the final state budget. Thank you.

Hello, my name is Stephanie Simpson and I am a parent of two daughters. I'm actually here in a fourth grade field trip and they're around the building somewhere. But I wanted to pop in and just urge your support for the $200 million investment in Teacher training and evidence based literary instruction. Thank you.

Thank you. Anyone else on Proposition 98 or Pre K through 12 proposals? Seeing none. Appreciate the public comment and the questions and we will obviously take those into consideration as we listen to our panels this morning. So with that we will begin with our first panel which is the Proposition 98 May revision proposal.

We will hear the proposal and the assumptions that are impacting the Proposition 98 guarantee. We will hear from the Department of Finance and then the Legislative Analyst Office. So welcome to Department of Finance. Please begin.

Thank you. Mr. Chair, Members. Alex Shope with the Department of Finance. So the May revision forecast that the Proposition 98 guarantee amount for 25-26 will be $114.6 billion which is 4.3 billion less than what was forecast at the Governor's Budget. So the operative tests, those remain unchanged from the Governor's Budget.

2324 remains in test 22425 and 25-26, those are both in test one. In the three year budget window, the May revision shows a decrease of about 4.6 billion overall compared to the Governor's Budget. Of course 2324, that still remains at that statutorily suspended level of about 98.5 billion.

So the projected maintenance factor obligation at the Governor's Budget, remember created due to the suspension in 2324, that was about 7.9 billion. At Governor's Budget that is revised up just slightly to around 8 billion. Then the projected maintenance factor payment in 2425 decreased to about 4.9 billion down from around 5.6 billion at the Governor's Budget.

And that was due to a decrease in per capita General Fund. So the $1.6 billion settle up obligation that was included in the Governor's Budget that is reduced to around 1.3 billion at the May revision. So the total current year Prop 98 funding level or the appropriation level, I guess that still remains at about 117.6 billion.

So this proposal, it continues to reflect the uncertainty in revenue estimates and provide budget flexibility, you know, within Proposition 98 and on the non 98 side of the budget. While of course also accounting for updated revenues at the May revision. So the May revision also includes two RE benches.

First, the guarantee was re benched to reflect the continued implementation of Universal transitional kindergarten. The Mary vision also removes TK funding from the K12 community college split calculation. I think similar to something like Proposition 28, you know, because this re bench is due solely to expansion on the K12 side.

I think the Administration views this proposal as, you know, aligning program funding with where those costs are being realized. Additionally, the guarantee is re benched on a one time basis in 2425 and 25-26 to increase the guarantee by the amount of projected property tax losses resulting from the LA fires.

So the MIR revised also provides 9.71,000,001 time Prop 98 to provide property tax backfills to basic aid school districts impacted by the Los Angeles County fires. And that amount covers estimated losses in both 2425 and 25-26. And just, just one note on that.

The May revision RE bench amount for the LA fires that includes the non Basic Aid Districts only. Our intention was also to include the 9.7 million in those property tax re benches. I think it just got, you know, kind of separated out unintentionally in the process.

But that's the administration's intent kind of going forward for Ada, the percentage change in average daily attendance from 2425 to 25-26, that is expected to be about 0.47%. So indicating just a slight increase year on year. We are however projecting decreases in Ada in both 2425 and 25-26 relative to the Governor's Budget levels.

Moving on to the public school system stabilization account, the Mayor revised also includes changes to the projected current year and budget year deposits when compared to the Governor's Budget. So this includes a deposit of 540 million in 2425, which is a decrease of about 617 million from the Governor's Budget.

And then there is a mandatory withdrawal of the same amount around 540 million in 25-26, which will be used to Fund LCFF and SCFF costs on a one time basis in 25-26 and which would completely deplete the account. So with those amounts updated, the School District Reserve caps are still not triggered anywhere in the three year window.

So the May revision also proposes several budgetary actions. You know, I'll provide a high level overview of a few of these investments. You know, inclusive of Governor's Budget adjustments to Governor's Budget investments and new May revision proposals. And I think you know these will be covered in more detail in the following panels too.

On the K12 side, that includes an ongoing increase of 2.1 billion for the LCFF to reflect growth adjustments and the 2.3% cost of living adjustment 1.71,000,000,001 time for the student support and professional development discretionary block grants, an ongoing increase of 1.2 billion to support further lowering average student to adult ratio from 12 to 1 to 10 to 1 in every transitional kindergarten classroom and an ongoing increase of 525 million to fully implement know, universal, before, after and summer school.

Then an ongoing increase of 174 million to Fund a 2.3% cost of living adjustment for specified categorical programs and community colleges.

There's an ongoing increase about 217 million to Fund a 2.3% cost of living adjustment for the SCFF, a one time increase of 100 million to Fund SAFF apportionments in the current year and an ongoing increase of 15 million to Fund a 2.3% cost of living adjustment for specified categorical programs.

Finally, the May revision continues to pay off all of the deferrals created at the 2024 Budget Act. So for 2425 deferral payments so so 2425 deferrals being paid in 25-2619.5 million in reversion funding and 131.9 million in reappropriation funding is used to cover parts of these on the K12 side.

Then there is 126.1 million used to cover part of the community college deferral repayments. There are also new 25-26 deferrals, about 1.8 billion in the Local Control Funding Formula and then 520 million for the student center funding formula. And that concludes my remarks and happy to take questions at the appropriate time.

Thank you. Legislative Analyst Office, please thank you Chair and Members. Ken Kapphahn with the Analyst's Office. I'll focus on the architecture of the Governor's plan for the Proposition 98 budget as well as our recommended alternative. And in doing that I'll cover most of our comments for this issue and the next few issues as well.

We have two handouts going around and I'll start my comments focusing on the larger one first. So starting on page one of that handout, the most important number Here is the 4.6 billion reduction in the Proposition 98 guarantee across 2425 and 25-26. That's mainly a story about lower General Fund revenue estimates in the budget year.

A smaller portion of that drop reflects lower estimates of attendance from transitional kindergarten. And another portion reflects lower property tax estimates. Although, as you heard, the Administration has a proposal to offset the portion of the drop that's due to the 20. The January 2025 fires in Los Angeles.

Turning to page two, we think the General Fund revenue estimates here are reasonable. They're close to our estimates, and they're consistent with recent trends in tax collection data and some of the key economic indicators that we watch.

But there is still significant uncertainty, and the Proposition 98 guarantee is sensitive to further changes in revenue and particularly changes in 2425 on the property tax estimates. Our estimates are much closer to the Department of Finance than they have been in some previous May revisions.

Looking at the data, we still think property tax revenue is likely to come in around $400 million higher per year in both 2425 and 25-26. And that would increase the Proposition 98 guarantee. But on the whole, we think these estimates are a reasonable place to start building your final budget.

Turning to page three on the spending architecture here, the mayor vision brings down spending to reflect that 4.6 billion reduction in the guarantee. And it does that through five major adjustments. The biggest one, more than half of that is addressed through the payment deferrals.

So that's reducing spending by 2.4 billion by deferring a payment to schools from June of 2026 to July of 2026. And then for the community colleges, there would be two months affected, the May. And portions of the May and June payment would be shifted to July. The other significant piece is the reduction in Proposition 98 Reserve deposits.

That frees up 1.5 billion. The January budget had both mandatory and discretionary deposits. Mandatory deposits are reversed by lower revenues. And the Governor withdraws his proposal to make a discretionary deposit.

There's almost 400 million in savings in this budget from reductions to community college proposals to those are mainly focusing on a couple of information technology projects, although there are a few other items in there. And you'll hear more about some of those in detail this afternoon.

Fourth, you probably remember from January the Governor had this proposal to delay a 1.6 billion payment related to meeting the Proposition 98 guarantee. In 2425, that proposal remains, but that delay is reduced to 1.3 billion. So that gives you another 250 million to put towards covering program costs in this year.

And then finally, we have final federal data showing that the statutory cost of living adjustment is Revised down from 2.43% to 2.3%. And along with a few other adjustments in there, that lower rate reduces state spending from almost 150 million.

And then separate from all of those actions, the Governor has a proposal that would shift 492 million from community colleges to schools. And we'll get back to that at the end of this presentation. So turning to page five, the May revision makes a few adjustments to the January proposals.

I won't go through all of these, but we'll highlight just ones that we think are the most important. In terms of the dollar amount, there's an additional 91 million to cover higher cost estimates for the governor's expansion of the expanded learning opportunities program.

The other important piece here is there is a 229 million reduction in the funding to pay for lower staffing ratios in transitional kindergarten classrooms. That reflects a combination of simply lower attendance estimates for those students and a lower per student funding rate.

The one notable new proposal here, 200 million for literacy training for elementary school teachers that really covers the school side of the budget. For the community colleges, the budget provides additional funding for higher enrollment as well as covering higher cost estimates for the student centered funding formula.

So turning to page six in our assessment, we have three critiques of this plan, and they're all somewhat related. First, despite the drop in the guarantee, the mayor vision is maintaining or even expanding upon most of the school spending proposals from January.

Many of those proposals would have districts expand local programs or hire staff based on funding that the state might not be well positioned to maintain. Typically, in a down year like this one that we're facing, the state takes a more cautious approach and focuses more on preserving existing programs rather than expanding or creating new ones.

We're also concerned that the mayor vision sets up a structural shortfall in the education budget by using $1.6 billion in one time funds to pay for ongoing programs. That leaves a hole in next year's budget when those one time funds expire, but the ongoing cost of those programs continue.

And given some of the projections for slower growth in Proposition 98 and 26-27, that hole could be challenging to fill. And then finally, we're concerned about the use of deferrals. Deferrals effectively are debts that reduce the funding available in the future and weaken district cash flow.

They've become a prominent tool for addressing previous recessions, but given their Downsides. The state has tended to think about deferrals as being one of those tools that's kept in the locker marked for emergency use only. In this budget, they're freeing up funding to help pay for spending increases rather than sustaining programs at their existing levels.

I think all of these elements are understandable in the sense that they feel easier than reversing a lot of the January proposals or trimming programs. But they put the state, and really districts too, in a bad position if revenues continue to decline.

And that's because we would be using in this budget, we'd be using up most of the easy options for addressing downturns and not really leaving any good options to address a sharper downturn that could be around the corner. So turning to page seven, we have an alternative package we'd like to put on the table.

This alternative would cover schools and community colleges, and it would represent a different way of thinking about and building the budget that you'll pass in June.

And it might be one that is more responsive to some of your comments earlier in this year about thinking beyond just the year ahead and trying to be proactive about addressing the volatility that the state faces. So under this approach, the state would not have a structural deficit.

It would align ongoing spending with the estimate of the guarantee. It would not use deferrals. It would continue to fully Fund the cost of living adjustment and enrollment related changes for schools and community colleges. And it would even allow you to provide a bit more discretionary funding for schools to pay for that.

The state would delay or reject 1.6 billion in ongoing spending, a mix of rejecting new proposals and making some targeted reductions to existing proposals. And it would reject 1.2 billion in one time spending proposals from the May revision.

So turning to page eight and getting a little bit more specific, we'd Recommend Rejecting the 526 million increase for the expanded Learning Opportunities program. That means the state wouldn't lower the eligibility threshold for the program next year, but it could still increase the minimum grant amount through the allocation of the existing 4 billion.

We'd recommend delaying the requirement for districts to have lower staffing ratios in their TK classrooms. The state would continue under the alternative to Fund districts for the 12 to 1 ratio. That would save 517 million. We recommend reducing funding for state preschool.

The ongoing funding for that program is 336 million higher than the cost of existing rates and slots. So we think you could make a reduction there without affecting local programs. We'd also recommend delaying the start of The Attendance Recovery Program.

This was a June 2024 budget action set to start next year that would allow districts to claim additional funding for attendance students in attendance recovery programs. Delaying the program would reduce state ongoing state costs, but it would still leave districts with a strong fiscal incentive to focus on attendance improvement activities.

Turning to page nine, just very briefly on the community colleges, we'd recommend reducing one categorical program, the Part Time Faculty Health Insurance Program, by 150 million. That program has been under subscribed for several years.

We'd also recommend, on the other hand, providing a 143 million increase for apportionments to cover our higher cost estimates and reduce the likelihood of a shortfall. Turning to page 10, we recommend rejecting most of the proposals that are in the Mayor vision, the one time proposals.

You've heard many of these recommendations from us in previous hearings, so I won't go through all of these in detail, but there are two new items to the list. We'd recommend rejecting the governor's May revision proposal to provide 200 million for literacy training.

This proposal would depend on guidance issued by the State Board of Education by September of 2026. And so without prejudice to the merits of the benefits of literacy training, we don't think you need to set aside funding now in order to cover those costs that might be incurred in 26-27.

We'd also recommend rejecting the January proposal for literacy and math coaches. I think the underlying idea here has some merit, but in a weak fiscal environment, this doesn't seem like the right time to launch a program that would require districts to hire additional staff.

We also think some of the Mayor vision changes make this a less compelling proposal than it was in January. Now, you could imagine some pushback from districts on some of those actions. Some of these proposals might be funding activities that are priorities for districts. In other cases, they might already be planning to implement some of these programs.

And so to help address that concern, the alternative package would allow you to provide an additional 410 million for the discretionary block grant. That works out to about an additional $75 per student.

And that's something districts could use to implement any of their local priorities, including activities that might otherwise have been funded by the proposals in the Mayor vision. And then turning to page 11, the alternative would have you reject all of the remaining funds for the governor's career education and technology projects at the community colleges.

We didn't find a compelling rationale for those proposals in their earlier and larger forums, and we still don't see very much justification for the skilled down version, so we'd recommend rejecting those completely.

Now, stepping back for a moment, this alternative package would obviously involve some tough decisions, but we think you might still consider it because it is more proactive about managing revenue uncertainty and economic volatility.

It would preserve core programs, allow you to cover COLA and enrollment growth, and it would set up much better choices for you entering next year and building next year's budget by approving a more affordable spending level this year.

Page 12 and 13 of this handout have an appendix that goes through a line by line program by program comparison of the Governor's January budget, the Mayor Vision and what this Alternative Would mean Before I wrap up, I wanted to turn to one other topic for this item that was mentioned in your agenda as well as by the Department of Finance, and that's about the distribution of Proposition 98 funding.

And our comments here are covered in a separate handout, the much Shorter one, so I'll go through that very quickly. Turning to page one of that handout.

The state constitution Proposition 98 is silent on how the state is to divide funding among schools and community colleges, but historically the state's allocated 89% to schools and 11% to the colleges. Those percentages are known colloquially as the split, and that comes from the actual distribution of funding in 1989-90.

Over the past decade, this calculation has come to encompass a growing list of exceptions. Essentially, the state will deem some program to be outside of that split as an indirect way of increasing funding for schools or community colleges.

The Mayor of Vision has this new exclusion related to the expansion of transitional kindergarten and distributing funding with that new method shifts 492 million from the colleges to schools over 23242425 and 2526233 of that amount million of that amount is ongoing.

Now, there isn't a proposal here for this because this entire split calculation has never been codified. It's simply a matter of historical practice. So turning to page two in our assessment, we think this whole issue really is a case study and budget formulas run amok.

We can't really think of a compelling reason to allocate funding based on spending decisions in 198990 that really disregards all of the enrollment changes and trends that have happened in schools and community colleges, the way their responsibilities have changed over time, the different cost pressures they face. It's also complicating the state budget.

And maybe most importantly of all, focusing on these very specific percentages and formulas makes it harder for you to Fund the priorities that you have each year moving forward. And all of those problems and downsides are going to exist regardless of whether this calculation is administered with transitional kindergarten as an exclusion or not.

So our recommendation here is to simply forget the split entirely. Don't build a budget that targets historical spending percentage. Instead, build a budget that provides funding that allows you to cover the COLA, to cover enrollment changes, to cover your most important priorities in schools and community colleges, the things that you think are most compelling.

The LAO alternative that I just talked about is an example of a budget that does that, and there are many variations on that approach that are possible as well. So with that, appreciate happy to take any comments.

Thank you very much to both of you. And just for the Members of the Committee, we've attempted to put together this agenda in a way that we would discuss Proposition 98 itself in this panel. So I'd ask that we stick to those questions.

And then in issue number two, it's and three are both on the actual proposals themselves and the programs. I know that both finance and the LAO spoke about the proposals. There's obviously impacts of those proposals to Prop 98, but. So let's try to keep these questions on this panel.

We have plenty of time to talk about proposals in the following two panels. So let's talk about 98 and sort of where we're at for the for both Members of the panel from LAO and from Finance.

The rebenching of TK and the reduction in community colleges I think leads to a total of about 250 million roughly for the previous years on a going forward basis. At least we know what it is.

But I'm just curious, how do we expect community colleges to respond to this reduction in funding for program expenditures that may have happened two years ago.

So I can maybe speak a little and I would defer, you know, any additional details to my colleagues. I think that within this budget package in the past year and the current year, any of the kind of impacts associated with that shift are being covered by reappropriation funding.

And then in the budget year that amount, that impact is included in the overall deferral total for the community colleges.

Okay. Can you. Sure. I'll let the LAO and they may have quite further questions. Thank you for walking up.

I mean, I think so. Our assessment is that I think you can see the effects of this in the fact that you're almost seeing A tale of two different Proposition 98 budgets here on the community college side, the Governor is withdrawing almost 400 million in spending proposals that's really a big piece of how this is being addressed.

The deferral for the community colleges is also larger as a percentage of the total funding the colleges receive than the school deferral is as a percentage of school funding. And the Governor is maintaining or even expanding upon most of the K12 proposals. So this isn't the only moving factor.

But that is one reason why you're seeing similar proposals to January or even increases on schools and proposals being withdrawn and larger deferrals on the community college side.

Sure. And for finance, can I ask why we're doing this going back two years and not on a perspective going forward basis?

I think so. Just simply we're trying to align the funding with where the costs are, I think. Right.

Because TK rebench has kind of been a sort of like a progressive re bench kind of expanding every year and the amount gets larger and associated with that is obviously the amount that is going to community colleges that I think is not going to TK subsequently.

So I think that this is, you know, something that we wanted to address understanding. Right. That it's sort of been. Because it's been about a four year rebench. Looking back, we understand that some of those costs in the past year, in the current year also may not.

...have been covered on the TK side.

So I think what you're saying is that we're utilizing funds from the previous two years that were allocated to community colleges to pay for TK on a going forward basis.

Yeah, I mean, you know, I think we're, you know, as with anything with Prop 98, right. It's, you know, things kind of move change within the three year budget window. So, right, we're going back and making adjustments to, to those amounts. Right. On the community college side, on the K12 side. Right. In the past year and the current year.

To the Legislative Analyst Office. On the percentage, you mentioned that the deferral amount is disproportionate. What is the percentage?

Yeah. So for community colleges, that deferral affects two months of payments and it is the equivalent of 5.3% of the total funding the colleges receive through the Student-Centered Funding Formula. For schools, their deferral is one month and it is 2.2% of the funding they receive through the Local Control Funding Formula.

But in terms of the split from the total, what is the percentage? Are we sticking to the 11%? And I want to ask you about that because...

You know, the percentage is as a share of the total. So there's almost 2.4 billion in deferrals. The community college share is just over 500 million and the schools are receiving the rest of that around 1.8 billion. So the school share is obviously larger, but as a percentage of the budget, they're much larger for the colleges.

The numbers you just gave roughly sounded like 20% for community colleges.

Yeah, that's right.

And since we are talking about the structure of 98, you raised a couple of interesting points.

Do we know, going back to 1989 and 1990 when this sort of split began of roughly 11% for community colleges and 89% to schools, at that point, do we know how much of the student population, either on FTE or other basis is it today compared to that day? Do we have a, do you have an estimate on that?

We don't. And part of the problem is we don't even count students the same way that we did back in 1980, 90. I mean, it's part of the challenge with this formula is that a lot of the concepts that even existed aren't defined the same way.

We removed excused absences from the school of calculation. We removed concurrently funded adults from the community college allocation. So even trying to do an apples to apples comparison would be pretty challenging.

You also mentioned that some programs receive the split and others don't. Do you have a...paint a better picture of...are most of those programs K-12 type of programs that usually get removed from the calculation, or is it sometimes K-12, sometimes community college? It just depends on the year?

Yeah, it's varied and it's grown over time. There are several community college programs on the list. The big one is the Adult Education Program and the High School Strong Workforce program. Those are both budgeted through the community colleges, but not part of the distribution of funding under this calculation. There are also more than half a dozen programs on the K12 side.

Okay, appreciate that. I'm moving on to what is concerning to me, which is the Public School Stabilization, a rainy day fund, which is zeroed out as a result of the budget that's being proposed.

And I'm, I'm wondering going forward whether the unallocated funds, which are 1.3 billion in this May revision, could be utilized potentially to go and refill that fund in some way in the next year. Once, once that number is known and we could trigger that kind of decision. That's something that's been contemplated by Department of Finance.

I don't think. I don't know if we've gotten that far yet. You know, I think sort of the broader context for that proposal is just the uncertainty that we're facing, you know, with revenue estimates, you know, some of the limitations on Proposition 98 once a year becomes the past year.

You know, So I don't, I don't know that we're looking forward that far to, you know, to expect some amount, you know, to be available kind of when we get around to this point next year or not. You know, if funding is available. You know, obviously there's, you know, it could be used for whatever purposes. But.

Let me ask Analyst Office, is that something that we could do in this budget?

Yes, that idea suggestion actually would align very closely with our recommendation from earlier this year. We think it's a way you could still fully fund the Proposition 98 requirement this year while also having a little bit of a hedge or buffer against the possibility that it's lower than anticipated.

The rub here is that under this mayor vision, that 1.3 billion is being spent on the non Proposition 98 side of the budget. So you would need to make some adjustments there in order to implement that idea.

But it would give you this buffer, it would address volatility and it would leave you again better positioned in 26-27 because you wouldn't have this debt hanging over that the state would need to pay that year.

So it's that debt, that deferral, and also COLAs, obviously that would be required in 26-27. Does Department of Finance and its projection over the three year budget identify that we have enough available in 26-27 to cover both the deferral and the statutory COLAs for that time?

That's something I would have to defer to our Revenue Department. You know, again, I think a lot of the uncertainty that we've been messaging obviously extends kind of in, into the out years. You know, a lot of, a lot of the projections. So I don't, I don't think I can get ahead of myself kind of. Yeah.

Okay. We'll turn to our colleagues on Proposition 98. Mr. Muratsuchi.

Thank you very much, Mr. Chair. So, following on the Chair's questions about the...the TK versus community college split, rebound split, I want to make sure that I understand. I mean, the basic idea is that our K-12 schools are incurring the TK costs and community colleges are not incurring any TK costs. Is that correct?

Yeah, I think that's, that's fair, right. The costs are for TK and the, right, so the K12 schools.

Okay. So given that community college is not incurring TK costs, I think it would make sense that the K-12 schools receive that funding. That's the basic idea behind the Department of Finance proposal.

Yeah, I think that's accurate.

Okay. Now the Chair is asking, can we just do this going forward rather than going backwards to try to mitigate the impacts on community colleges. I'm not sure I understood your position on that.

I think it's the administration's position that we look back, right. Because, you know, we're still able, at least within the three year budget window, to adjust those costs. Those are, you know, still real costs that, you know, as it's grown, have kind of grown larger, I guess you could say, on the TK school side.

So I think we're, we're kind of looking to suppose, remedy that for all years in the budget window.

And if I may jump in, Justin Hurst with the Department of Finance. From the perspective of the community colleges, and I'll get into this on a later panel, but we're also proposing every appropriation to cover some of those costs. That would have been incurred otherwise in the prior year and the current year.

So from the perspective of the community college system, they won't be feeling any sort of pullback of funds as relating to this proposal.

Okay. So there's additional proposals to try to hold community Colleges harmless for this TK reband split.

In effect, yes.

Okay. Does the LAO have any opinion on, you know, retroactively? Well, first of all, I mean, does it make sense that K-12 should receive the funding since they're the segment that's incurring the cost?

That's a tricky question to answer because it would make sense if there was some underlying rationality to these percentages in the first place. But if we look back at the history, the state has adjusted or rebenched Proposition 98 numerous times.

Some of those have sort of had collateral benefits to the community colleges because they've gotten previous increases that were based on K12 programs. They've also taken these sort of collateral reductions because we've reduced Proposition 98 based on K-12 programs. Would assign some of the reduction to the community colleges.

I think trying to find some rationality to this particular shift. I mean, I think I understand the argument for that TK is a program and that the state wants to allocate funding there. But all of these percentages from the beginning don't make a lot of sense to us.

And so that's why we think that making this shift now, you're still ending up with a very complicated formula that doesn't really align with your priorities. We'd suggest not using this as a budgeting approach.

I mean, I get that the split. You're saying that split percentages should be perhaps revisited. But I mean, if the basic idea is that as we continue to roll out universal TK, those costs are going to be incurred by our K12 schools and not by our community colleges.

And we would recommend that one of your priorities be in building your budget that you fund the attendance-based cost of transitional kindergarten.

So in building the budget, we would say let's make sure that you can Fund the Local Control Funding Formula, Student Centered Funding Formula, attendance cost, COLA, adjust your budget to make sure that you can cover the growing enrollment costs in both systems.

But what about, I mean, we know that the expansion of TK is not just the enrollment costs, the staffing costs, but it's also like the school facility costs. You know, shouldn't K-12 be getting more money to, you know, address those additional costs?

Yeah, there's no additional proposal for that in the May revision, but if that were a priority, that could be something where you could think about maybe adjusting or rejecting some of the other Governor's other proposals in order to provide some funding for that. You are correct.

I think, and this has been in, in previous hearings too, that the money that's set aside for TK expansion is focused on the programmatic aspect. It's not really designed with the facilities in mind.

And, and so, I mean, the conceptually more dollars for K-12 that would come from the TK community college split could be spent on addressing the adaptation of the school facilities.

That's right. So that's an example of how we would think about building the budget. If we're going to spend more on schools, let's do it because it's addressing a priority that you have, like improving or building more facilities for TK, not just because we're trying to hit a target or a historical percentage.

Okay. And then also following on the sheriff's questions about the, the rainy day savings is that the LAO is a position that basically rather than having $1.3 billion in unallocated Prop 98 funds, that we should earmark those funds to afford the rainy day fund the account.

We thought that was the most compelling approach for addressing volatility. I think our view on that is similar to what you heard us say earlier this year. 24-25 is very volatile. There's a lot of risk. And so we would credit the Administration for thinking about that and trying to have some mechanism for addressing that.

The, the settle up proposal does, does work mechanically in that regard. But as you said, I think our, we think the most compelling approach would be this discretionary deposit into the Proposition 98 reserve.

And again, your overall point is that, you know, I mean, I, I'm not too fond of your alternate plan and some of the specifics in there, but the basic idea is save today to try to avoid the cuts tomorrow.

Yes, that's one of the core principles in that plan.

All right, thank you.

Thank you, Mr. Fong.

Thank you so much, Mr. Chair. And thank you to all the panelists. My questions will deal with the rebenching as well. And to uplift the Chair's comments on that. They're concerned about the Prop 98 shift from community colleges to TK-12, to TK, and especially the retrospective part of it.

I know there's discussions about prospective going forward and the potential impact of $233 million ongoing Prop 98 funds. My question is really for Department of Finance. Why was this not raised earlier and addressed earlier?

So I think maybe stepping back a little, I think, you know, I think this was something that was included. Right.

Or it was an agreement as part of the 21-22 Budget Act. You know, and part of that agreement, I think was contingent upon there being a rebench of Proposition 98 for those funds, you know, to ensure that other programs aren't being crowded out by TK expansion.

I think, you know, I think this has, you know, it's been a conversation, I think since TK expansion has happened, Right. Whether whether it should be subject to the split, whether or not.

I don't know if I can speak that well to some of, some of the past conversations, you know, kind of dating years back as to whether, you know, it should be included, it should not be included. I think the administration's position, right, obviously this is the last year of the rebench. So I think that we see this as an appropriate time.

And regardless, I think of whether, you know, it is something that could have been done earlier or not, you know, I think that understanding that these costs we're seeing on the TK side, you know, we, we want to, you know, while these years are still able to be adjusted in the budget window, I think be able to address the years that we can.

Okay, thank you for that context. And, and we just heard from concerns about facilities costs and other things about the establishment of the TK enrollment in prior years. So with this shift, was the TK funding sufficient or?

I don't, I don't know that I can speak specifically to all aspects of TK funding. Right. Obviously, I think we always update our projections. So like the rebench costs, I think, you know, are driven by ADA.

So, you know, that's, those are things that we continue to adjust in the three year budget window when we can as we get, you know, kind of updated data periodically.

Okay, thank you so much. And as we heard from some of the public comments earlier as well, concerns about growth and community colleges and appreciate the 2.3% growth here as well. But the work and efforts going forward to continue to amplify and support our community colleges.

But also looking at TK, I think is a conversation and robust conversation we're having here. So I appreciate the comments. Thank you, Mr. Chair.

Thank you. Mr. Fong. Dr. Patel.

Thank you for the testimony today. Apologize for being late. I do have a few questions. One triggered by questions raised by colleagues here in looking at the re benching for Prop 98. Where will the funds come from to keep community colleges whole, if that's the proposal?

Justin Hurst, Department of Finance. So there is a somewhat significant amount of reappropriation funding available with the part of the May revise. That number is 311 million. So the portion that will be used to cover the TK rebench affiliated backfill in the prior year and the current year accounts for about 260 million of that 311.

Okay. And that was unanticipated originally, but now with the restructuring of the budget, that May revise, that money has come forward. Is that why that's on the table now? Was it previously?

There was a reappropriation item that was put forward as a part of the Governor's Budget.

Can I ask you to get that microphone closer to me, please?

Thank you. There was a reappropriation item that was put forward as part of the Governor's Budget. That being said, it was a lesser amount. And we received updated data from the Chancellor's office on what anticipated funds may be. So from that perspective, yes, the. That was updated to reflect this changing proposal.

Yeah. Michelle Nguyen, Department of Finance. Just to, just to clarify, those are savings that. Were identified in the community college system by the Chancellor's office, and those savings are being used to help backfill the past year and the current year reductions related to the TK rebench.

So the community college's own savings is going to be used to then backfill their own. Their. Their delta. Okay. Thank you for that. And I agree with my colleagues and some of the sentiments shared today that TK12 should receive the funding for TK12 enrollment. That seems pretty logical.

But I'm hearing about collateral benefits and collateral reductions from past years. So. So it seems like we do. I agree with our LAOs analysis. It seems like we do need a clean budgeting process for Prop 98 funds that aren't anchored to something that happened years ago that just doesn't hold up true today.

What would it take to develop that new method for budgeting? Is that just a decision from the Administration, from Department of Finance? How does that get triggered? What's the process for that? It interests me. So I'm curious to know how soon we could do that.

Sure. Ken Kapphahn with the Analyst Office. So at a basic level, it would be just adopting different distribution decisions in your final package. There's no statute or budget bill language or any other sort of formal mechanism to change here.

It's just making a different decision about how to allocate funding when you put together your final package, the two House agreement, and then we're negotiating with the Governor over that. So there's no, there's no language to change. It's just adopting different decisions.

Okay. And would that come with an analysis of perhaps looking at different dollar amounts for the different grade levels? Is that something that would be taken into consideration when we look at the new formula or the new strategy?

Our recommendation would be to not focus on a specific formula so much, but to focus on what do you want to accomplish in each year. For example, you heard Assemblymember Muratsuchi talk about let's find some funding for TK facilities. Okay, let's, let's pencil that in for a budget.

We've talked about making sure we have funding to cover TK enrollment. Okay, let's pencil that in. I've heard a lot of Members talk about funding the COLA. Okay, let's find funding for that.

Let's build a budget that way by putting in the pieces that are most important and not worrying so much about what the exact percentage is from year to year and letting that vary a little bit over time.

Okay, thank you. I appreciate that perspective. Getting to the rainy day funds and deferrals. Former school board trustee, deferrals are very painful and complicated for us at the school board level. My understanding is these are, especially draining the rainy day fund, that's a one-time fix. Deferrals, hopefully would be a one-time solution.

We're looking at a budget, our budget projections that really predict that we're going to have trouble in out years as well. So what is the plan for the out years if we drain all of this now? And can we, I think we had that question earlier too, sorry if it's redundant. What is the plan then for? How do we pay back those deferrals?

That is the, that's really the question of the hour, we think. And it gets to the heart of the concern about the May revision, which is that you don't have a lot. You wouldn't have a lot of good options in 2016. You wouldn't have reserves. You would have already used 2.4 billion in deferrals.

There's not as many proposals you could pull back. So the states had to. When the state's found itself in that position in previous recessions, it's had to start making some tough decisions.

Much larger deferrals, year over year reductions in programs, not providing to COLA, kinds of decisions that are much tougher than the ones that are on the table right now.

Thank you for setting expectations.

Okay with that. Appreciate all the panelists on this issue. We will now get into the specifics of the expenditures in Proposition 98. The first panel will be issue two, which is the changes in the May revision to the Governor's Budget in TK throught 12 in the funding and trader bill proposals.

These are proposals from the January budget that remain unchanged and for that we have the Department of Finance and we have the Legislative Analysts. We will kick this off with the Department of Finance first and then we'll hear from the LAO. So welcome to all of you.

We did receive a little bit of a preview, but this is where we're going to get into the specifics of what we're funding and not funding. All right, Finance, please begin.

Thank you. Good morning Chair, Members of the Committee. Patrick Rochelle with the Department of Finance. I'll be giving a brief overview of the proposals included in the May revision letter, starting with the resources provided for the Department of Education, and then we'll move on to highlighting some of the proposal trailer Bill included in the May revision.

The May revision provides a reduction of 42 positions and a decrease of 4.8 million in state operations for the Department of Education. This is in addition to 17 positions and $7.4 million in state operations for the department in Governor's Budget for a total decrease of 25 positions and an increase of $2.7 million for 25-26.

With the addition of these positions and funding, a total of 2,630 positions and 508.4 million dollars is proposed for the Department of Education in 2025-26. Of this amount, 377.1 million and 1,662 positions are for CDE headquarters and 131.3 million 968 positions are to support the three state special schools and three diagnostic centers.

To highlight a few of the state operations proposals, there are approximately $7.3 million in 14 positions provided to support various Governor's Budget proposals including resources to support form J90 data collection, principal apportionment replacement system project, IT services support and proposals for sustaining cybersecurity investments and enhancing cybersecurity resilience.

Another 9.1 million dollars and 3 positions are related to federal funding at May revision for various programs including one-time funding for Special Education Office of Administrative Hearing Contracts, the Stronger Connections Technical Assistance Grant Program Federal Funds, State Operations Spending Authority and one-time Federal Individuals with Disabilities Education Act Fund for Individualized Education Program Template Translations.

Finally, 15.6 million dollars in 45 positions and savings related to the Control Section 4.05 reductions to state operations and 4.12 vacant positions funding reduction, government efficiencies, and vacancy savings drills, which control Section 4.05 identified 9.739 million General Fund in 24-25 and ongoing reduction to state operations of 7.95%.

Control Section 4.12 identified savings of 5.849 million General Fund in 24-25 and ongoing for savings associated with vacant positions and the elimination of approximately 45 positions beginning in 25-26 and ongoing.

Briefly, the May revision also includes various technical changes to proposals included in the Governor's Budget Trailer Bill, specifically amendments to implementing language for various programs, including failure to adopt an LCAP Education Protection Account, transitional kindergarten add-on, teacher vacancy definition,...

...Student Teacher Stipend Program, Expanded Learning Opportunities program, Inclusive College Technical Assistance Center cleanup, curriculum frameworks, standards and instructional materials, process educator training for screenings of pupils for risk of reading difficulties,...

...English Language Arts, English Language Development, instructional material supplemental guidance, Individualized Education Program template translations, Literacy and mathematics coaching, Literacy Mathematics networks and the Student Support and Professional Development Discretionary Block Grants.

Details on all these proposals are reflected in the May revision letter included with the agenda as well as the May revision Trailer Bill that has been posted on the Department of Finance's website.

I'm happy to answer any questions at the appropriate time and also have my finance colleagues in the wings in their room to answer any questions on specific proposals included in the May revision letter. I'll now turn it over to my colleague Jodi Lieberman.

Good morning, Chair and Members. Jodi Lieberman with the Department of Finance for the Commission on Teacher Credentialing. There are no changes from the Governor's Budget, but there are some new proposals that I'll go over in the next panel.

My colleague just touched on the Department of Education's budget, so I'll just go over a couple of specific educator items and then also the California School Finance Authority. So first we have the Student Teacher Stipend program.

The May revision includes trailer Bill Language to amend the Loan Repayment for Teachers and Priority Schools program to instead provide stipends for student teachers.

The proposal provides 100,000,000 one-time Proposition 98 General Fund to be allocated to Kern County Superintendent of Schools to serve as the administrative entity for the program and to provide $10,000 stipends to California prepared preliminary credential candidates for 500 hours of student teaching.

Stipends will be paid during the school year that the teacher, the student-teacher, is teaching. Those eligible include candidates enrolled in a program of professional preparation for a preliminary multiple or single subject education specialist or PK through 3 early childhood education specialist credential.

2% of the total appropriation may be reserved for Administration outreach and Kern county will be responsible for collecting relevant information from student-teachers.

Submitting a report to the Legislature and Department of Finance by January 1st of each year and conducting outreach for the program in collaboration with the Commission on Teacher Credentialing and other interest holders to LEAs, institutions of higher education and educator pipeline organizations, including classified employees, Expanded Learning Employees, CTE programs and labor organizations.

Next, the Mayor revision includes technical changes to the reading difficulties screener, professional development language that clarifies the allowable use of funds, and for the California School Finance Authority, the Charter School Facility Grant Program, also known as SB 740.

The Mayor vision proposes a decrease of 1.7 million ongoing Proposition 98 General Fund to reflect a decrease of 133,000 related to a 2.3% cost of living adjustment and a decrease of 1.6 million ongoing Proposition 98 General Fund to reflect upgrade updated projections for program participations. That's all and I'm happy to take questions at the appropriate time.

Thank you. Legislative Office, please.

Good morning Mr. Chair and Members. Edgar Cabral with the Legislative Analyst Office. You heard from my colleague Ken Kapphahn walk through our overall comments on the property needs, structure and alternative and some of that covered some of our specific concerns of proposals. So I won't rehash all that.

I did just want to touch on three proposals and talk a little bit more detail about our recommendations associated with those on the Expanded Learning Opportunities program. We did recommend rejecting the proposed increase given the budget outlook. We do still do recommend adopting the May revision proposal to increase the minimum grant size to 100,000 per participating LEA.

This is something that I know the Subcommitee heard about in the in the specific conversations around expanded learning. We think that's reasonable and it aligns with other concerns we've heard from districts who are operating these programs.

We do think you can do that can be done within existing resources and have limited effect on the rates for other participating school districts. In terms of the coaches proposals we recommend rejecting, we had initially recommended adopting we recommend rejecting the proposal at this time in part.

Again, the value of these programs that we see is that it helps to start up and build capacity within the school district. But the really the long term benefits of coaches is that the school district were to sustain those kinds of activities over the long run.

Given the school funding outlook, we think it's less likely that if we provided this grant program that that would be able to be sustained in the long run. In addition, the proposed changes to the Math Coaches program from our perspective doesn't target the program as much as before.

The previous proposal was targeted to the highest, the districts that had the highest UPP. So 90% or above UPP would receive funds under the current proposal now that it's anybody who's 55% or above.

So it's really spreading the dollars much thinner and we think is not targeting as effectively the students and schools that might have the greatest need for the funds. And then finally when it comes to the which was initially a student loan repayment proposal that now is a proposal for student-teacher stipends.

We had recommended rejecting the loan repayment proposal in the past for two reasons. One is that we didn't see significant evidence that that was an effective way to increase teacher recruitment across the state.

And then second, because those funds were not targeted to the subject areas and the schools that had the greatest shortages with this proposal the same issues remain. This would be something that's not targeted in a way that is helping benefit specifically the shortage areas or schools that have the greatest shortages. And. And we don't.

We're not aware of evidence that this would be an effective way to increase teacher recruitment. We have not had a chance to review the state operations proposals in the May revision that were discussed. If we have any specific concerns that we will inform you at the appropriate time. I'll stop there and I'm happy to answer any questions.

Thank you. So let me start and certainly hopeful and believe colleagues will jump in as well here. I want to start by the focus on the teacher recruitment programs which as was stated by the LAO on on the coaching program.

One of the things that concerns me about is is that this is utilizing one time funds for a program that people who may be interested in the profession or entering the profession or want to continue in the profession may.

It may not be very clear that this is a commitment that's a new commitment from the state since it's one time in nature. Do you given Golden State Teachers program now it's in its multiple years going forward.

Is it the intent for this to be going to be ongoing programs or is the intent for this to be a one time program both for Golden State Teachers and for the stipend program?

I can't comment on the Golden State Teacher program. I'm not sure if we have another colleague who is here to speak on that. But for, for the stipend program.

While the funding is one-time at this point in time we're certainly open to it being ongoing in the future if there are sufficient resources to do it in future budget years.

Does anybody in the audience have anything to add on the Golden State teachers program? If not. We'll have some time come at some point before the noon hour. Would appreciate that. Oh, the question on Golden State Teachers is it's one time funded, but is this intended to be an ongoing program? If you can answer that. One second. Sorry. We have the ball.

Hello, I'm Aman Singh, Department of Finance. Is there a question if the Golden State Teacher Grant Program is intended to be funded continuously or just one time? Correct. At this time, it's a one time funded program. There was an initial allocation of $500 million that was meant to be spent across five years.

However, the Governor's Budget proposal introduced a $501,000,001 time augmentation and the May revision maintains that augmentation. There is also roughly $14 million of carryover from prior years. So as of the May revision, there will be $64 million added to the Golden State Teacher Grant program, which is 14 million more than Governor's Budget.

But to answer your original question, it is a one time program. We just have added more one time funds to the one time program.

So from a program implementation standpoint, and those who will be interested in this program, what would this allocation actually Fund? Is it for new and how many new potential teachers?

So this will Fund the 50 million was intended to to Fund about 5,000 students. A little bit less than that because there's a carve out for Administration costs with the 14 million more. I can't do the math in my head, but it's about 5,000, $10,000 each.

Yeah. Is the 14 million from the original 500 million or. That's correct, yeah.

And that's just a true up from prior years. Sometimes there's money left over. Students don't finish a program or they may underestimate or overestimate the number of students that participate in a given year.

Okay. And then the stipends would. I guess this is more of the stipend question, not Golden State teachers. But would those be. How would that program be administered in the proposal?

So currently the proposal would be that Kern county would be the administering entity. They would have an online platform where teachers would apply through. Through the platform they would give details on the LEA that they're doing, their student teaching, the educator program that they're part of, and then other sort of like demographic info.

And that's how the program would be administered.

Is that simpler than giving the funds to the LEAs for them to run their own programs? So if I'm in Chula Vista Elementary School District, I go to my school district.

If we did it that way, each LEA would incur an administrative cost. So. So by centralizing it with Accounting Office of Education, we avoid more spread out administrative costs across the whole system.

What's the calculated difference in that?

We don't have a calculated difference at this time for that.

I mean intuitively, yes, it sounds like you have it in one place. It's less Administration, so I understand that. But I'm just curious what that cost is and whether folks in different part of the state will know and be able to access the program. That's my concern.

Part of the Administration that Kern county will be doing is outreach in collaboration with the Commission on Teacher Credentialing, outreach to institutions of higher education and other sorts of programs to get the word out that this exists.

Is this a model currently used for other programs?

There's. It's certainly a model that county offices of education are used to administer programs. I don't think, I don't know that we've done something where they're administering stipends per se.

Okay. Let'S talk a little bit about the expanded learning opportunities program with the new tier one, Tier two. I think they're continues to be a, I think a now a more significant difference between Tier one and Tier two. Can we talk about that please? And, and whether at what level we're trying to stabilize tier two rates, please?

Hi, good morning. George Harris, the Department of Finance. So I didn't hear the whole of the question. So you just wanted to understand more about the proposal for expanded learning specifically for tier 2? Yes. So the May revise utilizes the most up to date information from the California Department of Education collected earlier this year.

That information led us to have more Rate 1 Local education agencies that are now in that 55% from the Governor's Budget. That led to an increase of funding to amount for the transition of the additional rate one local education agencies. Similar to the proposal we had at the Governor's Budget where we rate 2 was sustained.

We had no changes in funding proposed for Rate 2. That's consistent at the May revise. We don't have any additional funds proposed for rate 2.

So the augmentation, if you will, for rate 1 does not create a reduction in rate 2. It just stays at the same level of what was in the January proposal.

Which is what amount? Well, the January proposal had 434 million and then this may revise added an additional 80 million to accommodate those new rate 1 LEAs. We wanted to make sure that we weren't taking any money.

If we didn't add this new $80 million, we would have had to take money from rate two to support these new rate one LEAs.

And what is it per student on the rate two and the new per student on the rate one. Tier one. Sorry.

Yeah. So the rate one is at the 2750, the statutory amount. The rate two is we use the information that the California Department of Education had based on their first principal apportionment period. I don't have that specific number at the top of my head. Let me see if I can find it.

While you're looking for that question or that response question was brought up. If the LEA offset of ELOP for one year is, are they able to rejoin in a subsequent year? If there's like a gap between years?

Yeah. So part of the principal apportionment data that the California Department of Education collects, they ask the local educations as a part of the ELLP section to whether they want to opt in or opt out. So that would, at that point in time each year, they have the ability to do so. Okay. And the rate to amount.

The data set that we got from the Department of Education, it had rate two being at the think it was $1,580.

Okay, thank you. Appreciate that. I'm gonna pause. I have some more, but I'll move over to my colleagues. Mr. Muratsuchi.

Thank you very much.

First of all, I want to thank the Governor for recognizing, number one, that we have, we continue to have a tremendous teacher shortage throughout the state and that in order to get more young people to want to become teachers, we need to reduce the financial obstacles to becoming teachers and we need to pay teachers more.

So to that extent, I know I've been working on this issue for a couple of years, but one of the, the greatest needs that we have is to pay student teachers during their period of while they're putting in their 600 hours of instructional time in order to get their credential.

And so I want to thank the Governor for recognizing the importance. You know, I hear the LAO doing their job saying that we need to be fiscally conservative and you know, re examining, questioning whether we should be initiating this new program.

But I think it's clear that we continue to have an ongoing teacher shortage, you know, especially in many of our rural districts as well as, you know, in subject areas like special education, math, STEM and so forth. And so I wanted to ask finance, the chair is raising the questions about creating a one time Proposition 98.

And it sounds like what I'm hearing you saying is that depending on availability of funding, we would like to continue this on an ongoing basis. Okay.

And so similar to an idea that we're exploring for the sustainability of career technical education to not just have like a one time grant, but to have, I mean it sounds like, you know, with the teacher, the Golden State Teacher Grant program, it was a block amount of money, but for five years.

And so I was wondering if finance had considered, you know, the $100 million as a multi year allocation.

You mean, you mean like where we split it up into like 25 million over five years? So I think that based off of the numbers that we had at the time, our goal was to be able to Fund all student teachers in a given year, sort of. We know at this time that.

That the 100 million is not going to Fund all student teachers. And we would like to enter into conversations with the Legislature on how we can, you know, sort of stretch that funding. But I think that, you know, splitting it up even further probably wouldn't achieve the goals of reaching as many student teachers as we want to.

I mean, I can understand wanting to reach as many student teachers as possible, but on the other hand, you know, if. Well, I guess we would have to discuss the, you know, does it make sense to offer it one year and then with the risk of pulling it back the following year?

I think that's the concern that we're raising in terms of the sustainability of the funding. Is the idea being proposed by. By finance that, that Kern county would allocate funds to school districts to know. To. To our teacher preparatory programs at our universities?

The idea is that they would allocate those funds to the students. Okay. Directly.

Okay. Yeah. I would like to continue to build on this proposal and while at the same time. Yeah. Recognizing that, you know, paying for the educational costs of teacher preparation through the Golden State teacher grant program, as well as the incentivizing our teachers to seek the national board certification to teach in our neediest communities.

I also applaud the Governor for continuing to highlight those programs. Going back to the student teacher grant program, was there any consideration in terms of, like tying that kind of similar to some of our loan forgiveness programs where we provided on the condition that they commit to serving in, know, low income communities or in our neediest communities.

We're certainly open to as discussions continue having conversations regarding prioritization.

Okay. All right, thank you very much. I thank you. Miss. I want to get clarity on the payment. I heard in the response to his question that current county would be providing the stipends directly to the students.

Yeah, that's correct.

Okay, so this would not be funding to the LEAs. The student would have to go on the Kern county website to do all their.

Yeah.

And so would they be employed by Kern county then?

No, they wouldn't be employed by Kern. County. They would be a student teacher in their preparation program, working at an lea, but not an employee of Kern. County. Kern county would just be administering the stipend program.

Okay, I. I think I have more questions about that, but Ms. Bonta is going to go next.

Thank you, Chair. And thank you for. To the speaker and you, Chair, for opening up this Committee to all legislators on the Assembly side. Appreciate that.

I just wanted to build on the kind of line of inquiry around the teacher training and look at it more from the perspective of the community college proposals and the cuts that are made there.

So if I'm understanding this correctly, there's a proposal to reduce both the Career Passport proposal program, the credit for prior learning proposal, by 30 million, and the Rising Scholars Network by 20 million. Is that correct?

I think we should go.

Ooh, I made a whole change happen with one question I could have.

Yeah, it's definitely 98 funding. We have a whole segment of community college in the afternoon, but this is appropriate.

But it's 98 funding, right?

Yeah, I just didn't see it. Justin Hurst with the Department of Finance. Apologies, I didn't catch all those numbers.

As we were walking, I was making a query about the commitments to support teacher training and development and career pathways, including our teacher supports. But from the lens of what the proposed cuts are being made to community college programs, specifically the Career Passport proposal, the credit for prior learning, and the Rising Scholars Network.

So, yes, those numbers that we're providing. Now for those specific programs, Rising Scholars. Network is being augmented at a level of 10 million instead of 30 as proposed at the Governor's Budget. Career Passport is being proposed for a one time investment of 25 million instead. Of 50 as a part of Governor's Budget.

And then the last one, credit for prior learning. There's two components to this. There's a one time and an ongoing. The proposal with the may revise is 151,000,001 time, down from 43 million at the Governor's Budget. And then that ongoing component is being shifted in this proposal from 7 million to 5 million.

Okay, so it's just merely a reduction, but not an elimination?

Correct. Those are all still part of the main revise.

Okay. Because those are pretty critical if we actually want to focus on particularly the one around credit for prior learning, given the fact that so many of our paraprofessionals are going back to school to be able to make sure that they can level up. My next question has to do with TK and elop.

I should have asked that question. Sorry, I don't know the faces enough to know sorry to cause havoc. So I think this is for both the Department of Finance as well as the LAO because you have a counter proposal as it relates to ELOP funding.

The first is do you have any visibility into the ELOG funding so the federal expanded Loan opportunity grants and whether or not they are going to be sustained at all?

Edgar Cabral with the LAO. I believe what you're referring to were was funding that was provided using the ESSER funds. So these were one time funds from the Federal Government we provided. I think the appropriation was made maybe in 2223. I don't think there's any has never been a proposal to extend those funds moving forward.

Those funds were, even though the names are almost exactly the same, they were different uses. So for example, those funds could be used for things like tutoring during the school day. They weren't explicitly only for before and after school programs. So the uses are a little bit different.

But I believe all those funds have been exhausted or they've gone back to the Federal Government and there's no specific proposal to extend.

And do you have any sense of to what extent the, the utilization levels for LEAs are right now around the current ELOP funding?

George Harris with the Department of Finance, when you, when you're referring to utilization, does that mean, are you saying like are LEAs able to expend all of.

The LEAs asking for the funding, using the funding, fully expending the funding?

Okay, yeah. So we don't have too much information on 23242425 in terms of how much funding they are fully expending. We only have information at this point in time from the 2122 and 2223 fiscal years. The California Department of Education released their unspent funds report on the ELLP program.

And from those two years I don't have the exact percentage of what that number is. But the first year there was $1.0 billion appropriation. In the second year there was a $4 billion appropriation. And of that roughly 470 million was unspent.

So the majority of the funding for the program is at least in those first two years has been being spent.

And that data that you're reporting on basically overlaps with the, with the federal funding with a similar name used for the kind of ancillary services and programs. The 21222223 timeframe.

Because what I'm trying to get at is many school districts because of the declining enrollment that they are experiencing Right now are making very hard budget cuts and budget and are experiencing deficits as well. I haven't heard of a school district that isn't experiencing some kind of deficit.

And I know that they are going to be incredibly reliant on ELOP funding in order to be able to provide full services specifically as it relates to tk, which can be still half day programs. Right. School districts are specifically relying on the ability to supplement that extended learning for the full school day with ELOP funding.

Have you done any kind of calculations around what it would mean to not have that ELOP funding? And I guess I would direct that question to the LAO because the LAO is the one that is proposing that that funding gets cut.

Kimberly Rosenberger with the CDE. We have pending updated numbers on ELOP. 1661 LEAs are intending have certified for take up leaving a remaining 13.4 million in savings. But one of the things noted by our programs has been tier 2 is very difficult to operate at.

So the proposal for Tier 1 allows many of the programs to actually take it up, whereas they haven't in the past. As well as the small districts needing that increase from 50 to 100. So the barriers that have program prevented districts in the past from taking it up are proposed to be addressed in the May revision.

So your sense is that because we're removing the barriers, there's going to be a higher uptake essentially in the ability to utilize the ELAP funding.

Correct. We do expect to see a higher take up both at the smaller rural districts and those that were at tier 2 previously because of the 75% unduplicated threshold.

And just to my specific question around the practical matter of needing to have ELOP funding paired with tk, do you all have any visibility into that specific grade level? I know that ELOP is for all of the grade levels, but around what the impacts would be if we decided to not to reduce or to not find elop.

I guess this is a question for Elio because it is your proposal.

With the ll. Yeah, we did. We don't have. We don't have major concerns that school districts wouldn't would be. I think your question is if we don't do the governor's proposal and we stick with the 4 billion that we've currently provided moving forward as we're implementing TK, is that going to create challenges?

We don't have major concerns in part because we know when we've talked to school districts we don't have actual data yet or by next year the Department will start Collecting information on ELLP participation. But at this point, we know that when we talk to school districts, the participation rates are. Not everybody's participating in the program.

And so we think there's funding with those. There's sufficient funding with the rates that we're providing to cover increases in the number of transitional kindergarten students. It does mean that there's funding that they have available. They might have to shift some activities to Fund some specific staff for tk, but we don't have major concerns there.

Also, I would note that over time, the ELP formula does go up. It's based on TK through 6 attendance. So as TK through 6 attendance grows, the amount that the school district receives will increase as well.

Okay. I think we have a little bit of a chicken egg scenario there where we're basing our assumptions on the lack of use when we already know that it's been somewhat problematic to be able to use it.

I will just say that my school district, Oakland Unified School District, has just put forward a proposal, a budget proposal to eliminate all prior to school, after school and summer programming. And so our very reliant on these ELOP dollars. I wanted to just. My last question is going to be around the TK classroom staffing ratio.

There's obviously been a lot of conversation about this over the years. So can you clarify, I guess, either CDE or DOF, the governor's proposal, the May revise proposes maintaining staffing at 10. A 10 to 1 ratio.

Yes, that's correct. We provided funding for that.

But then there's this component on reduces associated funding to 517 million, down from 2. Down 229 million from the Governor's Budget. Can you explain that, please?

Yes, that's correct. So the figure was adjusted for COLA, which decreased slightly. And it's also adjusted based on what our demographics people have projected the attendance would be. And so with fewer classrooms, we assume. That there will be fewer teachers needed and that is why the decrease. That's the decrease.

Okay. So basically, across both the assumptions around the staffing ratio and the prior line of questioning that I had around elop, the basic theme is that there's been a lower attendance than had been estimated for tk. That's correct. Okay.

And at the same time, just to relate it to our earlier conversation about how we should be apportioning funds between TK and community colleges, there is a desire to basically take money away from community colleges in order to be able to Fund TKs that have lower enrollment rates.

I suppose that's correct.

Okay. Just trying to make sense of that. I think the idea that the LAO has proposed to really look more robustly at our funding allocations across Prop 98, given, given that seems to make a lot of sense. I obviously wholly believe in tk.

I just am particularly concerned that we keep on recycling calculations based on projections that we don't seem to be able to get there. And it has impacts on other parts of our system, including other parts of our early childhood learning system. I will stop my questions for now.

Thank you, Ms. Monta. Appreciate your perspective. One thing I just noted that we didn't get a chance to talk about was with ELLP, you're presenting something very real. We had a TK presentation a few weeks ago in this Committee. About 80% of the TK programs are full day programs, 20% are not.

And we certainly identify, I think, should be thinking about how do we ensure that those non full day programs take advantage of opportunities like expanded learning in order to provide people with a full day of learning opportunities. And I think it'd be important that we figure out how to capture that data.

As a result of the funds that go out on elop, we're going to be capturing calpad's account of how many students are participating by grade level, which is good, but it doesn't get to the granular detail of providing a full day experience for folks.

So you raise a really important question and then your other important point that probably requires a fall oversight hearing for this Committee. And welcome all of you is on the 98 Conversation. I think it's an important one. Thank you for raising that as well. So with that you any other questions on this?

Otherwise, we'll go to the new proposals from the next panel. All right, thank you very much. I know I forgot to say a few things, but I'll bring it up in this next next panel. But this one is on the new May revision, Pre K through 12 funding and trailer Bill proposals.

We'll hear from the proposals in the revision and anything that was not previously occurred. The list is relatively short, but there are a few items. And again, I will probably make comments on some other questions on the previous item as well as they are interrelated. So with that we'll start with the Department of Finance. Thank you.

Patrick Groeschel, Department of Finance. We provided the state operations overview when we discussed issue number two previously. But in addition to that update, I'll. Be highlighting the proposals that are new for May revision. The May revision includes implementing language for. New proposals for the California State Preschool Program Amendments Literacy Instruction Professional Development Scale.

Up Multi Tiered systems of Support for. Fire Impacted Local Educational Agencies Universal Benefit. Application Reading Instruction Competence Assessment Extension and Adoption Allowance Reading Instruction Competence Assessment Passing standard Local Control Funding Formula Hold Harmless for Fire Impacted Charter Schools Transitional Kindergarten Amendments sunbox Program Eligibility and Verification Requirement the Differentiated Assistance Regional English Learner Lead.

Agencies Changes to California Ed Code in support of A through G credit for dual enrollment coursework COVID 19 era waiver. Requirements deadline Extension Extension of expiring Principal. Apportionment Categorical program authority for 25-26 extend. Encumbrance state and specified circumstances for Proposition. 39 clean energy jobs act the one time reading difficulty Screener Support Secondary School.

Redesigned Pilot Program Special Olympics and the Transitional Kindergarten Multilingual Learner Supplemental funding Details on all these proposals are reflected in. The May revision letter included with the. Agenda as well as the May revision. Trailer Bill that's been posted on Department of Finance's website.

Happy to answer any questions at the appropriate time and also have my Finance colleagues available in the room to answer. Any questions as well. Thank you.

Good morning, Chair and Members Jodi Lieberman with the Department of Finance. I will be providing an overview of new proposals included in the May revision for Educator Issues, the Commission on Teacher Credentialing and the California School Finance Authority and the Office of Public School Construction. First, we have Literacy Instruction Professional Development investment.

The May revision includes 2001,000,001 time Proposition 98 General Fund for the Superintendent of Public Instruction to support evidence based professional learning for elementary school teachers aligned with the English Language Arts English Language Development or ELD framework. The trailer Bill Language is modeled after the professional development included in AB 1454.

The administration's proposal includes language that requires the State Board of Education to approve criteria and guidance for selecting or developing the in service professional development programs, which the CDE will then post on its website.

Additionally, the Administration's language exempts teachers who teach Tk5 who have taken the new Literacy Performance Assessment or the LPA or created an OR completed an updated Educator Prep program.

Next, the May revision includes a number of statutory amendments that address the winding down of the Reading Instruction Competency Assessment or the RICA and waivers that some preliminary credential holders receiving during the pandemic. Finally, I will cover the BCP investments for the Commission on Teacher Credentialing.

The Mayor revision proposes an augmentation of 1.5 million teacher credentials Fund and seven positions to address the Commission's increased workload related to updating the Administrative Services credentials and the Commission's IT operations.

Additionally, the mayor revision includes an augmentation of 800,000 teacher credentials Fund to support increased contract fees with the OAG and OAH for legal costs due to increased caseload from litigation and educator misconduct and increased OAH fees. Next we have an adjustment for the California School Finance Authority for the Charter School Facilities Program.

The Mayor Vision proposes approximately 1,000,2006 State School Facilities Fund to reflect 611,000 in administrative funding and 410,000 for contracted external services for the California School Finance Authority to fulfill its charter School Facilities Program requirements under the School Facility Program for the Office of Public School Construction.

The School Facility Program administered by the Office of Public School Construction. The Mayor Vision proposes a General Fund solution to revert the unexpended balance of the one time statutory appropriation in the 2023 Budget act for TK through 12 school facilities and construction to be allocated through the School facility program totaling 177.5 million. One time General Fund.

Next, for the School Facility Program, the Mayor Vision proposes that statutory changes be added to give the State Allocation Board the authority to provide excessive cost hardships grants under the School Facility Program to school districts demonstrating unusual circumstances beyond their control. That's all and I'm happy to take questions at the appropriate time.

Thank you. The Legislative Analyst Office Comments please.

Yes. Edgar Cabral with the lao. I'll cover a little bit more in depth a couple of the recommendations we made earlier and then a few that we have not touched on yet.

First, in terms of the $200 million that's for literacy instruction professional development, we did recommend rejecting the proposed funding again but we want to highlight this is part of a timing issue as well.

So the proposed trainer Bill Language says that the training activities have to be spent in accordance with criteria and guidance that the State Board would not produce until September of 2026. So that being the case, there is no ability for districts to spend those funds in 25-26.

So we think that you could you don't need to have funding for that proposal in this budget and you could add funding for the budget for these activities in the budget next year. In terms of the state preschool suspension of the preschool COLA, we don't have concerns with that.

I would just note again we direct recommend making a larger ongoing reduction of 336 million which is aligned with the expected funding that would be going unused under the program. This is a program that's had long standing unspent funding.

Last year the state proactively reduced made a one time reduction to the program because there was an understanding that those funds would not go out to providers. And so we would just recommend making that ongoing. There's a new proposal here that's $21.9 million for the Administration of the Sun Bucks program.

This is funding that is provides students from low income families with $120 in food assistance during the summer. The state is in the process of ramping up implementation of the program. It is a federal program. There's matching funds as well.

We don't have concerns with doing the activity makes sense and it would help increase the amount of access to food assistance. We are still trying to get more information about the how the 21.9 million was arrived at. We're still trying to get a little bit more information on that.

And also we would note that the trailer Bill Language doesn't currently have an allocation formula for how those funds would go out to school districts. So that's something that we think the Legislature will want to make sure is done before the final budget is enacted.

There is a $15 million proposal related to a pilot program to redesign middle and high schools. We would recommend rejecting this proposal. Some of the specific goals and outcomes that would be measured are unclear.

And given the limited amount of time that the Legislature has to vet proposals new proposals at this time we would recommend rejecting this could be reconsidered next year with more time to vet. And then finally when it comes to there's a 77 and a half $1.0 million one time. That's for TK multilingual learners.

And this is the intent here is to mitigate reductions for some school districts to their supplemental and concentration grant funding. Given that the state is currently transitioning to a different assessment tool for determining whether TK students should be are considered proficient in English.

There is will be some effect on LCFF for some schools for school districts this year. So we think some amount of funding is reasonable. The administration's proposal would provide additional funding based on the attendance of a school district and then the proportion of their students that are English learners or low income.

We think you might want to consider a different approach that doesn't focus on both low income and EL but just on the proportion of students that are English learners in each district because we think that might be better targeted to the specific effect that districts might face. That concludes my comments. I'm happy to answer any questions.

Thank you very much. Let me start with I said earlier that I my brain was thinking about a new program but it was a change in the program. So I know this was the previous panel, which I think we have some panelists here and it has to do with the student teacher program. It's more common than anything.

But one of the things, maybe the question is why do we not model the program after. I know Mr.

Mucci mentioned this, but previous programs, like the loan programs that were in the past where we focused on ensuring that those who serve in high need schools were the ones who were had access to this, this program in particular, was there a reason why is there some deliberation over that?

So initially our hope was to allow all student teachers to apply for the stipend. But as I mentioned earlier, we are certainly open to having conversations regarding prioritization of the funds and that could certainly be one of them.

And the stipend amount per participant, would that be determined based on where in the state you may be doing your student teaching or.

As of now, we haven't considered regionalizing the stipend in any way.

What is the stipend amount?

$10,000.

10,000 after you serve one year. Is that what it would be after.

You serve your 500 hours of student teaching?

Okay, thank you. Yeah, I think appreciate your openness to figuring out what the program could look like.

I think certainly creating some stability and obviously some prioritization and assessments to stabilize that program on an ongoing basis and building it in a way that I think it's an investment that we may want to make that as we've heard as a priority to this Committee on a long term basis.

So building the program as a long term program as opposed to a one off may make sense if that's what we're going to be doing with this, with this program. So appreciate you allowing me to go back to that.

Now on the new proposals, I heard the lao, I believe mentioned that the statuary COLA for preschool there were unused funds in prior years. Can you say the analyst office talk more about that and what you're suggesting we do.

And then I'd like to hear from finance what exactly we are doing with previously unspent funds and how that is. Being. Programmed into the budget. Proposed budget. So first from the lao, please.

Sure. So first on the COLA issue, I guess I glossed over quickly, but I think we have. We in our analysis this year did raise a concern both on the child care and state preschool side. They have a similar rate structure.

The COLA goes to a small subset of providers, those who are funded on the standard reimbursement rate and then the providers who are funded based on the regional market rate do not receive that COLA because the state's typical approach is then to just update the regional market rate so it goes to a small subset of providers.

Those also providers are in regions where if you compare their rate versus the market rates are actually relatively higher funded. So we had recommended repealing the COLA completely, that statutory COLA completely.

And then as the state builds a new alternative methodology for funding checker and preschool providers that there would be a, you know, presumably a rational COLA that makes sense for everyone. So that's part of why we don't have concerns with suspending the COLA.

Specifically then separately is this broader issue of the amount of unspent funding within the state preschool program. So several years ago the state made various policy changes. It increased and it increased funding in the state preschool program for those purposes. There were increases in rates.

There were also increases associated with requiring higher percentages of students to be served that are children with disabilities to be served in state preschool. I think essentially the state over budgeted those costs. We provided more than was necessary to, to cover the cost of existing programs. And then the program has had unspent funds over several years.

So last year actually in the budget, the Administration had proposed a one time reduction that was aligned with estimates of program costs and that was adopted in that final budget. In this 2526 budget, that one time reduction is restored. And I think our main concern is we don't think that adjustment needs to be restored.

We think you could keep spending lower and still be serving. This has no effect on providers. State preschool providers, they continue to receive the funding. This is funding that's above the commitments that the Department has with contractors.

Okay, so finance, I think you heard the argument it's been restored. What's the rationale behind the restoration?

George Harris of the Department of Finance. It was the savings last year were a one time savings. So this year we made sure to pay that out in full for the current, for the budget year.

In terms of any, we haven't identified any savings during as we have continued our review of the state preschool program for the budget year. So we don't have any comments to provide on that.

But what was the amount of savings?

300 something million. Right. Our recommendation was yeah, 336 million. Yeah. This is based on estimates of the amount. Again the, if you take the amount that the, the Department is committing to contracts to state preschool providers and there are a few other things that are requirements within state preschool, we're still far below the amount that's budgeted for.

That's not an insignificant amount. So I'm just trying to understand why we would not be essentially facing a similar situation with these funds not going out.

Brittany Thompson, Department of Finance we just didn't identify any savings for budget year and I would note that when there. Are savings in preschool, they come back to the guarantee and we redirect them is reappropriation and reversion funding.

There's also savings to the General Fund though, right? That some of these funds are General.

Right. Some of them are none.

Yeah. So you just don't believe that these savings that occurred in 2324 or 2425?

Well, the one time reduction that the state that we made was in this last budget 2425. But the state there has been unspent funding in previous years as well.

So you don't believe your projections aren't aligned with the projections from the Legislative Analyst Office on this program expenditure?

I would say yes. And we would also note that the alternative methodology is still being worked out and we don't know what those costs would be. So we don't want to sweep funds too early if those costs go up.

Okay. So this is really thinking about the alternative methodology in mind is really the reasoning behind this, right?

Yeah, we had a hearing with sub 2. I was just conferring to make sure it's not. That proposal was not in the January budget anyway. I don't know if it's. Is it alternative methodology in the May revision?

No, it's not. It's not included.

Okay. Okay, let's move on to another question. The Special Olympics funding, that was kind of a surprise to me. I love to understand why this is funded through the Department of Education utilizing these funds. I think there's going to be a lot of chair shifting because there's a few programs here.

So apologize in advance, but let's start with that.

Elena Powell, Department of Finance. Can I have you just repeat your question real quick regarding Special Olympics?

Sorry. Just understand why the May revision includes $30,000,000 one time for special Olympics through the Department of Education.

So this historically is actually how we have funded Special Olympics before. In 2022-23 there was also 30 million across three years for the same purpose. And in 21-22, I believe it was. 10 million, 6 million. My apologies. So this is the typical way it's funded through the state.

And who does this funding go to?

So it goes to three separate programs. Two separate. Apologize. I don't have it in front of me.

Sorry. Liz Meiba, Department of Finance. It goes to the Special Olympics of Northern California and the Special Olympics of Southern California. And it supports various programs that they do, including operational costs.

Are these programs only in schools, at schools, including students or.

No, they're not just in schools, but. They do include students, children across California with intellectual disabilities.

And it's all children?

Yes.

Okay, sorry. We're going to swap out probably to another group of folks, the middle and high school redesign proposal. This is one. This is identified as one time funding for a pilot program, but I can't seem to be able to get much more information. Besides, it's a one time pilot program.

Is it utilizing any evidence based theories or practices or what is this program?

Hugo Solis Galeana, with the Department of Finance. The purpose of the program is to, like it says in the name, it's a pilot program. The COE and nonprofit that run the program will select grantees who will then work with the grantees to see what redesigns they can do in schools that will help better serve students.

So there's a wide variety of options they could go with it. That's one of the things that we want the County Office of Education and nonprofit to look into just what redesigns could help enable student success.

So are we going to request proposals from county offices of education throughout the state and nonprofits to partner and provide their proposals to the state. And then we'll pick one.

So they will go directly to. They will select schools and give them funding as part of the proposal. Who will select schools? The County Office of Education and nonprofit.

Which County of education?

We have selected one yet. I imagine that that will happen.

That was my question. So are we going to do a request proposal so that all counties can submit their proposals and then we'll pick one after that?

Amber Alexander, with the Department of Finance in terms of making the selection for the County Office of Education that would administer the program? Yes, that would be the process. Any county office know could be considered through that avenue. In terms of who exactly will participate in the program. As my colleague mentioned, that county office in terms in.

In their role as administering will develop a process for selection for both school sites and local educational agencies to express interest in participating.

There are certain commitments that they would need to make, most notably agreeing to participate in the program for a period of two years so that there's some consistency in their participation and in terms of kind of the outcomes that you would expect. The Administration recognizes that there's a lot of innovation happening at the local level.

So the focus of the program really is to identify through the participation of these entities in the, in the pilot, some best practices and innovative practices to deeper student engagement.

And those would be lifted up both through an evaluation of the program and a report to the Legislature at the end that could then be used to inform future conversations.

I have to just publicly admit I'm very biased on this topic. I attended a high school that then did a redesign into small schools with some funding from philanthropic dollars. It was an experiment that went on for a few years that did not turn out to be successful.

And because there was no real long term commitment to that redesign, I believe partially and probably other reasons.

But I'm concerned that over the course of two years, I mean even if you just spent, you know, half of the $15 million to redesign a school over two years, which would be a significant investment and I'm sure plenty of schools could put the money to use in various ways how that leads to actual long lasting change and not just an experiment for two years at a school.

And often, you know, experiments happen in the schools where we least need to be experimenting with because those are the kids that usually we look at these schools because they need the most help. So let's go try something new at the school and doesn't always lead to the outcome.

So I'm, I think I'd like to hear more specifics about now. I know it's two years now. I know it's through some RFP process, the counties are going to partner with a nonprofit that is going to help administer this. I hear that there will be some outcomes expected.

Not exactly sure what those would be, but I'm just a little bit cautious about one time funding. I'm happy to explore it, but I'd like to know exactly what we should expect from the funding and investment that's happening. So those are more, I guess comments and questions on that switch. What is the game of chair? Musical chairs.

Yeah. We're going to switch to the English Learner statewide system of support. Okay. So we thank you very much. We had a hearing also about a few weeks ago on just literacy in General.

I'm sure you're familiar with some of the things we discuss and I'm trying to understand how this new proposal fits in to the, to the existing literacy proposal.

The literacy coaches and some of the work that was or some of the questions that was asked by the Committee at the time was how is this going to build on what's happened and sustain this long term. And so curious as to what exactly this $2 million proposal will accomplish.

Nate Williams, Department of Finance Yes. So the $2 million that we're proposing is for a new selection of five to seven county offices of education that are going to act as regional English language English language learner lead agencies.

And so these are really going to be, they're designed to replace the existing regional English language, our English learner specialist, County Office of Education.

So we have, we currently have 11 of those that are operating, but these are going to have a little more targeted approach really designed to help LEAs really kind of attack some of the issues of state accountability, particularly the long term English learner development student groups.

So really the hope is that we can make a little bit smaller cohort so that we can give a little bit more resources to each lead.

And then with that we can hire or have the opportunity to hire kind of directed staff that can really kind of dial in and provide good technical assistance and support to our English language learners.

Okay. Thank you for the response. I'm gonna stop there. Does anybody have questions on this specific proposal before he gets up and walks away? I should have done that with the others. I realized once I made everybody get up and walk. Ms. Bonta.

Thank you. Did you say that the plan is to wind down the existing 11 technical assistance and then providers around ELA and English language Development and then stand up other technical assistance providers.

Yeah, so the idea. So the current. Yeah, so what they're currently doing is we've got 11 county offices of education. They're funded through Title 3 funding. So with Title 3 funding, there's a lot more strings attached.

And so there's some other things that those county offices need to do that we would like to focus some of the efforts on a smaller cohort and then really kind of target some of our state accountability measures.

The other thing that, you know, with this proposal to keep in mind is we're really trying to bring parity to the lead agencies. So a lot of our other lead agencies within the system of support are supported by Prop 98 General Fund, including the geography leads, the equity leads.

And so this is really kind of bringing some parity to our English learners as well.

Did you get feedback from the 11 Regional Centers that are going to have a phase out of their technical assistance?

So part of the language does give priorities to those 11 during the selection process. So assuming as the Department or goes through and determines who those. Who those county offices will be, priority will be given to the existing 11 county offices.

Is there a decent regional spread of the existing 11 regional offices right now for that provision of service throughout the State of California?

You know, I do not have. The. The actual 11 in front of me right now, so I can't speak to the regional spread. But that would be a part of what we would be doing with the 5 to 7 is to make sure that we've got a good regional spread.

And that also is included in the language as far as the selection process.

Yeah. To the chair, I encourage this Committee to investigate that proposal a bit more. There's a lot of infrastructure that is required to stand up technical assistance provision units and reliance of local LEAs on those Regional Centers.

And in a very tight budget year, it seems very odd to basically wind down existing infrastructure to set up something that might be a little bit more challenging. That's my only question on that. Thank you.

I may add that the language does actually continue the funding for the existing structure for the Next. So for 2526. And then the new lead agencies would be operational in the next. The next year. So 2627.

Ms. Banta, you want to continue with other questions since you're on the mic now and then we'll try to do this a little bit more orderly and.

Zero, okay. I just had a quick question that might just be worthy of a shout. Out from whoever is able to answer it. About the question that you were asking about the 15 million for the one time pilot program. So you indicated that the for the redesign of middle and high schools.

So you indicated that the County Office of Education wasn't identified yet, but you did mention a nonprofit lead. Is the nonprofit lead mentioned or already identified?

Amber Alexander with the Department of Finance. No, that specificity is not in the language. So the language just references a County Office of Education who would then partner with a nonprofit. There is no nonprofit or county office called out in the language.

Yeah, I think I would agree with the chair that there is that. This proposal as it stands seems to be quite vague in terms of its purpose.

And given the fact that the state has actually engaged in, you know, decades long redesign middle and high school efforts, we should already have enough pilots proof of concept to be able to pick up on the work that was already done. I worked on some of the prior pieces of work around that.

Ms. Bonta, if we can. Do we have other questions on this item? And I'll come back to you right after the other Members ask on this item.

I have the same concerns on this. And $15 million does not seem like enough when you're building school construction. Anything with schools, I feel like the number triples when we're adding anything into schools. Is this just for proposals? Like they're just paying for people to come do estimates and make proposals.

Like we're giving money to consultants or is this actual construction dollars?

Amber Alexander, again with the Department of Finance. And to clarify, this is not a facilities related proposals. So when we reference redesign, it's in terms of structuring of the school day or curriculum. So the all the programs, correct? Yes. Yeah.

There's not a facility. So who's doing those proposals for them? Is that the school doing it or are we paying consultants to do it?

So. So currently in the proposal as it stands, the County Office of Education as mentioned, would be selected in consultation with the State Board of Education. They would then establish a process to identify participants for the pilot.

So this would be either school sites or local educational agencies in terms of how they have gone about kind of establishing the innovative practices that they would be lifting up through this process.

I don't know that we have the knowledge on that to be able to speak, but that is something that through the work of the pilot would come to light in terms of, you know, steps that they took to be able to establish those types of innovative practices that would be lifted up and would be included in the report evaluation and the recommendations at the end of the pilot.

So. And do we have a timeline like when this will begin or.

I mean the, the, the funds would be appropriated in 25-26. The report is due in September of 2029. So in terms of establishing the County Office of Education to administer and then their timeline for rolling out their criteria for selection, that's not specified in the language but we would anticipate.

Generally it takes a good probably six months depending on if there's a County Office of Education that kind of rises to the forefront to lead or if it does need to be more of an exhaustive effort to get interest in administering.