Senate Budget and Fiscal Review Subcommittee No. 1 on Education

Senate Budget Sub-committee number one on education will come to order. We are going to begin as a sub-committee and I will call the roll when the next Senator arrives. We have three hearings on today, three hearings, three items on today's agenda and they really relate primarily to K through 12 education.

And this is our eighth hearing, but we had one yesterday on higher education and today is K12. And in each case it is us vetting all the issues that are in the may revise. We will not take hard actions in this.

However, if any of you were watching yesterday, we will send a clear direction about how we view certain issues because we know the negotiations are coming up and we want to inform, if no one else, the Senate negotiators, but like to inform the others of the three parties that these are are some of the priorities that we have and where we want to go.

We will take public comment at the end. So after our three issues we will do public comment. And as is my want, I will take a survey of who wishes to speak and decide the timeframes accordingly. So before I continue, we have a quorum and I'm going to ask for a call of the roll.

[Roll Call]

We have a quorum. So we are going to move to issue number one. And I would ask that we have Alex Shoap and Ken Kapan I know to present who are very familiar to us because they were sitting in chairs yesterday. And the first item is our overview on Proposition 98.

And let me just say we veered into this yesterday because we were doing higher education and we had community colleges. And there is a particular issue involving a so called split and pre K TK monies in how they're allocated and how it affects the split with community colleges.

And while I'm confident somebody will bring that up today, I feel like it was fairly litigated yesterday and feelings were expressed. So this is the review of Proposition 98 as reflected in the May revise. And I would note for the record that we've been joined by Senator Ochoa Bug. We have a full Committee right now.

So let's just go into our panel and we'll begin with the Department of Finance and then we'll go to the Legislative Analyst.

Thank you, Mr. Chair. Senators Alex Shoap 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 44.3 billion less than what was forecast at the Governor's Budget. So the operative tests those are unchanged from the Governor's Budget.

2324 that remains in test two while 242525-26 are in test one. In the three year budget window, the May revision shows a total decrease of about 4.6 billion compared to the Governor's Budget. 2324 of course remains at that statutorily suspended level of about 98.5 billion.

The projected maintenance factor obligation at the Governor's Budget that was created by suspending the guarantee in 2324 at the Governor's Budget that was about 7.9 billion. That is revised up slightly to 8 billion. Then the projected maintenance factor payment in 2425 decreased to to about 4.9 billion which is down from 5.6 billion at the Governor's Budget.

And that is 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 about 1.3 billion at the May revision. The total current year Prop 98 funding that that will remain at about 117.6 billion.

The proposal continues to reflect uncertainty in revenue estimates and provides budget flexibility both within Prop 98 and on the non 98 side of the budget while also of course accounting for the 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. Of course, as you noted at the top, this was discussed yesterday. So I won't get into the split proposal again.

We did just want to provide a little additional clarity on a concern that was raised yesterday with regards to adjusting allocations in the past year and the current year. So Proposition 98 factors including revenues, those are continuously adjusted for all years, all three years that are in the three year budget window.

And that is based on the most updated data that we have at any point in time. A year is only really finalized once it has been certified.

As part of that true UP process, it's necessary to also adjust funding for Programs in Team TK to 12 and community colleges to align with what we're seeing as updated costs there. This is something that you know often benefits TK to 14 schools.

But you know, in situations where costs do exceed resources, it is the practice of finance to use funding shifts other options to make TK to 14 schools whole, as is the case with the split proposal where you know, we are using savings that are identified by the community colleges to backfill those shifts in 2324 and 2425.

So in addition to the TK re bench, the guarantee is also re benched on a one time basis in 24-25 and 25-26 to increase the guarantee by about the amount of projected property tax losses that resulting from the LA fires.

The Mayor Revision also provides 9.71,000,001 time Prop 98 to provide property tax backfills to basic A school districts impacted by the LA fires which covers estimated losses in both 24-25 and 25-26. Just one note too on this re bench, the May rent revision re bench amount that only includes the non Basic Aid Districts.

It was our intent to include that 9.7 million in the property tax re benches in addition to the one time backfill. I think it was just something that was unintentionally separated during the process.

Moving to Ada Average Daily Attendance the percentage change in average Daily attendance from 2425 to 25-26 is expected to be 0.47%, so indicating a slight increase year on year. We are however projecting decreases in Ada in 24-25 and 25-26 relative to Governor's Budget levels.

Moving to the Public School System Stabilization Account, the May revise 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 into the count in 24-25. That is a decrease of about 617 million from the Governor's Budget.

And then there is a constitutionally mandated withdrawal of that same amount 540 million in 25-26 which will be used to Fund the Local Control Funding Formula and student centered funding formula costs on a one time basis in 25-26 and that would completely deplete the account.

And just so to clarify on this right, this is a constitutionally required withdrawal pursuant to the formulas that are in Article 16. So so it's not a discretionary choice by the Administration to deplete the Reserve. So with those amounts updated, the School District Reserve caps are still not triggered in any year in the three year window.

So moving on the May revision, it also proposes several budgetary actions. So I'll provide just a high level overview of a few of these investments which are inclusive of Governor's Budget investments, adjustments to those investments, new May Revision proposals Of course there'll be more detail on these in the coming panels.

On the K12 side, there is an ongoing increase of about 2.1 billion for the LCFF Local Control Funding Formula to reflect growth adjustments and a 2.3% cost of living adjustment, 1.71,000,000,001 time for the student support and professional development discretionary block grant.

An ongoing increase of 1.2 billion to support further lowering the average student to adult ratio from 12 to 1 to 10 to 1 in every transitional kindergarten and classroom. An ongoing increase of 525 million to fully implement universal before, after and summer school.

And then an ongoing increase of 174 million to Fund a 2.3% cost of living adjustment for specified categorical programs. And I think on the community college side, I'll move past that. I think those were covered in yesterday's hearing.

Finally, for the deferrals, the May revision continues to pay off all deferrals that were created at the 2024 Budget act for 2425 deferral repayments. So the 2425 deferral is being repaid in 25-2619.5 million in reversion funding and then 131.9 million in reappropriation funding is now being used to cover parts of these payments.

On the K12 side, then 126.1 million is used to cover community college deferral payments, repayments. And then finally there are also new 25-26 deferrals, about 1.8 billion for the Local Control Funding Formula and then about 520 million for the student centered funding formula. Happy to take questions. Thank you.

Thank you. Appreciate the presentation. To the Legislative Analyst.

Good morning, Chair and Members. Ken Kapphahn with the Analyst's Office. I'll focus on the architecture of the governor's Proposition 98 budget and our recommended alternative. We have a handout that covers some of our comments.

And knowing that the captain likes to run a tight ship, I will cover almost all of our comments for the morning for the morning right now. And we'll have much less to say in the subsequent issues.

So turning to page one and starting with the Proposition 98 guarantee, the most important number to focus on Here is the 4.6 billion drop across 2425 and 25-26. That's mainly a story about lower revenue estimates in the budget year. But a smaller portion also reflects lower estimates of transitional kindergarten. We're adjusting Proposition 98 for that.

And another portion reflects lower property tax estimates, although, as you heard, there is a separate proposal that would increase the minimum guarantee to offset the portion of that drop that's due to the Los Angeles fires. Turning to page two, we think the General Fund revenue estimates here are reasonable.

They're close to our estimates they're consistent with recent trends in tax collection data and some of the key economic indicators that we're watching. But there is still significant uncertainty. And the Proposition 98 guarantee remains quite sensitive to changes in revenue, particularly that would happen in 2425.

On the property tax forecast, our estimates are a little bit higher than what is reflected in the May revision. We're up about 400 million per year in 2425 and 25-26. Under that higher assumptions, the Proposition 98 guarantee would also increase almost dollar for dollar.

So on the whole, May revision estimates of the guarantee generally reasonable as a starting point for building your budget. Then turning to page three on the architecture. The May revision is bringing down overall school and community college spending to reflect that 4.6 billion reduction in the guarantee. And it really does that through five major adjustments.

The most important is the deferrals. 2.4 billion essentially in one time savings from shifting the June 2026 payment to schools to July 2026 and then a similar about 1.8 billion. And then a shift of about 500 million from May and June to July. For the community colleges, another 1.5 billion is coming from lower Reserve deposits.

That's a combination of the required automatic adjustments from lower revenue estimates as well as the Governor withdrawing his proposal from January to make a discretionary deposit. Another 400 million in savings are coming from withdrawing some of the community college proposals. You already heard about those yesterday.

Fourth, you probably remember the governor's January proposal to delay making a payment related to meeting the Proposition 98 guarantee in 2425. That proposal is still in the May revision. But the May revision reduces the amount of the delay to 1.3 billion, giving you 250 million more to spend on this year's programs.

And then the last piece, lower estimate, lower calculation of the statutory cost of living adjustment based on revised federal data. That brings down state spending about 150 million, reflecting that slightly lower rate of 2.3% and a few other COLA related adjustments.

Separate from all those actions, of course, is this proposal to shift 492 million in funding from the community colleges to schools. Turning to page five, the mega vision has really just a few adjustments that are worth mentioning. At the structural level, there's an additional 91 million related to the increase for the expanded learning opportunities program.

Not really a change to the proposal, just higher cost to implement it. There's a reduction in funding for lowering student teacher ratios in transitional kindergarten classrooms. 229 million less for that, reflecting lower attendance estimates. As well as a lower per pupil rate to Fund those lower ratios.

Only notable new proposal in terms of the dollar amount is 200 million for literacy training for elementary school teachers. So turning to page six in our assessment, we have three critiques of this May revision proposal, and they're all somewhat related.

The first one is that despite this drop in the guarantee, the May revision is maintaining or even expanding many of the January proposals. Those proposals would have districts hire staff and expand local programs, despite the state not being well positioned at this point to sustain the funding for those programs over time.

Typically, in a down year, the state takes a little bit more of a cautious approach and focuses on preserving its core programs rather than expanding new ones or creating new ones. We're also concerned about the structural shortfall in this budget. The mayor envision would use about 1.6 billion in one time funds to pay for ongoing activities.

And that leaves a hole in next year's budget when those ongoing program costs continue and the one time funds expire. And that might be a particularly difficult hole to fill next year given some of the projections for slower growth in the Proposition 98 guarantee in 26-27. And then finally, we're concerned about the use of deferrals.

Deferrals effectively are debts that reduce funding available in the future and we can cash flow for districts. They undoubtedly have become an important tool in managing some of the severe drops the states experienced during past recessions.

But given their downsides, the states tended to think about those as being a tool of last resort, whereas in this budget they're helping to free up funding to increase programs and pay for other spending increases.

I think all of these elements are understandable in the sense that those things might feel easier than withdrawing January proposals or trimming existing programs. But they put the state, and really districts too, behind the eight ball if we are going to if we experience further drops in revenue next year or even in the year ahead.

And that's because we'd be using up really almost all of the easy options in this year's budget and not really leaving anything on the table to deal with the more severe downturn that could be around the corner. So turning to page seven, we have an alternative package for you to consider.

This is focusing on the entire school and community college picture. And this would just be a different approach to building your budget. Yesterday the chair mentioned concerns about the deficits and deferrals in this budget. So this alternative, one way to think about this is this illustrates the kind of decisions you might need.

You would need to make if you wanted to avoid those things in your final budget package. So under the alternative approach, the state wouldn't have a structural deficit. It would align ongoing spending with the Proposition 98 guarantee. It wouldn't use deferrals.

It would continue to Fund the COLA and enrollment growth, TK expansion, community college enrollment growth, and it would even allow you to provide a bit more one time funding for schools to pay for that. The state would delay or reject 1.6 billion in ongoing spending, including some reductions to existing programs in a few select cases.

And it would reject 1.2 billion in May Revision Spending Proposals so turning to page eight and getting a little bit more specific here, we recommend rejecting the 526 million increase for the expanded Learning Opportunities program. That means the state wouldn't lower the existing threshold.

It could still implement the proposal to increase the minimum grant amount within existing funds. We recommend delaying the requirement for districts to adopt a lower staffing ratio in their TK classrooms. That means the state would continue to Fund schools to run a 12 to 1 ratio but save 517 million by not requiring the 10 to 1 ratio.

Next year. We recommend reducing funding for state preschool. The ongoing funding level for that program is 336 million higher than the cost of existing rates and slots. So we think you could make a reduction without having a negative impact on the local providers. We'd recommend delaying the start of the attendance recovery program.

This was a June 2024 budget action set to start next year that allows districts to claim additional funding for students who are in attendance recovery programs. Delaying the program would reduce ongoing costs, but you would still have this strong fiscal incentive for districts to focus on improving attendance.

Turning to page nine, you already heard the community college elements of this package Again. That's just reducing one existing categorical program that's under subscribed and providing more for apportionments to avoid a shortfall in the community college side of the budget. Turning to page 10, we recommend rejecting many of the one time spending proposals in the May revision.

You've heard most of our recommendations on these in previous hearings. There are really two notable new items to the list. One is recommending we recommend rejecting the May revision proposal to provide 200 million for literacy training. This program is dependent on guidance the State Board of Education would adopt in September of 2026.

So we don't think you need to provide funding now for a program that wouldn't get started for at least another year. We're also recommending rejecting the January proposal for the math and literacy coaches.

I think the underlying idea here probably still has some merit, but this doesn't seem like an auspicious time to launch a program that requires districts to hire new staff and do a lot of local expansions. Now, you could anticipate some pushback from districts on some of these ideas and recommendations.

Some of these proposals might be funding things that are priorities at the local level. Districts might already be planning to implement some of them. And so to help address some of that concern, we recommend providing an increase in the funding for the discretionary block Grant.

An additional 410 million beyond what's in the May revision works out to about an additional $75 per student. That's funding districts could use to pay for any of the activities that they might have wanted to do with the funding that the Governor had proposed.

Turning to page 11, the alternative package rejects all remaining revision proposals for the community college technology projects. Again, you heard that yesterday. But stepping back here for a moment, the alternative package clearly does involve some tough decisions, no denying that.

But we think you might still consider it because it is more proactive about managing uncertainty, addressing revenue volatility. It would allow you to preserve core programs, Fund the COLA, Fund enrollment growth, and maybe most importantly, it would set up better choices for you in next year's budget by approving a more affordable level of spending this year.

The last point on this alternative, and this is regarding the split. You heard our recommendation yesterday to focus on an allocation of funding that allows you to preserve core programs and not so much focus on hitting a historical percentage in terms of the distribution.

Under the alternative that we put forward, the state would spend 458 million more on the community colleges than schools. That would effectively be reversing most of the shift that the Governor had proposed, but not all of it. So with that, happy to take questions.

Thank you very much. And I'm going to start off and, and go to each of my colleagues and then come back in for anything that might not have been asked. And I think that.

And thank you for putting it all together succinctly, I would like to just ask a few questions about the overall architecture, because the overall architecture dictates some things.

And knowing that people watch these hearings, it's always an uncomfortable feeling for us to have all these recommendations for individual programs when we know the architecture sets us up for those augmentations being in trouble in the next year and that it, it's hard because you have to say, no, we don't want some of those augmentations which Everybody in the audience and is watching wants.

But then next year they would come to us and say, why are you cutting us or why are we short? It's because of decisions we're making here in this budget and that's what makes it difficult.

So that leads to the question, the first one, about paying off the deferrals in 2627 and then fully funding the COLA without using one time funds. And I would just ask finance, how are these recommendations not going to put us in that position?

Alex shope, Department of Finance I think that, you know, obviously sort of looking at a kind of broader level. You know, I think that this budget, you know, it tries to obviously protect core program funding, address Administration priorities, but also do so in the context, you know, of the kind of budget reality that we're looking at, right?

Addressing the problem that we're seeing in 2526. Again, you know, I think, I think I said this yesterday. I don't know if, you know, you found it to be a sufficient answer, but you know, with regards to.

Don't give me the option of deciding whether something is sufficient.

What I think with regards, you know, to deferrals, right? It's not right. It's not, it's not a first option, not something that we want to do. But, but I think, you know, it is part of that, that balance, right?

So I guess I appreciate the balance, but if we do all this and the projections are somewhat accurate for next year, then we don't have enough money to both pay off the deferrals and make the COLA and the decision to put us in that position we're making now and that so it's not of total comfort to say we're doing the best in a really bad situation because we're potentially creating a bad situation for next year.

And then I think I know the answer, but putting money into the Prop. Proposition 98 reserves is discretionary and it has been a discretionary action at certain times since the the that rainy day Fund was triggered.

And so why not, instead of doing some new investments, do a voluntary investment in the Prop 98 Rainy Day Fund that we could draw on in the next year.

So I think, I think that, you know, especially as it relates, I know Elio had an alternative proposal to our proposal that involved making that discretionary deposit into the rainy day Fund. I think we do agree that that would provide flexibility on the Prop 98 side.

I think what we might emphasize with our own proposal is that it provides that Prop 98 flexibility right it provides that flexibility within the guarantee, but it also provides flexibility on the non 98 side of the budget.

And then if there's still a $1.3 billion, whatever you would call it, shortfall in funding Proposition 98 and I think you said in your statement, zero, there'll be a true up.

You know, I think it would be our preference that we true up now and that we not head into the budget with that hole that we have to figure out how to fix. But how do you believe that we will be able to meet that 1.3 billion in addition to doing all these other things?

So pursuant to the certification statute, that kind of dictates our thinking with that the true up would have to occur either when 24-25 is certified so at next year's budget act, or pursuant to, you know, like an authorized repayment plan.

You know, I think we obviously been talking a lot about the uncertainty that that kind of underlies this proposal. You know, I think, I think that, I guess our plan, you know, is to have a better picture, right. Of what the revenue situation is looking like next year before we actually make.

That decision in this is just an observation. It seems to me that after the hoo ha last year over the $8 billion, there's concern in the Administration that that never be allowed to happen even inadvertently again. And so I feel like the response is to Under Budget Prop 98 all the way along.

So there's not a shortfall that you somehow gets locked into the guarantee going forward. And I just say I don't think that's the best direction. It would be nice to be where we are at any given point, but because it's possible that that sets us up for when we have to true up.

And if in fact we are coming up with 1.3 billion, then there's another demand in the mix on the funding when we're trying to triage everything and not cut it. Which leads to my last question, sort of architecturally before going to my colleagues on that $8 billion thing.

It's still $8 billion that's in the out years scheduled for the General Fund to have to pay. Is that correct? Where what's the status of that in this budget?

So that. Right. That proposal remains. It's 6.2 billion. That's in the out years. So it's beginning 2627 and then for 10 years. So until 2035-36 I think there would be, you know, equal size generally.

My former Boss, Jerry Brown, he would say you are rebuilding the wall of debt. I can just hear him saying that. And it's just sort of passing that off into the future to be paid back. And when we last tuned in, it was 8 billion and you said 62. What's the change in that?

So part of the 24 budget act, we were able part of that final agreement, we were able to bring it down to 6.2 billion. We were able to find there's about 2.6 billion in unallocated or unexpended funding from 2223 that we were able to then defer to 2324.

And those amounts were then paid off with that mandatory rainy day Fund withdrawal.

Okay, let me just, before I move to my colleagues, ask the legislative analysts if you wish to venture into this conversation with any observations that you might not have already made before I move to the others.

Well, thank you, Mr. Chair. I think you covered all of the points and I think you were, I think, understanding all the points that we were making and don't have any additional comments to make.

Thank you. And then an observation which is I just am worried about the structure and the architecture of this budget in education and I think it's kicking the can down the road and actually putting more stuff on the road. And yet I understand the dilemma.

It is if we don't do that, we have to do options that are not giving people some money that's recommended in this budget, although the proposal of the Legislative Analyst to increase the, the discretionary grant thing then gives every district the option to choose what their greatest need is and operate within it.

So let me go to my colleagues who is ready to go here. Senator Perez.

So I heard you during your presentation when talking about the Prop 98 split that you said that this is something that we've done before. So when have we done this before? In years past for the budget.

And when we did do that in years past, did we do retroactive cost shifting the way that we're suggesting in this budget to go back in time to shift cost almost two years?

Yeah. So this is, I think this is something we would say it happens at every budget, every point in time in the budget, you know, as sort of as we go Governor's Budget may revision budget act. Right.

Even to the next years when years become the current year or the prior year, we still continue to get, you know, updated revenues. The various factors that influence Proposition 98 and what that minimum guarantee level is, those continue to change for all of the years that are within that three year budget window.

And of course, there are also kind of revisions to costs that we're seeing once we get more data or once new programs begin to be implemented. So it's always a little bit of a moving target. And we do have that ability to augment appropriations in the current year or even in the past year.

Although I would note that there is appropriations in the past year can change. There are some limitations on reducing the actual Prop 98 minimum guarantee level in statute. But, you know, the appropriations, I think within those years, you know, those will kind of always be shifting a little bit as we. As we build, you know, any budget.

Well, I understand that things can change and, you know, budgets can shift and change as we put together costs. As costs are changing. Right. And those are actively moving targets. But we're talking about shifting approximately $492 million and shifting that level of cost onto a small number. So is that something that we've done in the past?

Yeah, I mean, I can't, you know, I would have to probably go back and look at, you know, whatever, you know, large shifts there might be. But, you know, I think when building this budget, we tried to be, you know, cognizant of the effect that, you know, the impact that a shift like that could have.

You know, I think it was important that, you know, we knew we had those savings available for the community colleges that would be able to backfill those amounts and make them whole. You know, so that it wasn't just really, you know, an actual reduction that we're seeing to those budgets in those years.

Thank you, Senator Ken Kapphahn. So just adding a little bit of clarification here. The split discussion on the distribution of funding has become a hot topic in the past, and it tends to come up when the state is making some kind of recalibration of the Proposition 98 guarantee.

For example, we have shifted programs out of Proposition 98 and recalibrated the requirement down. We've added programs and recalibrated it up, like what's happening with transitional kindergarten now. So sometimes that raises this conversation about when the pie is growing or shrinking, how do we distribute it.

But I can't recall a situation quite like this one now where we're talking about the program and some of these adjustments that are in the prior year. Usually when we're making these adjustments, they're all prospective and being done on a going forward basis.

Okay, yeah. I guess I'm just trying to understand the design of this and how it's set up. What are some of the budget impacts that we could expect to programs and to other things.

If we're basing a budget on shifting costs on three years, three years retroactively, you know, back into 2023 what are some things that can happen by designing our budget that way when we're basing it off of. Off of dollars that have already been allocated and costs that have already been allocated?

Hi, Michelle Nguyen, Department of Finance in this specific case, when we're seeing a reduction in the past year, in the current year for the community colleges, you know, in this, like my colleague Alex said, we have some savings that were identified in the community college budget from budgets in the past, and those are considered outside of this three year budget window.

And so it ends up being kind of like a technical accounting and budgeting shift where you see a reduction in the past year and the current year, and then we take the savings and then we kind of add an increase in the past year and the current year.

So I think from a district perspective, they would see a decrease and then an increase at the same time. So it wouldn't have a substantive effect on like programmatically for the community colleges in the past year and the current year the way that we're trying to do it this year.

So just focusing very much on the practical effect, the practical effect is with the community colleges, you end up with proportionately larger deferrals than you have for schools, and you end up with proportionately much less in terms of new spending proposals.

And I mean, you're saying that part of the reason why we're going this direction is because there were savings that we saw within the community college budget that we wanted to apply towards this. Did those savings add up to $492 million?

The savings that we had in the May revision, they add up to about 320 million. So this is unusual. It's a much larger savings than we, than we've had. It just so happened that this year we had a lot of savings. So it fully covered, you know, and I think the way that Ken characterized it is correct.

You know, obviously the savings could have been used for something else ultimately. But yeah, so the savings covered the reductions in the past year and the current year, and it partially covered the reduction in the budget year as well, but it didn't fully cover.

And have the community colleges, even though you, you, you do see savings, have they budgeted with those dollars and assumed that they were keeping those dollars, even though, you know, we're now reallocating them elsewhere? So, like, what happens then with, with the plans that they've made to utilize that money?

So the savings, I think we can, they're safe to call them true savings at this point. They're identified by the Chancellor's office working with districts to say, okay, are you expecting to spend these funds from these current years for some of the savings that are identified in, at the May revision?

Some of them go back to 201617 and then some of them, you know, go to 2223 I believe. So. Yeah, I, for the savings that are put forward at the May revision, they are expected to be true savings from the district perspective as well.

Okay.

I just want to reiterate the, the chair's earlier point just with the, the way that we're designing our budgets and you know, I think some of the, the fiscal impacts that, you know, our, our education system has been facing and, and continuing to, to defer some of these costs and, and these payments and you know, as I'm sitting here, I don't know how we've tried to address some of these issues in some of the more recent years, but I'm just trying to figure out how this all adds up ultimately and we work our way out of the deficit ideally or eventually.

So yeah, I appreciate you answering my questions, but still have some of those outstanding questions to understand how this is all going to work in the upcoming years, especially if we continue to see this trend with the Federal Government, continue to face challenges with them.

Thank you, Senator Ochoa Bogh.

So a couple of things. So as the LAO said, the May revision uses the 1.61.0 billion billion 1.0 in one time funds to cover the ongoing spending.

This addition is this, in addition to what was previously noted, paints a pretty precarious picture of what might happen if the state runs into a tighter fiscal situation than expected in the out years.

Kind of curious about what that would look like for school funding if the state were to see more significant decrease in revenues that are currently projected. How is the state planning on working that out moving forward? Because as of right now, it doesn't look very optimistic.

Alex Schope, Department of Finance I think maybe to touch first, you know, on the sort of the one time aspect, you know, there's, there will always be, I think some level of one time funding that's used for various things in a budget.

You know, every budget cycle we kind of work to identify savings, as my colleague was noting, that can then be sort of re appropriated in this specific budget. There's a constitutionally required rainy day Fund withdrawal that, you know, that, that we're, you know, we're using. I mean it's constitution required to be withdrawn.

So you know, it has to be used for schools and community colleges. So I guess I can't, I can't, you know, sort of forecast what anything like that would look like in the out years.

Obviously I think those decisions would have to be a conversation, you know, with the Administration and the Legislature moving forward, you know, depending on what those out year projections do look like or what, you know, what the out years look like once we get there.

But again, you know, I think with significant level of uncertainty that's been cited, I don't know that we can really sort of speculate on decisions that are made when we don't kind of know the scope or kind of outline of what looking at, at this time.

So this is where I'm a little concerned as well. Moving forward in that. First of all, if you speak to school districts in our community colleges or UCS, CSU, especially our K through 12, it's very leery for them to have one time funding programs. It's just, it's not reliable as far as programs go moving forward.

And so I'm, I understand the one time funding allocations that we do. I, I try to see why we're doing it that way.

But when it comes to school districts and planning and moving forward, especially when it comes to positions moving forward, I actually very much appreciate giving them the flexibility saying you're going to get this ongoing funding moving forward and allocated to however you need to, rather than saying we're going to Fund these particular programs, programs or give you this one allocation, one time funding, it just, it becomes very, very unnerving for school districts to be able to plan out moving forward.

And when we're talking about deferrals, when we're talking about one time funding, it makes it very difficult for school districts to be able to literally plan their, their years, their, their educational programs, their hiring.

And so I actually, I really like the idea of just having, giving them the flexibility and saying, okay, you get this additional funding, $75 per student, use it as you may need going on that. Having said that, I want to go back to the, the TK program.

I had a conversation yesterday with several school board members in my district and we were talking about the TK program.

So when it came to putting forward the TK program in our state, was the intent to have it funded within the K12 or K14 funding in Prop 98 or was that something that could have done or been funded outside of Prop 98, bringing in additional General funding into the program to be able to pay for it or was the intent to always have it within the Prop 98 funding?

My understanding of the agreement is that it was always intended to be in Proposition 98, right. If the two peoples are going to be served in leas as also my understanding of that agreement was contingent upon re benching the guarantee Upwards.

So increasing the overall Proposition 98 minimum guarantee amount to account for those increased service levels so that the TK funding was not crowding out any other program funding for LEAs.

So that was the intent. Okay, so. So it was a plan. It was part of the plan to be part of the split.

I can't. I wasn't a part of those conversations. I can't, you know, I can't speak to them too, in too much detail. I think that the question with regards to the split, I think it was, you know, a question then.

And it's been something that's sort of been discussed over the years, you know, whether it's something that, you know, should be subject to the split, whether it should be on the TK12 side. I think the administration's perspective is that because the transitional kindergarten expansion funding, right.

The amount that the guarantee is being increased by that is kind of based on TK Ada. So that's because that's where those costs are being generated. The Administration views it as that's where the funding should be allocated.

Okay, so expanding a little bit more on that. Do you believe that it was an oversight by the Administration originally? Why the shift now? I'm just kind of curious again, I.

Can'T, you know, I wouldn't be able to speculate kind of on any of the decisions or conversations back then. I think the shift now. Right. It's the last year, the final year of the four year re. Bench process.

So I think it's an appropriate time as we kind of circle in on that, you know, sort of final, final level, final funding level with TK at full expansion, you know, and I think we view it as the right thing to do, sort of, as I had mentioned before, you know, because those costs are being generated by, you know, the TK Ada, because we have the ability to, you know, to make those shifts within the three year budget window.

I think we view it as the right move to make.

So two more questions. oh.

No, go ahead.

If I may, Senator, just to add a little bit of historical context. Back in 2021, when this state was talking about how to have a universal program for four year olds, it considered all kinds of permutations and combinations.

And paying for this inside of Proposition 98 and outside of it, all these variations, we worked on a lot of the fiscal modeling for that. Ultimately, what where the state landed was let's pay for this program within Proposition 98, but then also make this recalibration that increases the Proposition 98 formulas themselves.

The state didn't necessarily have to do that, but that's how it shook out. I think what we have learned from this discussion is there was evidently some people walked away from that agreement with different understanding about exactly what that would mean for the total distribution of the Proposition 98 pot.

But 1.0 that's important to emphasize is that we're talking about two calculations running on two different tracks. So one calculation is how much is the Proposition 98 guarantee going to be increased as part of this agreement? There's no real disagreement on that. We know that's 2.1 billion in 25-26.

Our calculation is very close to the Department of Finances on that. The second issue is, well, how much is that going to increase the cost for the Local Control Funding Formula? And that's a different number. I think what we've heard from the Committee, both Senate and Assembly, is that implementing TK does seem to be a high priority.

So the mayor vision sets aside funding to pay for that. We think it's a reasonable estimate, but that's really a separate decision from how you want to allocate the total pot of funding that exists. There's enough funding in this budget to fully pay for the expansion of TK and cover all of those additional students.

And that would happen regardless of what you decide about the 492 million. That's more of a separate question about we've got this pot of funding and how are we going to divvy it up?

Oh, okay. And then just a final thought. I'm just going to place this conversation because I was planning on having a conversation with Senator Laird and Senator Perez on the issue of TK and the concerns with the local school.

Some of the local school board Members that I had a conversation with yesterday, and that's the fact that right now it was interesting to note that they're really having a hard time finding teachers that are qualified and prepared to actually meet the TK requirement, especially as we move forward with the reduction of student teacher ratio.

So that was a huge concern for them of the pipeline, which was also interesting to note that based on our Committee hearing yesterday, there was still remaining funding on the Golden State training program for teachers, the Grant Fund for teachers to be trained.

And within those parameters, we were emphasizing some of that funding to be specifically for teachers to meet the TK training. So we don't have many folks going into the profession. Even though we have funding to allocate for their educational programs. We can't force people to go into educational programs if they don't want to.

We don't make it appealing, we don't make it attractive. They're not going to go in there. So we have folks that are not taking advantage of the grants that we have available specifically for tk.

School districts don't have, can't find the qualified folks to actually meet those positions that they need in their school, which makes the implementation very, very difficult. So we're talking about allocating funding for this particular program where we don't have the infrastructure, we don't have the classroom set up, because that's the other consideration that they're having, right?

Having the classrooms fit to meet the needs of these little four year olds, which is different than the older elementary schools. So the schools have the infrastructure, literally the actual class classroom that they have to set up for these particular students. They don't have the workforce to be able to place in the classroom.

And especially in rural areas like in my community, within the mountain communities, whether or not it's the teachers being able to travel or live within that area. So overall, I'm not sure that the state is quite ready to fully implement the TK program as a whole.

It's a great ideal, It's a great program that we have and a goal. But the reality lies in the fact that our school districts in General are having a hard time bringing professionals into, into the profession of teaching.

And more specifically, as we're allocating and talking about funding for TK in relation to, you know, how it impacts our community colleges and whether or not we do have the funding for it, the question begs to ask, and we need to really look into this as whether or not the state is ready to move this forward.

Because we've had these lofty goals as the Legislature trying to implement many, many programs, but we don't have literally the infrastructure, workforce and the classrooms. So just something to kind of just digest and go back.

And I was going to, you know, have this, but I might as well just throw it all out here since we're talking about the budget and where we're going to be allocating the funding as to whether or not are we able to do that, the reality of what it looks like on the ground with our school district.

So it was interesting because we had our budget hearing yesterday, talked about many years in higher ED and how we're going to do the split. And then I just happened to have a meeting scheduled with school board Members from my region and they brought this to light.

And so I thought I'd just put it all in context as to what we're doing here so that we can literally start analyzing, really thinking about whether or not the state is ready for TK and if it's not ready yet, it's okay.

Maybe we just need to postpone it, because if the implementation is placed, you know, with the teacher ratio starting next year in 2026-27 and then we're looking at in statute that our school districts will be fined if they don't have the right ratio of teachers to students two years thereafter.

I don't see how as a state, we're going to be ready to be able to expect our school districts to have the infrastructure in place or the workforce in place. And so right now, instead of delaying and kicking the.

The can down the road, we need to start having those conversations right now as we're considering the budget moving forward as to whether or not we're really prepared to implement all of this that we have in place. So I just wanted to leave that at the table.

And I know it's going to require us to have further conversations, and I look forward to having those conversations, both with the Department of Finance, our LAO, my colleagues here, and of course, most importantly, our school boards, who are literally facing the challenges of what we, the Legislature, have imposed.

Well, not necessarily all of us all the time, but, you know, the Legislature as a whole on our local school districts. Thank you.

And I just want to add.

Senator Perez.

Thank you.

So people know who's talking.

I just want to add that I agree with, but Senator Ochoa Bogh, the issue that she raised, I actually met with a group of teachers yesterday who just brought up the teacher shortage to me and just how difficult it's been as they've been actively losing teachers.

They were describing to me, there are folks that are coming in through some of the programs that we've invested in. So new teachers coming in, but a large number of teachers that are experienced, that have been in the profession for many years that are retiring.

And so there's this gap kind of in the middle of some folks that have some experience have, you know, been working for some time in the profession where we have a large number of folks that are leaving that are very experienced and, you know, lots of new folks that are coming in, so figuring out how to fill that.

And I mean, they just told me very, very frankly that they're very nervous about finding enough teachers to be able to actually fulfill us going to Universal TK they love the program. They want to be able to do it.

But, you know, obviously, I mean, everything from pay to us having, like, programs that make it an attractive option for students that are in college to pursue these opportunities. It's going to take a big investment. And right now they're struggling to currently staff even the current existing programs and school districts that we have.

So we definitely need to have a conversation around that. But that was absolutely something that's been brought up to me several times. So just want to highlight that.

Then. Let me, as we wrap up here, just acknowledge that we have had this discussion in different iterations both in the past years where there was some concern. Oh well, we'll get to that when we get to it. But we could tell already that there were facilities issues and staffing issues and we should move on them.

And we have had extensive discussions about retirement and recruitment. That's one of the reasons we have some of the things on the agenda.

And the real trouble that we had when I was doing this during the pandemic is there was a disproportionate amount of retirements, but there was a lag time we almost it depended on between teacher credentialing or retirements with the STRS system of when we could actually finally capture how many people were in fact retiring.

And we have tried to focus on the fact that the shortages have been in particular subjects or particular places. And that that's where we need to focus some of our efforts. And so I know that we will continue to do that. For me, it's.

It seems like moving ahead with the TK and the pre K forces the issue rather than standing back and putting the program in limbo and then not just losing the momentum that exists there. So we'll cross that. There's somebody at the microphone and tell me why I should recognize you.

Kimberly Rosenberger, with CDE and I just wanted to give some statistics on the TK staffing issue if that would help with the question that was asked. It's up to you. But I do think it addresses the shortages if you do it quickly.

And this is not a precedent for audience participation.

We were initially on the agenda, but we stepped off. So I do just want to flag that. Overall, 91% of LEAs reported having enough fully qualified TK teaching staff. 89% of districts have enough fully qualified TK teachers. And at charter schools, we're seeing 93%. So we are able to move forward with TK.

We don't see a need to delay the ratio teacher to student deduction reduction because we are getting report backs from our LEAs and from our school districts. That they have the staff and are capable of moving forward.

Thank you. And if you would provide a written copy of that to the Committee for the record. Absolutely. We'd appreciate it. Anything else on this item? Then let me thank you.

And I think we have talked just our General concerns about the architecture and those are things that we'll want to talk about in the negotiations in the coming weeks. But we really appreciate and Mr. Shope, you should get a differential for having to have done this assignment.

So we're going to move to item number two, the Federal Fund update. We're going to have Patrick Groeschel from the Department of Finance, Natasha Middleton from the Department of Education, and Edgar Cabral from the Legislative Analyst Office. So welcome to the Committee and we'll go in that order.

So we'll start with the Department of Finance whenever you're ready.

Great, thanks. Good morning, Chair, Members of the Committee. I'm Patrick Groeschel with the Department of Finance. I'll be giving a brief overview of federal funds at May revision as it relates to state operations and local assistance for the California Department of Education.

The May revision includes a total of 8.2 billion in federal funds for the California Department of Education in 25-26. This mandate of this is made up of 194.5 million in state operations and $8 billion in local assistance.

More specifically, new it May revision includes 9.1 million federal funds and three positions in state operations and 256.4 million federal funds in local assistance to reflect various federal grant award adjustments. This includes Title 1, Special Education, Nutrition, Public Charter Schools, 21st Century Community Learning Centers and Adult education.

We would like to note that when building the May revision, Finance typically receives final updates on federal grant awards in March annually due to issues at the federal level.

At the federal level, federal Fund grant awards had not been updated since October 2024 and so estimates built into the May revision are budgeted from that point in time except for a few grants where actuals were available.

While carryover information is as of March 2025, we want to note that we would like to continue discussions regarding adjustments that may need to be included for post May revision. That concludes my remarks, but I'm happy to answer any questions at the appropriate time.

Also, my finance colleagues are available in the room to answer any questions on specific proposals.

Thank you very much. We'll move to the Department of Education. Welcome.

Okay, thank you very much. Thank you, Mr. Chair and Members of the Committee.

You should at least pull it a little closer too, so you can be heard. I'm a soft talker. Yeah.

Thank you.

Thank you.

Thank you for the opportunity to provide a few remarks on behalf of the State Superintendent, Tony Thurmond, and the California Department of Education.

Under the Trump Administration and the current secretary, Linda McMahon, the federal fiscal landscape at the US Department of Education involves Executive orders, a 50% reduction in workforce, threats to withhold federal funding if not held in full compliance under new interpretations of Title VI and blaming DEI policies as a scapegoat.

We have encountered at the CDE an almost daily bombardment of notices involving delayed drawdowns, termination of funding, or threats to cut cuts to federal funding. As this continues, the ongoing dialogue from D.C. indicates the intention to, quote, return education to the states, end quote, without clearly defining exactly what that means.

In the month of March alone, the US Department of Education employees were subjected to a 50% reduction in force.

This included an elimination of the State Grant Relations Unit, which comprised of program officers who were liaisons between the states and the Department, providing General grant communications, updates and meetings solely dedicated to grants funding, tracking allocations of the same and evaluating programmatic impacts and effectiveness.

In addition, without notice, the Regional Office of Civil Rights based in San Francisco was forced to close by the U.S. Department of Education, and employees were immediately locked out of their laptops and devices, no longer able to communicate with the state education agencies on any outstanding issues or continued correspondence.

This office handled all California civil rights cases for the U.S. Department of Education. To this day, it is not clear who at the US Department of Education is handling complaints and open cases as we have yet to receive a communication regarding this drastic change.

Proposals for upcoming funding for upcoming federal funding and legislation continue to suggest drastic changes to federal education programs, but policymakers have not yet settled on what changes they intend to make. To encapsulate this experience, the Federal Government has placed state educational agencies and respective local educational agencies in a fiscal limbo that California students and families cannot afford.

The risks to programs and services would be dire and disruptive to students, staff and their families. Thank you.

Thank you very much. Now we'll move to the Legislative Analyst. Edgar Cabral with the Legislative Analyst Office. We don't have any specific comments here, just available if there are any questions. Okay, thank you. Let me just ask one global question of the Department of Finance.

Yes, sir. That's correct.

And the global question is just sort of the time frame of cuts we have received or might receive. And so thus far, the May revise contains any cut that we knew about at the time the May revise was locked down. Is that correct?

So we were able to address some of these issues that came up in the May revise. But until we get the big beautiful Bill or whatever else it is that is making its way through the Congress, we don't truly know what the impact is yet on the education piece of our budget. Is that correct?

Yeah, I'd say that's a fair characterization.

And if we have a budget that is adopted at the federal level that has billions of dollars of additional cuts to education, are we going to expect some kind of recommendation from the Administration on how to deal? When that's determined.

We will continue to monitor what's happening at the federal level and we'll continue working with the California Department of Education and the Legislature regarding any changes with federal grants.

Okay. I'm going to assume that over time it's going to be a yes, but I was just trying to get you to say it because I don't see how if we don't have billions of dollars of additional cuts, it doesn't come back to us in some conversation with all of you.

Yes, sir. Okay.

And at this point, this budget doesn't presuppose anything that might still happen. We are presupposing the status quo at this point, other than cuts we know about by the time of the May revise. Is that essentially correct?

Well, then it seems to me the report is very firm about what we know thus far, and there's a lot that we. We won't know yet. So I appreciate that. Let me ask my colleagues if you have questions or comments. Senator Ochoa Bogh.

So just two questions. Do we know as of right now, what is the total cut so far in federal funding?

Are you talking about for this fiscal year?

Yes.

You mean for this fiscal year or the budget year?

Budget. I'm assuming you're referring to the budget. You were talking about federal cuts.

Yes. So, we have, what is going on right now, we're waiting for the fiscal year '25-'26 funding tables, which, every year, the US Department of Education issues the upcoming fiscal year's funding tables, which lists all state allocations for all title funding, which is typically released and posted by the end of April.

This year, we were told that they were delayed because the Office of Management and Budget is reviewing the funding tables and data, as well as looking to identify ways that federal funds can be used to advance the Administration's policy priorities.

As of today, we still have not received complete funding tables to reflect all federal funding, as we face a month's delay, basically. Instead, certain funds have been sent out on a separate basis. Thus far, California has received Title 1, Part A, Perkins and IDEA funding—the funding tables.

While it cannot be confirmed 100%, we have heard that Title 2 and Title 3 will follow. In addition, Title 4, Part A and Title 4, Part B will come next, with Title 3 to follow. Unfortunately, the CDE relies on the funding tables to plan for our school fiscal year, which begins July 1 of this year.

We anticipate that the allocations on July 1 will move forward as planned, but knowing the exact allocation amounts is necessary for overall budget planning.

I'm sorry, the last, the last part you just mentioned?

That we anticipate that the allocations will come through on July 1, in order to move forward as planned, but we need to know the exact amounts so that we can plan for overall budget—for the state budget.

Okay.

Can I ask a follow up question? Because you introduced the subject of funding tables. I've never heard of them. I've been chairing this for four and a half years. I don't understand what that means. Does that mean that you have to wait till you get some papers from them to know what the impact is?

Or you can tell what the impact is individually, but that gives it to you in the aggregate?

So, since all these funds come through congressional approval, once they are approved, they are—the amounts are sent, the total amount for each, each title is identified.

But basically, you won't know what's coming to California from each title until you get these tables. Is that what you're saying?

Yes. The U.S. Department of Education issues these tables and there's actually one person who only does it for all states in the United States. And so, because the Office of Management budget is holding on to this, reviewing it, it's delaying the process of states knowing exactly what is being allocated for each Title Fund.

Thank you for letting me interrupt. Please continue with whatever question you have.

We're a team. We're a Committee team, right? We're all here for the same reasons. Okay. So, basically, we don't know what's outstanding yet. We're hoping to know in the near future.

Yes. But because they are statutorily required, we do anticipate seeing these allocations July 1st. But again, for planning, for budget planning, we need to know ahead of time, and the specific titles that I mentioned, We know what those amounts are.

We know what they are right now?

Yes, and we can get that if you're interested in that.

I just wanted to know whether or not we had any current cuts that were scheduled.

So, for, I believe, so, for IDEA...

And that stands for?

That stands for the Individuals with Disability Education Act funds.

We have a totally trained Subcommitee.

This Grant was decreased by approximately $4 million from the prior year.

Was increased or decreased?

Excuse me, decreased.

Decreased?

Decreased by $4 million.

Really?

And for a current grant year of approximately $1.47 billion.

Decreased as well?

Yes, although special education funding is expected to continue at current levels.

Really? A decrease? You might want to check with your staff in the front row.

Oh, yes. Sorry. Shiyloh Becerril, who's the Associate Director of Special Ed.

I'm just reading body language.

No, I appreciate it. I appreciate it.

Apologies. Shiyloh Becerril, Associate Director of Special Education. I got a little bit worried because it sounded like the decrease was $1.4 billion. The total grant award is $1.4 billion. We did have a decrease of $4 million, and that amount is about 0.3% of the total grant award. It is not a punitive cut necessarily.

It's really just a determination based on population that determines that amount. So, it's just mostly said, okay, this is what, you know, all states look like, and this is the total amount, and we cut it up that way. It's not necessarily a decrease based on cost savings.

Okay. It's just on population.

Yeah.

Okay. That's important to note because I was really, really surprised to hear, like, we're cutting funding for our children with disabilities because I know we're not fully funded, I mean, there's a shortfall on covering the cost.

Yes. So, federal funds cover about 12% of the total costs for students with disabilities and California LEAs.

Okay, perfect. All right. That's all I have for right now. Thank you.

All right. Thank you. Senator Perez, any questions or comments? Okay. Well, thank you. I think this is the overview we were looking for, but we know this is really going to change over time and we just expect you to keep us informed as that happens.

And I do want to play poker with your colleague in the front row because she cannot hide whatever she has in her hand. That would be totally good. So, I, I appreciate this and it was clearly a discussion about a moving target. So, we will keep posted.

So, now we're going to move to our third and final issue, the various May Revision proposals of the Department of Education School Facilities Commission on Teacher Credentialing. And we have Patrick Groeschel still here. Jodi Lieberman from the Department of Finance.

We will still hear from Edgar Cabral from the Legislative Analyst Office and Kimberly Rosenberger from the Department of Education. And we will begin with the Department of Finance. So, welcome to the Committee.

Good morning again, Mr. Chair, Members of the Committee. Patrick Groeschel with the Department of Finance. I will 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 proposed 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 and Governor's Budget, for a total decrease of 25 positions and an increase of $2.7 million for 2025-'26.

With the addition of these positions and funding, a total of 2,630 positions and $508.4 million 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 and 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 $7.3 million in 14 positions provided to support various Governor's Budget proposals, including resources support form J90 data collection. Another is principal apportionment replacement system project IT services support and one other proposal for sustaining cybersecurity investments and enhancing cybersecurity resilience.

I won't go over again the Federal Fund State operations since that was just detailed in Issue Number 2. Lastly, we wanted to mention the $15.6 million 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.

Now, I'd like to briefly give a brief overview around technical changes to proposals from the Governor's Budget. 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 Framework Standards and Instructional Materials Process, Educator Training for Screening of Pupils for Risk of Reading Difficulties, English Language Arts, English Language Development Instructional Materials, Supplemental Guidance, Individualized Education Program Template Translations, Literacy and Mathematics Coaching, Literacy and Mathematics Networks, and the Student Support and Professional Development Discretionary Block Grant.

Lastly, the May Revision also includes implementing language for new proposals, such as 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, Sun Bucks Program Eligibility and Verification Requirement, Differentiated Assistance, Regional English Learner Lead Agencies, Changes to California Ed Code in Support of A-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 Date and Specified Circumstances for Proposition 39 Clean Energy Jobs Act, One-Time Reading Difficulty Screener Support, Secondary School Redesign Pilot Program, Special Olympics, and lastly, Transitional Kindergarten Multilingual Learner Supplemental Funding.

Details on all these proposals are reflected in the May Revision letter, as well as the May Revision Trailer Bill that's been posted on the Department of Finance's website. Happy to answer any questions and I turn it over to my colleague Jodi Lieberman at this time.

Good morning, Chair and Members. Jodi Lieberman with the Department of Finance. My colleague just gave an overview of the education budget. I'll be giving a highlight of some of the issues that affect teachers. I'll also be going over some for the Commission on Teacher Credentialing and the Office of Public-School Construction.

So, first, I have an overview of the Student Teacher Stipend Program. The May Revise 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 million one-time Proposition 98 General Fund to be allocated to Kern County Superintendent of Schools, to serve as the administrative entity of for the program and 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 student teacher is teaching.

Those eligible include candidates enrolled in a program of professional preparation and for preliminary multiple or single subject credential holders, education specialist, or Tk-3 early childhood education specialist credentials.

2% of the total appropriation may be reserved for Administration outreach and Kern County will be responsible for collecting relevant information from student teachers and submit a report to the Legislature and the Department of Finance by January 1st of each year and conduct 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, career technical education programs, and labor organizations.

Next, we have the Literacy Instruction Professional Development Investment. The May Revise includes $200 million one-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 Framework. The trailer bill language is modeled after professional development included in AB 1454.

The Administration's proposal includes language that requires the State Board 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 Tk-5, who have already taken the new Literacy Performance Assessment 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 and waivers that some preliminary credential holders received during the Pandemic. Next, I'll cover the BCP investments for the Commission and Office of Public-School Construction.

The May 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 credential and the Commission's IT operations.

Additionally, the May 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.

For the School Facility Program administered by the Office of Public-School Construction, the May Revise proposes a General Fund solution to revert the unexpended balance of one-time statutory appropriation in the 2023 Budget Act for Tk-12 school facilities construction to be allocated through the School Facility Program, totaling $177.5 million one-time General Fund. That's all, and I'm happy to take I'm happy to take questions at the appropriate time.

Said complete the Department of Finance presentation. Thank you. Then, let's move to the Legislative Analyst.

Edgar Cabral with the Legislative Analyst Office. I wanted to just add a little more details to some of the recommendations that were discussed on Issue 1, or in some cases, we have a few recommendations or comments associated with other proposals that didn't come up in that first item.

First, on the Expanded Learning Opportunities Program, we did, in the first item, discuss our recommendation to reject the increases in funding for the proposal. We do recommend adopting the increase to the minimum grant size amount. We think that can be done with minimal effect on rates for other districts that are in the program.

There is $21.9 million related to the Sun Bucks Program in the May Revision. This is a relatively new federal program that provides $120 in food assistance to students that qualify for free and reduced-price meals.

This funding—there's Prop 90 General Fund and then also federal funding that's intended to cover district costs for administering the program because they would be required to process applications and verify income eligibility in some cases.

We do think that additional funding is necessary to comply with the, with the federal funding, with the federal requirements, and also to cover district costs. We would just note that the May Revision doesn't have an allocation formula for how those funds would be distributed across school districts.

And we also are still working with the Administration to get a better sense of where that specific $21.9 million cost estimate came from. On the, the Student Teacher Stipend Program, so this replaces the loan repayment program from a proposal from January.

We recommended rejecting that proposal primarily because we thought that there was an evidence that showed that this kind of a program would increase the supply of teachers and also, because it was not targeted to subject areas and schools that have the greatest teacher shortages. We would have those same concerns with this proposal, so we would recommend rejecting.

On the literacy and math coaches, we did mention earlier, my colleague mentioned earlier, that we recommend rejecting that proposal in part due to the changes in the fiscal situation.

But we would also note that the math coaches proposal specifically has been updated and from our perspective, is less targeted to the schools and school districts that would have the greatest need and would benefit the most from those funds and rather, spreads those funds thinner across a larger amount of school districts.

We recommend rejecting the proposal for a secondary school redesign pilot. There—the goals and the specific outcomes of that pilot are unclear and given the limited time that the Legislature has to review these proposals during the May Revision, we recommend rejecting and something like this could be revisited at a different time.

And then, finally, regarding there's a proposal one-time funding for funding for transitional kindergarten multilingual learners. This is intended to be funding that mitigates reductions in supplemental and concentration grant funding for school districts. Given that the state has—is now exempting TK students from determining whether they would qualify as an English learner, as the state is transitioning to a developmentally appropriate tool for that purpose, we do think that some additional funding is reasonable because there are going to be some school districts that are affected.

The formula that the Administration is using is based on the overall attendance of—the attendance in the school district, or TK attendance, and the percentage of students in that school district that are English learners or low-income.

We think you might want to consider changing that approach to focus specifically on the proportion of English learners in a school district since that's going to be more closely tied to the likelihood that a district would lose funding because of this change. That completes my remarks, but I'm happy to answer any questions. Thank you very much.

And then we'll move to the Department of Education.

Thank you. Kimberly Rosenberger with the Department of Education, on behalf of the Superintendent, not breaking protocol this time. We acknowledge the difficulty of this year's budget and the limited revenue, so we're appreciative of many of the creative proposals that are submitted into the mid-year revise.

We would like to highlight areas that are a key priority for us at the CDE, for the Superintendent Tony Thurmond, as well as areas where we have a little bit of concern, starting with the Expanded Learning Opportunity Program, ELOP.

We are appreciative of those additional dollars as we are seeing both increasing the 50 to 100,000 gets rid of the barrier that many rural districts have had in participating in the program, but also, reducing the unduplicated funds from 75% to 55%, that increases to Tier 1, which allows many of our districts that haven't been able to participate to engage.

This has been a hurdle for us for many years and we think it's particularly important this year as our districts—over 80% of LEAs are working to implement TK and they reported combining the ELOP with TK to create a full day experience—allows for more participation.

And about a third of the sites offering TK do not offer full day TK, which is why this extended program is really important for those school districts. Superintendent Thurman is advocating to also have that be based on a competitive basis grant—competitive grant basis, so that there's schools that are intending to extend their program and extend their year.

Additionally, literacy is a top priority. There's a lot of funding and resources for literacy, including the $200 million for professional development that aligns with AB 1454. This has been a priority for the Superintendent for CDE. We asked for it last year.

We think it's urgent. It's proven to help students. We're closing the gap on literacy in California, which we have—need to continue—and not take our foot off the gas, which is why we are advocating for this money to be included in the final budget, as well as the $500 million for math and reading coaches.

This is really important, as we know nationally, but particularly in California, there is a shortage. So, this investment helps address those concerns. And we would like to see prioritized inclusion of the California universities and we offer assistance in getting the CSU and UCs to help increase the opportunity for more coaches to get into our public schools.

Additionally, we are supportive of the $10 million one-time fund for the screener, $25 million for the literacy and math network. We also do want to highlight, on the people nutrition and food assistance, while it was under federal, we need the state dollars in order to receive that drawdown. That's incredibly important.

Previously, it was a summer EBT, now called Sun Bucks, and the way the federal guidelines make it, we need those additional state resources because it can't be done under LEAs. We also wanted to flag, for the Regional English Learner Lead Agencies, that we are very supportive.

We've been very successful in expanding this program with the first and second cohort and would like to see that third cohort but wanted to flag that we have concerns around adding an additional lead because that could lead to delay in fragmentation. And finally, trying to keep it very short, because I will also play poker with you.

We are disappointed in the state preschool program, COLAs, that are proposed. They are being swept while we know that we are pending higher reimbursement rate needs and that there is a collective bargaining rate increases on the horizon.

We would recommend the COLA dollars be retained but the methodology for allocating them be modified so the dollars can go both to high and low-cost counties.

I'm gathering that completes your comments.

That's all for me unless asked.

Okay, thank you very much. I'm going to, in a second, go to my colleagues first. But I just have one quick question of Finance and that is, for the Fund that's either $1.7 or $1.6 billion discretionary grants, wherever that lands, AB 218 settlements are allowable expenditure out of that Fund. Is that correct?

Out of what Fund?

The Discretionary Grant Fund. It's the $1.6 billion.

Hi, Alex Shoap, Department of Finance. Is a fully discretionary block grant. So, I think those will be allowable uses under the program.

Thank you. I appreciate the answer. Then let me go to my colleagues who has questions. Senator Perez.

Well, a couple of things that—I just want to highlight that I appreciate that have been included in here. I think, you know, first and foremost, this literacy piece.

I think this has been, you know, something that's been discussed for a while and I know that there's some legislation that's been worked on that will eventually make its way over here. But, you know, I think this is something that's a worthy investment.

Obviously, we've needed to move the needle on literacy rates here in the state for some time and will be really, you know, exciting to see the kind of impacts that this has, just on literacy rates for the entire state. In terms of monitoring impacts of investments like these and we're making these really large-scale investments, how do we go about like doing that?

Are you—is that going to be on a yearly basis, on a regular basis, you'll be providing us with updates for how those dollars were allocated and also the kind of impacts we're seeing on students and the outcomes? I guess CDE, I would imagine, collects that information and data, but.

Yes, we do regular reporting. I am getting three dots, but I can call up Jennifer who can speak directly to that if—on the reporting requirement.

Hello, is it? Okay. I'm Jennifer Howett with the California Department of Education. We do have a legislative report due December 31st of this year. So, that will be coming to you.

The legislation, as it is written in the previous cohorts and this upcoming cohort, is asking for an interim and final report from the LEAs that are getting the funding.

But at the CDE, we're actually asking for an annual report so we can continually kind of track the investments that are happening and be sure that funding is being spent appropriately.

Okay.

But I do want to note that we have taken that 7.95% cut and a lot of that has impacted our ability because it is strictly on our operations budget. So, it is difficult for us to maintain the regular reporting required by the Legislature with that impact.

Okay, great. Yeah, that's exciting investment but you know, also useful to know what's happening with those dollars and the kind of impacts that we're seeing but also hear you on the amount of time and resources that it takes to actually put together those types of reports. So, appreciate that.

I wanted to speak a little bit to the wildfire related property tax backfill, which I appreciate and very grateful that this was included as well. As many of you know, I, I represent the Pasadena area, the Altadena area, the San Gabriel Mountains.

So, this is something that's definitely needed, especially for the Pasadena Unified School District, which covers all of Aladena and all of the areas that were impacted by the Eaton Fires. Appreciate that it's included both for this school year and for next school year.

So, you know, just wanted to hear and for this if that'll be something that we continue to revisit. Obviously, the rebuilding process is going to take some time. It's not going to be immediate and in talking with folks from Paradise, you know, I think they're on year seven right now.

And you know, this is a six-to-eight-year endeavor, you know, to, to, to be just perfectly honest. And so, you know, I'm not anticipating that we're going to see those ADA numbers suddenly, you know, go back up to where they were, come next year, even the year after.

So, how will that process work to kind of monitor the situation, especially as we go through the rebuild and to also make sure that the school district is not impacted as a result of these fires and there's the tremendous loss that the community went through?

Discretionary block grant does allow for impacted LEAs, such as LA and Pasadena, to benefit from special allocation calculations and reporting requirements. So, there are proposals in the May Revision that allow for flexibility for those areas, but I think in terms of monitoring and ongoing support, we can get you additional information on that.

Okay.

Yeah, I just want to make sure that we're regularly like kind of revisiting this on a, on a yearly basis, to see what ADA is looking like as we're going through the rebuild process, as families are beginning to return.

You know, I know families that are traveling from Anaheim to Pasadena, which, for those of you that aren't familiar with Southern California, that is like a two-and-a-half-hour drive and can sometimes be more than that with traffic, just to get their kids to school.

I don't know whether or not those families are going to continue doing that after they get past this school year. I mean that is just an incredible amount of time to spend on the road to have your kid go to school. So, you know, I guess, how will that process work? So, we continue kind of discussing this.

Right. So, the May Revision proposal, of course, it includes—so there's, there's the, the $9.7 million backfill for Basic Aid Districts—Non Basic Aid Districts—which make up most of the property tax losses we're seeing. There's an automatic property tax backfill mechanism, for, for property tax losses.

I think, as I mentioned in the first panel too, we're also re-benching the guarantee, so increasing it to make sure that there's not really kind of like a double hit to schools, right, because, you know, there's that additional backfill funding through the LCFF that's sort of crowding out other programs. I think as far as moving forward, I think it's, you know, something that we'll certainly monitor as we move into the next budget cycle.

A couple of other things I wanted to ask related to the fires. Many of the surrounding school districts in my district have taken in some of those students. So, San Marino Unified, La Canada Unified, took in several hundreds of students because they're immediately bordering PUSD.

In those cases, I—many of them have shared with me that they've been very confused about what the process will be for, you know, covering the additional cost and taking in, you know, an additional 400-500 students. These might—the school districts in my area are very small, so that's actually significant amount of students for them.

So, will we also be like adjusting to cover some of the costs that they incurred, to accommodate those additional students as well? And is that included here?

Can I just ask a clarification in your question? Were those school districts you named basic aid school districts?

No.

Okay. So, this would have to be covered different than the basic aid line?

Yes. Yeah. Basic Aid Districts are those that are in the Palisade. PUSD is not a basic aid district, as I'm sure you know, but.

Well, no, there's 58, so, in the state. So, I thought there was a chance they veered into your area. So, go ahead, go ahead. Thank you.

In Ben Allen's district, but not in mine. But they are still also—we need to take care of their needs as well in the Palisade, so.

Yeah, thank you for the question. Amber Alexander with Department of Finance.

In terms of the Local Control Funding Formula, which is, you know, the, one of the largest sources of discretionary funding for districts, there is protections built in, as my colleague had mentioned, in terms of overall funding, to the extent that those students are increasing the attendance in those neighboring districts.

The formula is calculated on the basis of the greater of current year, prior year, or the three prior years. So, that is a natural protection in the trailer bill language.

To the extent that it's a charter school that's impacted, you do see some language holding harmless those charter schools from declines and their attendance that is specific to the '25-'26 years. So, any protection for future years would need to be considered as part of conversations ongoing.

But in terms of districts themselves, the Local Control Funding Formula does have some protection there.

Okay, so...

Can I ask a follow up quickly?

Yes.

Because it seems like you're addressing the question of the places that there are reduced students, but how does that address the place where there are increased students, which was the original question?

The funding formula is calculated on the basis of ADA, so to the extent that those students are enrolling in those neighboring districts and increasing the attendance in those districts, those would be captured through formula adjustments.

And is there some conflict between the districts where they each would like to claim them because somebody was—lost their house in a district but is enrolled in another district? Is there a way this is clean so that we're not going to be asking about this next year because both districts were claiming them or something?

Yeah, that is a nuance that I think may require some further exploration. In terms of the current year impacts, those are protected largely for those districts that are having the decrease through the J13A process, to the extent that it is resulting in a material decrease to their attendance.

So, they're largely protected in the current year, again, through the LCFF Funding Formula, going forward. They are largely protected as well through the mechanics of that formula. The basic aid—if they were to be Basic Aid Districts that would be experiencing this impact.

Those—that is not something that additional funding is provided for in the budget, though we know that we have heard from some neighboring districts that are basic aid. They're taking in those students.

Well, that seemed to be, I'm sorry, because I'm interrupting Members' questions, but that was an issue over in the Ben Allen area where there were basic aid schools taking displaced students and then not getting reimbursed. Are you saying that is not addressed in this budget somehow?

There's no additional funding for Basic Aid Districts that are taking in additional students. I think, in conversations with those districts, I know many of them were in a state of declining enrollment as well, not necessarily to the point where they were flipping out of that basic aid status and triggering an LCFF entitlement.

That is, I think, something that we would expect.

And I would just note that that's probably an issue of concern the next month—is seeing if we have to address the Basic Aid Districts that are taking additional students. Anyway, I'm sorry, please continue.

No, I appreciate you asking this because I mean, that is exactly something that my, my colleague, Senator Allen, would want to know, and even though he's not here right now, I feel like we've kind of become very close as a result of these fires.

So, I may not represent the Palisades, but I understand the hardship that they're going through because of what I'm going through. So, we definitely need to resolve that and get those folks some answers.

Appreciate that the LCFF covers, you know, covers those, those additional students, you know, for those that are not Basic Aid Districts and that that is included. This happened in the middle of the school year, as you know, right. This occurred in, in January, so some of those students moved around, around, you know, January, February.

So, the recalculation of the increased ADA would happen then in this upcoming school year, so that's when they would get that additional funding. It would be in this kind of next cycle.

We would make an adjustment in the current year, but I think the Department of Education was working really closely with those impacted, to direct them to the J13A process during the, during the fires.

So, in the current year, those districts should be largely impacted to the extent that they did file and go through that process with the Department of Education.

Okay, thank you. The final questions I—a question I wanted to ask, fire-related, was around testing and soil testing for some of these schools. You know, we have, for example, Jackson Elementary, which is right now the only elementary school that is open in Altadena.

And there's been, you know, concerns from parents, students, families, rightfully so, about the safety, right, ensuring that there's not lead present on some of these campuses and testing that's been done. PUSD did this recently at some of their campuses and the results were—looked well, they were positive, so.

But we know that that also requires a cost. Ideally, those costs are reimbursable by FEMA. And then there's also uncertainty about what may happen to FEMA as a result of this new Federal Administration.

Has—have we ever been in a situation before where we've covered some of those expenses or, you know, assisted with covering some of those expenses? You know, I think the safety component is something that's really important to parents and to families and so.

But also recognize that so many of our school districts are facing some financial challenges right now, so.

I'm going to turn it over to my colleague who covers facilities. I would just note that during the emergency, there was a multi-agency approach, with both our partners at Camp Cal OES, Office of Public-School Construction, the Department of Education, and others to help navigate some of those processes and particularly some of the safety concerns.

But I'll let her elaborate on that.

Okay, thank you.

Hi again. Michelle Nguyen, Department of Finance. There's nothing included within the May Revision for that—within the education budget—that is for that purpose specifically. I can check with our colleagues in our kind of like natural resources area to see if they have any kind of like a specific response to your question, but.

Sorry to call them out. I also have some colleagues from the Office of Public-School Construction. I don't know if they have anything that they want to offer.

Let me just add a thing here, which is that yes, the Office of Emergency Services has supervised or involved in some testing, but in other incidents, it's the Department of Toxic Substance Control, or its various agencies that are over in the Environmental Protection Agency.

I didn't hear them mentioned in your listing of agencies, but that would be the one. I know in other fire events, I know in the Moss Landing Battery Storage Fire, they are doing the testing about a lot of the stuff that's come from that. So, that may be the place that some of that is happening.

Yes, if you want to, it's fine if you use that mic, if it just short circuits the commute.

Thank you, Mr. Chair. The commute wasn't too bad. Okay. Rebecca Kirk, Executive Officer for the Office of Public School Construction.

So, Senator Perez, certainly here the question and concern, it's one that we've heard from the Pasadena Unified School District recently as well, in terms of the cost that they've undertaken to do soils testing at various sites impacted and kind of outside of the burn zone.

In our program, we don't specifically have a funding source for that type of work. We do with Proposition 2, which was just passed by voters in November 2024.

The state allocation Board that we're staffed to has the authority to provide disaster assistance funding which can be used for interim school sites or for other assistance coming out of a natural disaster for which the Governor declared a State of emergency that has impacted school facilities.

At this point in time, we're looking at that funding opportunity primarily as tied, like our other State Allocation Board funding opportunities, as being more directly related to the school facilities themselves and not necessarily an operational, more of what might be viewed as more of an operational expense of conducting testing in this way.

I know you mentioned as well FEMA. So FEMA public assistance is often a source of funding that might be used for these types of experiences or costs incurred following a disaster. But you know, you raise of course a valid concern there as well in terms of some uncertainty at the federal level perhaps.

Okay, that's, that's helpful to know and that it could be possible for us to tap into Prop 2 funds if we need to. Obviously I think we want to ensure that those costs are covered by FEMA.

But I think many Members of my community, so school board Members and other leaders are just a little bit nervous hearing both the President as well as the head of the Department of Homeland Security situation suggesting that FEMA could be eliminated this year and so, and what that would mean in terms of the recovery of some of those major costs.

So I, yeah, that's helpful to know. Just wanted to know if there was even a pot of money that we'd be able to tap into for something like that.

And do want to highlight, I know from the study that was initially done from pusd, those results looked positive in that they were negative, you know, for lead and some of those other toxic substances. Not to confuse folks so.

But just want to continue to provide reassurance to families and to those that have small school age children that are in the surrounding area that was impacted. So thank you, that's really helpful and appreciate you all answering some of these questions related to navigating some of these fires and the recovery process.

Thank you. And just before I go to Senator Ochoa Bogh, let me ask another follow up question because as was mentioned, the discussion has mostly been about the immediacy of the fires that happened earlier this year and the response. But paradise happened in 2018 in my own district.

The CZU fire, Bonny Doone district in 2020 lost homes that contain 27% of the student body of that district. And there have been, in a few past years we've had a special call out for paradise in some budget actions we've taken.

My question is how do we make sure that when the solutions are ongoing past the first two or three years that they're coming to us or they're addressed in the budget? Because the thing that's my concern is, is the answer to one of the questions is, is.

Well, there was the rolling three year attendance thing that allowed districts that had a substantial loss in attendance due to fires to weather it. But it appears in some of the districts we're moving out of the three year rolling thing and they have not rebuilt and they have not addressed some of the issues.

How do we know that they're being taken care of in the budget? Or do we have to have special call outs for districts that are in that, that situation? If they move past the three years, what do we have to do to make sure that, that the continuing ones are being addressed?

I see the LAO moving to the mic.

Yes. Edgar Cabral with the LAO. So I think in those cases there has been a separate specific either appropriation. Or other language associated with it. I believe in the case of paradise, and I think that was, I think it's a little different than that. I think the proportion of the, of.

The attendance lost in paradise was more significant. And so I think that there was. I believe there was the fiscal crisis management assistance team did a review and.

There was a determination of some amount of temporary funding that would be provided over a few years to, to give them a little bit more time to adjust to the lower attendance level. So that, but that did, that was. Something that was separate. That was additional trailer bill that was added in the budget associated with it there.

It wouldn't be part of the automatic.

Well, no. And I would just like to know that somebody's not falling through the cracks because I take it upon myself to call the Superintendent in my district and say, are you covered for this next year?

What's happening and they went in and out of Basic Aid because of some Lockheed facility which just complicated it because they were a rural school district that really didn't have a lot of wealth just in one facility.

So I would just and maybe we can double check with some of them, but I just like to make sure there's nothing we have to do for Paradise, Bonny Doon or a couple of the other districts that burned longer than three or four years ago. Okay, thank you, I appreciate that.

Let me ask Senator Ochoa Bogh who may actually be conferencing about the question, if you have any questions.

I do, I do, Mr. Chair, thank you. So in the May revision we're seeing an increase of $526 million for the expense and learning opportunities. So I see the right folks coming up on there.

It seems that based on the fiscal situation that the state is currently facing, the increase on ongoing spending for categorical programs might be less prudent than perhaps moving that funding towards increasing the COLA.

As an example, if we insist on using those funds as ongoing or increasing the one time discretionary block grant to provide schools with more flexibility to address the most pressing budget concerns.

As mentioned by the LAO a little earlier, considering the LAO raises the concern that in their write up that the May revision would task districts with hiring staff and expanding local programs based on funding levels that the state might not be able to sustain, we're worried that the budget is expanding programs in a one year that might see cuts to the next.

Talking earlier about the the instability for school districts to be able to plan ahead.

So one for the Department of Finance, what considerations were taken when deciding to increase ongoing spending for programs like ELOP with uncertain future fiscal situations that are facing the state and for the LAO, where or how would you suggest the 526 million be allocated?

George Harris with the Department of Finance. So for the expanded learning opportunities program, the May revise is updating the program to move forward with the Governor's budget proposal.

This proposal was to decrease the eligibility threshold for Rate 1 local education agencies, they get the higher amount of funding to implement the program and in doing so they have to are required to have expanded learning after school programs for all students in the district.

So in the Governor's Budget when it was initially proposed, we increased the funding to allocate for the 475 local education agencies that were moving to rate one. When we decreased the threshold and in the May revise, updated data required us to increase the cost to accommodate for the additional Rate one local Education agencies.

So the increase in funding for the May revise is really just to move forward with the original proposal from the Governor's Budget using the most up to date information.

And I'm assuming that was because of the need of the academic need or what was the determining factors to decrease the threshold or.

Yeah. So part of the after school programs, these programs that the students are in, they do get more resources. It's to target the unduplicated pupils, are English language learners, foster youth, homeless youth. So making sure that some of the most underserved students are getting more resources after school as well as during school.

Okay, and then the lao.

Yes. So in terms of our recommendation, we. Have this whole alternative package that does a number of things, but you can. Think of rejecting the expanded learning proposal. Similar to our suggestion to delay the 10 to 1 ratios in TK would. Be a way to reduce ongoing spending. So that we would avoid having to.

Do things like doing a deferral to. To, to Fund programs and as is. In the May revision. So that reduction all the actions that we take to reduce ongoing spending ensures that we can Fund a level of. Funding in 2526 that is aligned. With our overall ongoing spending amount.

So I think the overall concern is just that we're, we're, we're expanding, right? We're giving this these.

But you know, do we have a guarantee that we'll be able to continue that funding for these schools to be able to help keep those programs in place, meaning the staff that they're going to have to hire or are we, or are districts going to be concerned about whether or not they're going to be guarantee that that funding moving forward and be able to keep those positions available?

Brittany Thompson, Department of Finance. So this proposal is funded by ongoing funding. It's not one of the proposals that uses one time funds. Okay. So there is assurance that the money will be ongoing.

Okay. So even with the state, with the, with the proposed, I mean with the state, the State of affairs of our finances, we think that this can be done ongoing.

We think this can be done.

Okay. Well our school district should be very, very happy to hear that in their financial planning. So the LAO suggests that reducing funding for the California State preschool program by $336 million and that this would align funding the program cost for the Department of Finance.

Has the Administration discussed this suggestion or do you have deferring thoughts on the alignment of the funding level? And second to that, is this funding set aside to cover potential parity agreement with the pending child care negotiations.

George Harris, the Department of Finance. The May revision does not include any additional savings in the California State preschool program. We're maintaining the base funding for the program proposed at the Governor's Budget, but we're open to conversations about any potential savings moving forward.

Okay.

All right. So is that also your answer for the sending, setting aside some funding for the potential parity agreement with the pending child care negotiations?

We're, we're just open to continuing the conversations around those savings for the California State Preschool Program.

All right. Anyone else? Okay. See the smiles there? Thank you.

Are you done? Thank you. Then let me follow up with a few questions. One is, and maybe with finance, when we had the literacy proposals in front of us in the spring, I'm not going to remember the right number, but there were 12, I think, individual proposals between training of teachers and operations and stipends and different things.

And in the May revision adds additional investments. Is there has there been any thought of some sort of consolidation so you don't have to do 12 reports and we try to focus on this, or are we still sort of adding in one offs on this?

Amber Alexander with Department of Finance. You do still see in the May revision the approach of several different investments targeted at literacy in terms of whether there's consideration to streamlining?

I know in drafting the various proposals, there was a conscious effort to try and keep any reporting, both on the data side and the actual reporting side, consistent and streamlined. But there is not a kind of universal report that would cover all of the literacy investments that are being proposed.

And when you say the reports were the reporting function was sort of being streamlined, what does that mean? Does that mean that they're reporting similar things but it's not one report? I mean, where are we from getting to a point that people don't have.

To do 12 reports in terms of drafting of each proposal? There was consciousness given to looking back at data points and reporting deadlines for other programs that exist and trying to make sure that to the extent any of the data points were duplicative, that there was a way to streamline.

You saw that with, most notably with the math and the literacy coach, where there is explicit language saying that there can be a, you know, opting out and that the template that's developed by the Department could be the same for both programs.

Again, that's not consistent across all of the literacy programs, but there was at least awareness to the different reports.

I would try to politely say I really appreciate the awareness and I hope we can act on the awareness going forward. It just tried to continue that.

And I know I sort of said to somebody from the Legislative Analyst yesterday we were not going to do the renegotiate the split between K12 and community colleges in the next few weeks. And I don't think we'll do this in the next few weeks.

But, but just a signal that we're very interested in and we'd like to see that because I think it's hard on some of the districts to do all these multiple reportings and target different things when we're trying to address the literacy issues and focusing on them.

Maybe by three things would just make a lot of difference and maybe allow a little extra money go to actually addressing literacy. So just for that then the other question I had was there's 100 million for for student teacher stipend grants here and we also have the Golden State Teachers Grant program administered by the Student Aid Commission.

So now we would have two programs. And I was wondering why there isn't just proposals to put the money for both in one program. What is the the need to have two different ones in this.

Jodi Lieberman with the Department of Finance. I couldn't comment on how the Golden State Teacher Grant is operated, but I can speak to the student teachers stipend.

I appreciate you can speak to it, but my question is the why. Why do there have to be two different.

I would just point out that there's a different function with the stipend program and that we're trying to compensate students, student teachers for their for their time in classrooms doing student teaching, since currently that's essentially unpaid, the time that they're in classrooms teaching, teaching students is unreal.

This will break down a barrier for people becoming teachers because they can't afford to do the unpaid stuff.

That's correct. Yeah. Okay.

Even though you could do this with stipends from the other thing for that purpose and have one program but.

Liz Meyer the Department of Finance. I do also just want to clarify that I believe Golden State Teacher Grant program, that funding is a non Proposition 98 General Fund, whereas for the stipends it is Proposition 98 General Fund which does shape how the funding can flow. Because you can't intermix it. Is that what you're suggesting?

Well, Proposition 98 General Fund needs to necessarily go through an LEA first for. Right. For school purposes. Whereas General Fund can go to.

There's times when I think we look for ways to make things more complicated. The LIO looks pregnant with a.

Yeah, maybe this is. This is going to you're going to have memories of your conversation on this. But this is an area where again, I think we think that's a choice that you could make if you wanted to.

Traditionally, funding is is typically goes through an LEA when it's in Prop 98, but there are exceptions to that rule. The Legislature has broad authority to determine what is considered an educational expense for the purposes of Proposition 98. So there is flexibility there. But it is something that in practice.

Has not happened as as commonly in in the past with programs like that.

Okay. Thank you. Food for thought. That completes my questions. Are there any other questions or comments here under the sun then? Thank you. And I know that that between us there's still some work to do on some of these items and we will do it hopefully in the next few weeks. But I really appreciate the panelists.

I appreciate the people that run up out of the audience and sit down and run back. But this has been really helpful and I think a good overview. You. That completes the three issues we were going to talk about. And this brings us to the section on public comment.

And let me do and if you're in the somebody's presuming it in the back already. If you're in the hallway, come in so you can tell me that you want to do public comment. So let me ask how many people would like to make make public comment.

Then we have enough time to allow a minute, which I know just thrills you to death. But we'll consider a minute for anybody on any of the items that were on the agenda today and line up and welcome to the Committee. No, that's you. Yes. State your name.

You have up to a minute to tell us what you want to My.

Name is Dr. Christopher Anderson. I'm the elected chapter president of the Stockton Teachers Association. We are here as part of a delegation of chapter presidents from across the state representing California Teachers Association. The Stockton Teachers Association represents classroom teachers in Stockton Unified School District and the City of Stockton.

We're alarmed by the devastating impact of harmful federal policies and budget proposals that are having on our most vulnerable students and families. These actions have created widespread uncertainty in the schools and communities we are dedicated to serving.

We call on Legislature and Administration to stand firm against these reckless federal measures and to work together to increase revenues in our state and pass a state budget that upholds a collective commitment to protect public education and supporting working families and those living in poverty.

CTA remains unwavering in our commitment to partnering with state leaders to fight for creative revenue raising solutions so we can protect and build the California that our students and our families deserve. Thank you. Thank you very much. Appreciate it. Welcome.

Mr. Chairman, Oracio Gonzalez. On behalf of NextGen California, we're in strong support of the governor's proposed investments to fully Fund the universal school meals program as well as the proposed investments for the kitchen infrastructure and training program.

We know it's a tough budget, but would urge you to try to incorporate those investments as you negotiate the final agreement. Thank you. Thank you very much. Welcome.

Hi, Kelly Longo Flores with the California Association of Food Banks. Thank you again, Senator Laird, for your support of the food banks and Committee. My name. We stand alongside 41 food banks across the state with a mission to end hunger.

We thank the Legislature for its leadership in establishing and upholding school meals for all and the kitchen infrastructure grants which ensure that students have the nutrition they need to learn and thrive. We urge maintaining full funding for this program, including the infrastructure grants, as it's essential for supporting California families and combating childhood hunger.

We ask that the Legislature continue to strengthen assistance for families and children, children facing hunger by maximizing access and drawdown of the Sunbucks program by creating an online statewide application that would be tremendous.

And providing $6 million for a summer caregiver meals pilot to ensure parents and caregivers can sit down and have a meal with their children at summer meal sites located at the public libraries. Thank you very much for your consideration. Thank you very much. Welcome.

Good morning Sara Bachas with Children Now. We're very pleased to support the additional TK funding to ensure that 4-year-olds are in age appropriate classrooms and urge the restoration of the COLA for the state preschool. Those are the programs that are affected at the federal level as they don't know the uncertainty with Head Start.

So really important to take care of our littles. And we're also supportive of targeted funding to address literacy and math challenges as well as compensating student teachers with a minor modification that we ensure funds are actually targeted based on need.

And lastly, we do oppose the administration's deferral proposal and recommend maybe considering the elimination of the discretionary grant to minimize the state's uncertainty to better position our schools to weather possible cuts in the out years. Thank you.

Thank you very much.

Good morning. Sasha Horowitz, Los Angeles Unified School District. On behalf of the district, we greatly appreciate the Governor's Budget proposals that maintain commitments to 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 teacher ratio. We share concerns with the proposal not to appropriate the estimated 1.3 billion in one time.

24:25 Proposition 98 funding in the Budget act and for not providing a COLA to the California State Preschool program. We will follow up soon with our letter outlining our other priorities and our recommendations in the final state budget. Thank you.

Thank you very much. Welcome, Mr. Chairman. I have a shorter list. Jeff Frost, representing the California School Library Association. We're here urging you to fund Senate Bill 478 by Ms. Ashby which would create a library lead.

The importance of this bill is that for all of the funding that the Governor has put into literacy over the last several years, the area that has been lacking is getting books in the hands of poor kids in low performing schools are elementary schools in particular.

And we think the library lead is the sweet spot to be able to address that specific need. We would urge you to look at perhaps shifting $5 million out of the literacy coaches for this purpose. Thank you very much. Thank you very much. Welcome.

Thank you. Good morning, Chairman and Senators, and thank you for this opportunity. My name is Kelly Wachowitz and I'm the Executive Director of the California Association of Student Councils, a not for profit organization working for 80 years in the state to provide youth leadership programs across the state.

I'm here to support a budget item providing a grant to cascade. Our programs support emergent student leaders from all walks of life. Core to our mission is the belief that you don't have to be ASB President to make a positive contribution to your community.

The proposed grant will support over 90 conferences and programs in every region of the state, engaging approximately 5,000 students. We specifically focus on youth 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 programs to support students on CTE pathways.

Thank you for consideration of this one time grant on behalf of students across the state who want to be change makers.

Thank you very much. Welcome.

Good morning. My name is Spia Nicolaescu and I'm a current junior at Bella Vista High School here in Sacramento. For the past year I've participated in programs from the California Association of Student Councils.

And I can honestly tell you now that in less than a year it's been the most impactful opportunity opportunity I've had over my entire high school career.

You mean even over sitting in this hearing?

Yes, absolutely. It has brought me to the. Just checking. I started out with no knowledge of the legislative process and now I have the chance to lead a conference with presentations to the state board. Our organization is really unique in that it's completely student run.