BILL ANALYSIS
SENATE COMMITTEE ON EDUCATION
Leroy F. Greene, Chairman
1997-98 Regular Session
BILL NO: AB 602
AUTHOR: Davis
AMENDED: July 2, 1997
FISCAL COMM.: Yes HEARING DATE: July
9, 1997
URGENCY: No CONSULTANT: Jim Wilson
SUMMARY
This bill rewrites state law concerning the allocation of
funding for Special Education. The bill establishes a
means to transition to the new funding mechanisms by making
equalizing adjustments to per pupil funding levels on a one
time basis, and then implementing a new method of financing
that has as its ultimate goal allocating equal funding per
regular pupil in average daily attendance (ADA).
BACKGROUND
In 1980, California extended the Master Plan for Special
Education (MPSE) statewide eliminating the
overlapping patchwork of categorical programs that had
financed special education with separate funding for
different handicapping conditions.
To promote efficiency, the Master Plan organized school
districts and county offices into 116 Special
Education Local Plan Areas (SELPA). SELPAs differ in
size and composition. Some SELPAs serve only one
district, others are operated by county offices
serving several districts, and perhaps other county
offices. Although the SELPA is the basic
organizational unit of special education, funding
currently flows to SEPLAs through school districts and
county offices, whose elected trustees are ultimately
accountable for the funding.
Current special education financing law, which was enacted
with the MPSE, provides funding to local agencies
based upon the instructional services and settings
required for pupils who have been determined to be in
need of special education. Students are individually
assessed and an individualized educational program
(IEP) is prepared for each student. Based upon the
IEP, students are served through various settings:
a) Special Day Class
b) Resource Specialist Program
c) Designated Instruction and Services
d) Instructional Aides
Local Educational Agencies (LEAs) are funded to provide the
personnel needed to deliver services in the various
settings. Funding is based on the number of
Instructional Personnel Services Units (IPSU) required
for each setting and the value of each unit is based
upon the local cost of staffing, as reported in 1979,
by the local educational agency. Additional funds are
also provided for assessment and placement in a
licensed childrenos institutions (LCI) or Non-public
Schools (NPS), extended year (summer school),
regionalized services, program specialists, longer
instructional time incentives, and low incidence
disabilities. Each local educational agency receives
reimbursement based upon its costs as reported for
1979-80, thus leading to the different rates that
exist today.
Since its inception, LEAs have complained that the current
system of special education funding has been
inadequate to meet actual costs. Locals are required
to oencroacho on general purpose funding in order to
meet unreimbursed special education costs. Current
encroachment is estimated at between $400 million and
$1 billion.
Although the current system of Special Education funding
was intended to eliminate inappropriate placement and
olabelingo of pupils in order to generate funding,
fiscal incentives have arisen in the new funding
scheme. The clearest example is non-public school
placement where the state pays at least 70% of the
costs (100% of an out-of state residential placement).
Frequently LEAs find that paying 30% of the costs of
a non-public school placement is substantially less
than the reimbursement they would receive for
providing the special education services and it is
financially advantageous to place pupils in non-public
settings.
In the Supplemental Report to the 1994-95 Budget Act, the
Departments of Finance and Education, and the
Legislative Analystos Office, were instructed to
review special education finance laws and propose a
new system that would be more fair, flexible, and less
complex. The othree agencyo report was issued in
draft during Spring 1995, and finalized in December
1995. Although the report contained many
recommendations, the principal thrust was to eliminate
the current special education funding system and
replace it with oa population based formula that
allocates funding to SELPAs based on a uniform amount
for each pupil residing in the SELPA.o
Underlying this new system was the assumption that
handicapping conditions of similar severity occur with
roughly equal frequency in every population of
adequate size. Recognizing that small school
districts may not have an adequate population base,
the three agency report suggested allocating funds to
SELPAs, or larger federations that would have the
necessary population base.
ANALYSIS
This bill:
Repeals most provisions of current special education
financing law.
Makes various declarations of legislative intent regarding
the drawbacks of current special education funding
procedures and declares the reasons for revising
special education processes and allocations.
Provides for calculation of unit rates by LEA based upon
1995-96 special education funding in order to provide
a one-time equalization adjustment, bringing below
average unit rates up to the statewide average, for
allocation in the 1997-98 fiscal year. Unit rates
would be computed for the following services and
settings:
a) Special Day Classes and centers for severely disabled
b) Special Day Classes and centers for non-severely
disabled
c) Instructional aides for severely disabled
d) Instructional aides for non-severely disabled
e) Resource specialists
f) Designated instruction and services
Commencing with the 1998-99 fiscal year, establishes a new
system for funding special education services as an
allocation per pupil in regular average daily
attendance (ADA). Per ADA allocations would initially
be calculated by dividing prior year special education
funding for each SELPA by the regular ADA in all of
the districts and county offices of that SELPA. Over
time, funds allocated through the budget process
would be used to olevel upo per ADA allocations until
all SELPAs receive the same per ADA allocation.
Provides for direct apportionment of funding to SELPA
administrators, commencing with 1998-99, if the SELPA
administrator is designated to receive the funds in a
state approved local allocation plan. Otherwise most
funds continue to be apportioned to school districts
and county offices, to be distributed in accord with a
state approved local allocation plan. Funding for
regionalized services and program specialists are
apportioned directly to SELPAs, as is done currently.
Provides for SELPA administrators to become fiscal
administrators of all special education services in
the SELPA in accordance with an annual budget (local
allocation plan) which is to be approved by the State
Superintendent of Public Instruction.
Requires that providers of Special Education services in
California remain in compliance with all requirements
of the federal Individuals with
Disabilities Education Act (IDEA) and generally repeats
federal compliance requirements in state law.
Provides for allocation of resources from a SELPA to
districts by IPSU in the same manner as current law
governing allocation from the state to districts,
unless an alternative means of allocation is proposed
and approved in the local allocation plan.
Makes no change to the current reimbursement of Licensed
Children Institutions.
Revises the law governing reimbursement of non-public
school assessment and placement so that LEAs retain
the funding and may either continue to contract or
provide the services themselves. Creates an
Extraordinary Cost Pool for SELPAs to address the
potential costs that could result from placement of a
pupil in a non-public school or agency.
Requires the Office of the Legislative Analyst to convene a
work group, including representatives of the
Departments of Finance and Education, to contract for
a study of the distribution of severe and costly
disabilities and determine whether the incidence of
such disabilities is evenly, or unevenly distributed
among the SELPAs. The LAO is to report findings and
recommendations no later than June 1, 1998. $200,000
of federal funding is appropriated in support of the
study.
Requires the Department of Finance to study non-public
school, and non-public agency costs, and make
recommendations for cost containment, reporting to the
Legislature by May 1, 1998. The bill also transfers
$100,000 of federal funds to the Department of Finance
to conduct the study.
STAFF COMMENTS
If fully funded, the one-time equalization adjustment would
cost $105 million. The Governoros Budget proposed $77
million, offset from the receipt of additional federal
funds, and the Senate version of the Budget Bill has
this $77 million reserved for special education
funding reform. The Assembly version of the Budget
has the $77 million, plus another $12 million set
aside.
Significant savings to local agencies are expected to
result from elimination of the current funding
formulas and, not incidentally, the multipage oJ-50o
form. Any savings would contribute to reducing
oencroachmento and would not be recaptured by the
state.
Supporters of this measure argue that it is the long
overdue overhaul of special education law and formulas
that will make all of the following improvements:
a) Eliminates incentives to identify pupils to generate
funding.
b) Creates flexibility to use special education funding
as necessary without strict categorical ties of
funding to identified students. Allows, for example,
use of funds for early intervention with pupils before
an IEP has been written, with the aim of keeping the
student from needing special education services
later. (Example: Elk Groveos oNever-Streamingo
project.)
c) Eliminates inappropriate fiscal incentives in current
law such as the incentive for LEAs to place pupils in
non-public school settings due to the fiscal advantage
for doing so.
d) Makes special education funding simple and
understandable to the general population, allowing
taxpayers to see how tax dollars are spent, and
allowing other interested parties to concentrate their
attention on matters other than fiscal
concerns.
e) Utilizes new federal funds, and state funds to the
extent they are budgeted, to make equalizing
adjustments and does not deprive any agency of growth
or COLA funding in the process.
The Superintendent of Public Instruction has taken a
Support if Amended position of this bill, suggesting
several amendments that would address concerns of
significant concern. Staff recommends: adoption of
amendments suggested by the SPI in her letter of July
3, 1997, specifically:
a) Allow the California Department of Education to
enforce accountability provisions of the federal
IDEA through regulation.
b) Exempt funding for pupils with low incidence
disabilities from being folded into the per ADA
allocation formula.
The Legislative Counsel has noted that several other bills
amend the same sections of law and that potential
conflicts therefore exist. Staff recommends: that the
bill be amended to prevent chaptering out conflicts
with other legislation identified by the Legislative
Counsel.
SUPPORT
Alta Loma School District
American Federation of State, County and Municipal
Employees (AFSCME)
Antelope Valley SELPA
Area 2 Developmental Disabilities Board
Association of California School Administrators (ACSA)
Bellflower Unified School District
California Association of Resource Specialists
California Association of School Business Officials
California Association of School Psychologist
California State Federation Council for Exceptional
Children
California State PTA
Castaic Union School District
Central California Education Legislation Consortium
Central Unified School District
Clovis Unified School District
Coalinga-Huron Unified School District
Coalition for Adequate Funding for Disabled Children
Colusa County Office of Education
Contra Costa County Board of Education
Contra Costa SELPA
Corning Union Elementary School District
County Superintendents of Schools
El Dorado County SELPA
Exeter Public Schools
Fresno County Office of Education
Fresno Unified School District
Gilroy Unified School District
Imperial County Office of Education
Imperial County SELPA
Kern County Office of Education
Kern County Superintendent of Schools
Lancaster School District
Linden Unified School District
Lodi Unified School District
Long Beach Unified School District
Mariposa County Unified School District
Mid-Cities SELPA
Oakdale Union Elementary School District
Paramount Unified School District
Pasadena Unified School District
Pierce Joint Unified School District
Placer Nevada SELPA
Puente Hills SELPA
San Bernardino County Superintendent of Schools
Sacramento City Unified School District
San Diego Unified School District
San Joaquin County Office of Education
San Luis Obispo County Office of Education
San Luis Obispo County SELPA
San Mateo County SELPA
Saugus Union School District
Sierra Unified School District
Solano County Office of Education
Solano County Superintendent of Schools
Southwest SELPA
Tehama County SELPA
Vallejo City Unified School District
West Contra Costa Unified School District
West End SELPA
Williams Unified School District
OPPOSITION
California Association of Private Specialized Education and
Services
Children's Center, Clayton Valley Presbyterian Church
Easter Seals
Los Angeles Unified School District
Spectrum Center for Educational and Behavioral Development