Huntington Beach City School District Local Control Funding Formula Overview Presented by: Maureen Evans, Vice President School Services of California, Inc.

Funding Per Average Daily Attendance (ADA) – Actual vs Funding Per Average Daily Attendance (ADA) – Actual vs. Prior Statutory Level

Local Agency Reserves Higher If: Lower If: Declining enrollment Question: What should the target percentage be? Answer: It depends on the following factors: Higher If: Lower If: Declining enrollment Fast growth Deficit spending Inconsistent between years Potential audit or legal costs Smaller district Basic aid State Budget volatility Ending balance is consistent between years ADA doesn’t change much The community doesn’t change much Carryover categoricals are under control Employee contract obligations are covered Funding sources are stable

Unrestricted Fund Balance – Statewide Averages 2011-12 Unrestricted General Fund Balance Plus Fund 17 Special Reserve as a Percent of the Total General Fund Unified School Districts 15.44% Elementary School Districts 23.75% High School Districts 19.79% Huntington Beach City School District (SD) 23.80% Source: California Department of Education (CDE) state-certified data

Declining Enrollment – Budget Impact 4 Impact of ADA Decline Income Loss 114 ADA decline at $5,000 each – yields marginal revenue loss Lost Revenue: $570,000 Proportional Layoff 120 students requires 5 teachers at 24:1 Five teachers times cost per novice teacher yields savings of: $250,000 ($50,000 per teacher, including benefits, x 5 teachers) Miscellaneous savings ($400/ADA) $48,000 Total proportional savings: $298,000 Proportional layoff leaves $272,000 deficit. In this example, 11 teachers would need to be laid off to cover the decline. Program cuts would be required.

The State Budget The Legislature passed and Governor Jerry Brown signed an on-time Budget for 2013-14, the third time in as many years Passage of Proposition 30 in November of 2012 provides stability for the State Budget – but only temporarily – the taxes are temporary The majority party Democrats control the entire Budget process, and the Budget was passed without much drama Temporary taxes and additional revenue from a slightly stronger economy eliminated the need for gimmicks and overly aggressive assumptions This year, the Local Control Funding Formula (LCFF) is the Governor’s big win The last major revision of the education funding system was 40 years ago when Senate Bill (SB) 90 (Chapter 1406/1972) established revenue limits and categorical programs LCFF is evolving, but will have a huge impact on negotiations

Proposition 30 – The Schools and Local Public Safety Protection Act of 2012 Proposition 30, the Schools and Local Public Safety Protection Act was sponsored by Governor Brown Education organizations that supported the measure include: California Teachers Association, California Federation of Teachers, California School Boards Association, Association of California School Administrators, and California School Employees Association Temporarily increases the state sales tax and personal income tax for high-income earners Sales tax increase of 0.25% will expire in 2016 Personal income tax increase will expire in 2018

Proposition 30 – The Schools and Local Public Safety Protection Act of 2012 Generates $6.8 billion to $8.5 billion in 2012-13 and $5.4 billion to $7.6 billion each year thereafter Revenues from tax increases will fund the Education Protection Account, which will offset state aid toward school district funding Will also make permanent the sales tax shift to fund county government realignment

Proposition 98 and Local Control Funding Formula (LCFF) It is important to remember that Proposition 98 establishes the minimum funding level for K-14 education The Legislature and the Governor decide on an annual basis at what level to fund the various education programs In most cases, state statutes specify districts’ entitlements to state funding based on the delivery of educational services The LCFF is the model by which state funds are allocated to school districts, charter schools, and county offices of education (COEs) Unlike revenue limits and Tier III categorical programs, there are no state statutes that specify an annual appropriation to support the LCFF This makes multiyear planning very difficult A district’s annual LCFF entitlement will be determined by “any available appropriations” (Education Code Section 42238.03[b][3])

LCFF – What it Does The LCFF makes fundamental changes to how we allocate state Proposition 98 revenues to schools There are direct parallels with how we have funded schools in the past The LCFF base grants are like revenue limits The LCFF base grant adjustments – Class-Size Reduction (CSR), Career-Technical Education (CTE), supplemental grants, concentration grants – are like categorical programs At full implementation, the LCFF will fund every student at the same base rate Over time, most school district and charter school base grant funding will equalize to the same level The LCFF provides that each school district receive at least as much state aid in 2013-14 and future fiscal years as the district received in 2012-13

Categorical Programs A partial list of the 40 categorical programs rolled into the Base Grant CSR (K-3) Deferred Maintenance Economic Impact Aid (EIA) Gifted and Talented Education Regional Occupational Centers/Programs

Categorical Programs and the LCFF Over the years, a variety of programs and purposes were supported by categorical program funding Some were general purpose, such as instructional materials and deferred maintenance Some were intended to be targeted to meet the needs of specific students or circumstances, such as EIA and Home-to-School Transportation The LCFF replaces most categorical programs with two weighting factors applied against the LCFF base grant 20% on behalf of each eligible student An additional 50% for the eligible students exceeding 55% of total enrollment

Percent of Free and Reduced-Price Meals Percent of English Learners Percentage of District Enrollment of Free and Reduced-Priced Meals and English Learners Percentage of District Enrollment of Free and Reduced-Priced Meals (FRPM) and English Learners District Percent of Free and Reduced-Price Meals Percent of English Learners Rosemead Elementary 86.54% 35.88% Lennox Elementary 85.35% 46.77% Hawthorne Elementary 85.34% 35.94% Anaheim City Elementary 83.91% 54.61% Ontario-Montclair Elementary 83.06% 44.78% Lawndale Elementary 82.96% 37.30% Magnolia Elementary 81.65% 49.23% South Whittier Elementary 73.66% 42.61% Buena Park Elementary 71.47% 40.92% Westminster Elementary 71.31% 49.56% Whittier City Elementary 68.49% 19.84% Little Lake City Elementary 67.22% 17.67%

Percent of Free and Reduced-Price Meals Percent of English Learners Percentage of District Enrollment of Free and Reduced-Priced Meals and English Learners Percentage of District Enrollment of Free and Reduced-Priced Meals (FRPM) and English Learners District Percent of Free and Reduced-Price Meals Percent of English Learners La Habra City Elementary 66.85% 38.93% Savanna Elementary 64.37% 44.10% Centralia Elementary 58.49% 33.36% All Elementary Districts 56.14% 27.59% East Whittier City Elementary 52.64% 14.04% Ocean View Elementary 38.11% 23.21% Lowell Joint Elementary 33.40% 11.78% Cypress Elementary 30.39% 24.00% Fountain Valley Elementary 22.54% 10.13% Huntington Beach City Elementary 17.03% 5.91%

LCFF – Base Grant Entitlement Calculation 2013-14 target entitlement calculation Grade span per-pupil grants, based on 2013-14 statewide average initial target of $7,357 per ADA, are increased annually for a COLA Factors K-3 4-6 7-8 9-12 Base Grant per ADA $6,845 $6,947 $7,154 $8,289 COLA @ 1.565% $107 $109 $112 $130 Base Grants – 2013-14 $6,952 $7,056 $7,266 $8,419 T A R G E T

LCFF – K-3 CSR and CTE Adjustments 2013-14 target entitlement calculation K-3 CSR and 9-12 CTE adjustments are additions to the Base Grant CTE is unrestricted; CSR requires progress toward maximum site average of 24 students enrolled in each class Factors K-3 4-6 7-8 9-12 Base Grants – 2013-14 $6,952 $7,056 $7,266 $8,419 Adjustment percentage 10.4% CSR - 2.6% CTE Adjustment amount $723 $219 Adjusted grant per ADA $7,675 $8,638 T A R G E T

LCFF – Supplemental and Concentration Grants Per ADA 2013-14 target entitlement calculation Supplemental and concentration grant increases are calculated based on the percentage of total enrollment accounted for by English learners, FRPM program eligible students, and foster youth Factors K-3 4-6 7-8 9-12 Adjusted grant per ADA $7,675 $7,056 $7,266 $8,638 20% supplemental grant $1,535 $1,411 $1,453 $1,728 50% concentration grant (for eligible students exceeding 55% of enrollment) $3,838 $3,528 $3,633 $4,319 T A R G E T

LCFF – Minimum and Maximum Target Grants Per ADA 2013-14 target entitlement calculation Grant amounts vary from a minimum based on no students eligible for supplemental and concentration grants to 100% of student enrollment qualifying Factors K-3 4-6 7-8 9-12 Minimum grant per ADA $7,675 $7,056 $7,266 $8,638 Maximum grant per ADA $10,937 $10,055 $10,354 $12,310 Difference ($) $3,262 $2,999 $3,088 $3,672 Difference (%) 42.5% T A R G E T

LCFF – Grade Span Grants Per ADA

2013-14 District LCFF Entitlement A district’s LCFF entitlement for 2013-14 will be based on its 2012-13 base year funding level, its LCFF target, and the statewide funding provided to move toward the target The state factor of 12% of growth toward target is based on the 2013-14 appropriation of $2.1 billion and the estimated statewide funding gap of $17.5 billion Low Medium High 2012-13 Base $6,500 LCFF Target $8,000 $9,100 $11,300 Difference $1,500 $2,600 $4,800 State Factor 12% 2013-14 Increase $180 $312 $576

2013-14 Growth Toward Target $576 $312 $180

An Example of Gap Funding Per ADA Total Gap $7,858 - $5,929 $1,929 x 28.05% $548 Target 2013-14 Total gap $2.1 Billion 2014-15 Inc. $7,858 $7,564 $294 Dollars per ADA $6,477 $3,787 $5,882 $47 EIA $548 $69 Supplementation and Concentration Grants $479 Base $5,929 $5,882 LCFF $47 EIA $294 -$47 $247 x 28.05% $69 Supp/Conc EIA Net gap Closure Supp/Conc share 2013-14 Proj. 2014-15 Funding 2014-15 Target Economic Impact Aid LCFF Increase Supplemental and Concentration Grants 2014-15 Target Base © 2014 School Services of California, Inc.

LCFF Implementation Phase There are two distinct phases of the LCFF: (1) the eight-year implementation phase, and (2) the fully funded phase The eight-year implementation phase is not set in statute and can be longer or shorter than eight years, depending upon the annual LCFF appropriation Numerous fiscal inequities could arise during the implementation phase Even if the state appropriates sufficient funds to support the statutory COLA applied to the Base Grant, individual districts are not guaranteed a funding increase equivalent to this adjustment Significant revenue volatility will be imposed on districts with high proportions of students eligible for supplemental/concentration grants Once the LCFF is fully implemented, these funding anomalies will be eliminated

Proposition 98 Forecast

Percent of LCFF Components for Huntington Beach City SD (Administration Projections) Base Supplemental and Concentration

What Does the Future Look Like for Huntington Beach SD? Multiyear Projections Analysis 2013-14 2014-15 2015-16 2016-17 Estimated LCFF Funding $5,929 $6,477 $6,775 $6,905 SSC Recommends $6,607 $6,751 Net Change Per ADA $249 $548 $130 $144 Net Percent Change 4.34% 9.24% 2.01% 2.19%

Differential Risks – An Example

State Board of Education (SBE) Actions and Timeline Adopt Budget Standards and Criteria 1/1/14 Adopt Spending Regulations Adopt Technical Assistance and Intervention Evaluation Rubric 10/1/15 1/31/14 Adopt Local Control Accountability Plan (LCAP) Templates

Adopting and Updating the LCAP 4 3 2 1 Adoption of the plan: Adopted concurrent with the local educational agency’s (LEA) budget Submitted to COE for approval Posted on district website COE posts LCAP for each district/school or a link to the LCAP Opportunity for public input: Notice of the opportunity to submit written comment Public hearing The superintendent must respond in writing to comments received Present for review and comment to: Parent advisory committee English learner parent advisory committee The superintendent must respond in writing to comments received Consultation with: Teachers Principals School personnel Pupils Local bargaining units

State Priorities State Priorities Credentials/Materials Pupil Engagement Pupil Outcomes School Climate State Priorities Parental Involvement Adopt Standards Pupil Achievement Course of Study Expulsion Coordination (COE only) Foster Student Services (COE only)

Proportionality and Targeted Funds The LCFF statutes direct the SBE to develop regulations by January 31, 2014, to require LEAs to: Increase or improve services for eligible pupils in proportion to the increase in funds apportioned on the basis of the number and concentration of eligible pupils LEAs are also required to include in their LCAP a description of expenditures that serve pupils eligible to generate supplemental and concentration grants Goals, activities, and services that increase or improve support for eligible students is a local decision The proportion of the increase in funds attributable to the number of eligible pupils enrolled is a calculation It is important to keep this distinction in mind, and it is why we are calling supplemental and concentration grant funding targeted, rather than restricted

SBE Regulations SBE regulations provide a method of calculating the proportional share of LCFF dollars that are attributable to supplemental and concentration grants each year Proportionality calculation and the LCAP was approved by the SBE on January 16, 2014 Calculation of proportional increase for supplemental and concentration grants is specific LCAP is flexible, providing significant local control over services, activities, and plan content

Use of Supplemental/Concentration Grants The LCFF regulations provide districts varying degrees of latitude in the expenditure of supplemental/concentration grant funds, depending upon the percentage of eligible students If the district has unduplicated counts of the following: Greater than 55%, then these funds may be spent on a districtwide basis, provided the district Identifies the districtwide services Describes how these services meet the district’s goals for the targeted students in the state priority areas

Use of Supplemental/Concentration Grants Less than 55%, districtwide expenditure of these funds is authorized, provided the district Identifies the districtwide services Describes how these services meet the district’s goals for the targeted students in the state priority areas Describes how these services are the most effective use of the funds

Use of Supplemental/Concentration Grants The regulations also address school site enrollment and the authorized use of these funds A district that has a school with an enrollment of eligible pupils in excess of 40% of the school’s total enrollment, the district may expend the targeted funds on a schoolwide basis, provided the district: Identifies the schoolwide services Describes how these services meet the district’s goals for the targeted students in the state priority areas

Use of Supplemental/Concentration Grants A district that has a school with an enrollment of eligible pupils less than 40% of the school’s total enrollment, the district may expend the targeted funds on a schoolwide basis, provided the district: Identifies the schoolwide services Describes how these services meet the district’s goals for the targeted students in the state priority areas Describes how these services are the most effective use of the funds

Governance in the Past School district governance is coming full circle In the recent past, school district governance has evolved from: Pre-Serrano (1971) – local property taxes funded local schools and local boards governed Local boards made the rules Post-Serrano (1972) – SB 90 established revenue limits as a base for all students and categorical programs to deal with special needs Local boards had to conform to the state’s rules Post-Proposition 13 (1979) – property taxes are out, the state becomes the primary funder for education Local boards lose authority and basically administer state-driven and funded programs LCFF (2013) – funding levels and state priorities are reflected in the LCFF Most governance and policy issues are returned to local boards and embodied in the LCAP We have come full circle

Questions and Answers Change Old rules: How much money is in categorical programs? What are we allowed to use it for? How do we comply with state law? What are the audit requirements and penalties? New rules: What priorities have we set with our community? Have we defined student expectations and outcomes. as well as key elements of operation of the program? What do our professional teachers, administrators, and classified employees advise? How will we measure success? What alternative programs get a “no” in order to give this one a “yes”? The motive and tone of the discussion changes – we think for the better

To Act Differently. We Must Think Differently Old System State of California New System Board Revises Policy Results Reported to Public Local Board Empowers Schools State Provides Funding Local Board Sets Policy Community Involvement Focus on Students Policy Funding Program Rules Local Board Implementation School Site Performance Audits and Compliance Reviews Student Achievement Compliance Model Empowerment Model

Linkage Between Policy and Performance State Policy and Goals for Public Education Local Board Develops Goals, Plans, and Methodology LCAP – Specific Plan of Attack District and State Testing and Assessment Local Evaluation of Results Focus on Student Needs Grand Strategy and Goals School Agency Strategy Tactics Revision of the Plan Performance Evaluation

Conceptual Planning Matrix Planning Components Community Involvement Technology Professional Development Assessment Facilities Materials Policy Delivery Strategic LCAP Common Core EL Title I     Planning Requirement       Component Required  Most Restrictive

Thank you!