Education finance: Maximum Categorical Funding Flexibility and Accountability Program.

Existing law establishes various categorical education programs and appropriates the funding for those programs in the annual Budget Act. Existing law requires the Superintendent of Public Instruction, for the 2009–10 to the 2014–15 fiscal year, inclusive, to apportion from the amount provided in the annual Budget Act for specified categorical education programs an amount based on the same relative proportion that the local educational agency received in the 2008–09 fiscal year for those programs and authorizes those agencies, for those fiscal years, to use these funds, with specified exceptions, for any educational purpose, to the extent permitted by federal law. Existing law, as a condition of receiving the categorical education program funds that may be used for any educational purpose, requires school districts and county offices of education, at a regularly scheduled open public hearing, to take testimony from the public, discuss, and approve or disapprove the proposed use of funding. Existing law requires a local educational agency to report expenditures, as specified, to indicate the activities for which these funds were expended and requires the State Department of Education annually to collect and provide this information to the appropriate legislative policy and budget committees and the Department of Finance. Existing law, for those fiscal years, deems local educational agencies that use these categorical education program funds for any educational purpose to be in compliance with the program and funding requirements of those categorical education programs. This bill would establish the Maximum Categorical Funding Flexibility and Accountability Program, to be implemented from the 2015–16 fiscal year to the 2019–20 fiscal year, inclusive. The bill would extend the operation of the provisions that authorize the expenditure of funds provided for specified categorical education programs for any educational purpose by 5 fiscal years, but would delete funds appropriated for adult education programs, specialized secondary education grant programs, and regional occupational centers and programs from the scope of this provision as of July 1, 2015, and would base the amount apportioned under the provision on the same relative proportion that the local educational agency received in the 2013–14 fiscal year rather than the 2008–09 fiscal year. The bill would thereby make an appropriation by allowing the expenditure of appropriated funds for additional purposes for that extended period. To be eligible for selection for participation in this program, and in order to utilize the provisions allowing the expenditure of funds appropriated for specified categorical programs for any educational purpose for any of the fiscal years from 2015–16 to 2019–20, inclusive, a school district would be required to meet certain preconditions, including developing a plan to accelerate pupils' progress to proficiency that includes specified goals. A school district selected by the Superintendent to participate in the program would be required to agree to demonstrate significant progress toward accelerating pupils' progress toward proficiency in California's academic standards over a 3-year period, a narrowing of the achievement gap in its federally recognized subgroups, fiscal solvency, positive growth on the school district's Academic Performance Index, an increase in its graduation rate, improvement in its college entrance rate, and pupil progress in passage of common core standards. The bill would require the Superintendent, for the 2015–16 to 2019–20 fiscal years, inclusive, to apportion to the participating school districts an increase or decrease of the amounts apportioned under the provisions authorizing the expenditure of funds appropriated for specified categorical programs for any educational purpose in accordance with specified criteria. The bill would require the additional funds apportioned to school districts under this program to be expended for any purpose related to improving pupil achievement and academic instruction, except as specified. The bill would require that a participating school district would be deemed to be in compliance with the program and funding requirements associated with the categorical education programs. The bill would require that a participating school district would be required to submit an evaluative annual report and an annual expenditure report, including prescribed information, to the State Department of Education. The bill would require the Superintendent to contract for an interim evaluation report and a final evaluation report that identifies the success and failures of the program and makes recommendations regarding improving the program and whether the program should be continued. The provisions establishing the program would become inoperative on July 1, 2020, and would be repealed on January 1, 2021.