1. Fourth District PTA Ron Bennett Chief Executive Officer January 23, 2015 State Financial Update

2. Overall, a Positive Year for Education The 2015-16 State Budget proposed by the Governor would be good news in any year But particularly coming after such a long and deep recession, this State Budget restores the hopes and dreams of many Californians The recovery is not complete and won’t be until at least 2021 under the Governor’s plan But the incremental progress is significant – particularly for public education During the recession, we took more cuts than any other segment of the State Budget The Governor acknowledges this and is keeping his commitment toward restoration of our losses After all, temporary losses to public education become permanent impairments on the lives, hopes, and dreams of our children 1 1 © 2015 School Services of California, Inc.

3. Progress Toward LCFF Implementation 2 2 © 2015 School Services of California, Inc.

4. Proposition 98: The Minimum Guarantee The improving economy has boosted the Proposition 98 minimum funding guarantee State revenues are up in the current year and moderate growth is projected for 2015-16 In turn, the state’s obligation to K-12 education and community colleges increases For the current year, the minimum guarantee increases by $2.3 billion to $63.2 billion from the level adopted in the 2014-15 State Budget Act From this revised level, the Governor’s State Budget proposes a 2015-16 Proposition 98 guarantee of $65.7 billion, an increase of $2.5 billion, or 4.1% Funding is based on Test 2: (1) the growth in state per-capita personal income, which is projected to rise 2.91%, and (2) the change in K-12 ADA, which is expected to be flat 3 3 © 2015 School Services of California, Inc.

5. Proposition 98 Funding Source: Governor’s State Budget Summary, page 6 4 4 © 2015 School Services of California, Inc.

6. Proposition 98 and the Major K-12 Proposals The Governor’s State Budget proposes: $4 billion for LCFF gap closure $1.1 billion for discretionary one-time uses, including Common Core implementation (one time) $1 billion to eliminate the remaining K-14 apportionment deferrals $500 million for an Adult Education Block Grant $273 million for the Emergency Repair Program (one time) $250 million for one-time CTE incentive grants (each of the next three years) $198 million additional ADA growth in the current year and a $6.9 million decrease for ADA decline in 2015-16 $100 million for Internet connectivity and infrastructure © 2015 School Services of California, Inc. 5 5

7. Commitment to Adult Education, ROC/P, and CTE Adult Education, CTE, and Regional Occupational Center/Program (ROC/P) have been on life support for most of the past seven years First, inclusion in the list of Tier III programs during the “Great Recession” gave districts flexibility to reduce these programs and use the swept dollars to support other K-12 programs Districts took advantage of the flexibility and cut 50% of the programs statewide Then the state folded the dollars for these programs into the LCFF base, but required that districts maintain levels of effort for 2013-14 and 2014- 15 The maintenance of effort (MOE) requirement expires in June 2015, with no ongoing dedicated funding source after that Absent the Governor’s proposed actions, these critical programs would likely be eliminated over time 6 6 © 2015 School Services of California, Inc.

8. Career Technical Education The Governor proposes $250 million in each of the next three years for a new transitional CTE Incentive Grant Program, in lieu of continuing the Career Pathways Trust Grant Priority given to LEAs working in partnerships with other LEAs to offer regional programs Unlike the Career Pathways Trust Grant, it is a matching grant program Intended to accelerate the development of new and expanded high- quality CTE programs Between 2011-12 and 2012-13 CTE enrollment decreased 11.8% statewide* © 2015 School Services of California, Inc. *CTE State Enrollment Analysis 7 7

9. Adult Education The Governor includes a $500 million block grant for Adult Education in his 2015-16 Budget This is new money and does not include any portion of the funds previously required as part of the maintenance of effort (MOE) from K-12 schools The 2013-14 State Budget provided $25 million for two-year Adult Education planning grants to 70 regions for consortia of school districts and community colleges In 2013-14 and 2014-15, K-12 districts were required to maintain the same level of spending as they had in 2012-13 for Adult Education © 2015 School Services of California, Inc. 8 8

10. Adult Education Each consortium is required to designate an allocation board, which will make recommendations for the distribution of funds Adult Education programs serving the highest need populations will have priority for funds Administrative costs will be limited to 5% Each consortia is required to report to the Chancellor and Superintendent of Public Instruction (SPI) annually on the progress toward goals in the Adult Education Plan For 2015-16, funding will be provided directly to the K-12 school districts in the same amount as their MOE © 2015 School Services of California, Inc. 9 9

11. CalSTRS and CalPERS The employer contribution costs for both CalSTRS and CalPERS are projected to double over the next several years CalSTRS – From 8.25% in 2013-14 to 19.1% in 2020-21 CalPERS – From 11.442% in 2013-14 to 20.4% in 2020-21 The 2015-16 State Budget proposal does not address these cost increases for school districts or county offices of education The Governor does propose allocation increases for the California Community Colleges partly in recognition of increased expenses in the area of retirement benefits 10 © 2015 School Services of California, Inc.

12. Added CalSTRS/CalPERS Costs LCFF Implementation Promise Promise $18.5 B $14.1 B Actual Purchasing Power 11 © 2015 School Services of California, Inc.

13. Added CalSTRS/CalPERS Costs Recognizing Higher Retirement Costs Separate CalSTRS/CalPERS Funding $22.9 B Purchasing Power $18.5 B 12 © 2015 School Services of California, Inc.

14. Trigger Capping District Reserves The enactment of SB 858 (Chapter 32/2014) and Proposition 2 together establish a hard cap on school district reserves if certain conditions are met Triggering conditions include: The Proposition 98 maintenance factor must be fully repaid Proposition 98 must be funded based on Test 1 Proposition 98 is sufficient for enrollment growth and statutory COLA A deposit must be made into the Proposition 98 reserve when capital gains revenues exceed 8% of General Fund revenues In defending this controversial budgeting restriction or attempting to ease the growing sense of doom, some have argued that it is highly unlikely that the cap will ever be triggered  THIS CONCLUSION IS WRONG – it may be triggered sooner than we think! 13 © 2015 School Services of California, Inc.

15. Discretionary Funds The Governor’s State Budget proposal provides more than $1.1 billion in discretionary one-time Proposition 98 funds, including $20 million for COEs The allocation amounts to about $180 per ADA for districts The Governor suggests the one-time funds may be used to further investments in the implementation of Common Core State Standards (CCSS) Other uses detailed in the proposal are: To support the implementation of newly adopted English language development and California’s Next Generation Science standards, and To support expenditures that occur due to the evolving accountability structure of the LCFF 14 © 2015 School Services of California, Inc.

16. Any increase used to fund LCAP strategies for targeted students Must negotiate issues within the scope of bargaining Annual increase to base grant always available for negotiations Annual COLA always available for negotiations Any increase was restricted and not generally available for negotiations Categorical Programs Base Revenue Limit Targeted Funds Base Grant Negotiations Under the LCFF Revenue Limits LCFF 15 © 2015 School Services of California, Inc.

17. The Year in Review Governor signs AB 97 (Chapter 47/2013) to enact the LCFF The SBE approves emergency LCFF spending regulations and the LCAP template LEAs conduct local needs assessment, consult with stakeholders, and prepare a first draft of the LCAP The first draft of the LCAP is presented to advisory groups for review and comment, revisions are made, and the plan is presented for public comment July 2013 January 2014 Apr-May 2014 June 2014 Feb-Apr 2014 First LCAPs are adopted and submitted to the COEs and the state for approval 16 © 2015 School Services of California, Inc.

18. The Year in Review Oct 2015 Nov 2014 Sept 2014 July 2014 Future SBE readopts emergency regulations and conditionally approves changes to the permanent regulations and the LCAP template SBE readopts emergency regulations which include additional revisions to the LCAP template SBE adopts the permanent LCFF spending regulations and the LCAP template SBE must adopt an evaluation rubric 17 © 2015 School Services of California, Inc.

19. State Board of Education Updates – Evaluation Rubrics E.C. 52064.5 requires the SBE to adopt evaluation rubrics on or before October 1, 2015 Purpose of Evaluation Rubrics: Allow LEAs to evaluate their strengths, weaknesses, and areas that require improvement Assist county superintendents to identify needs and technical assistance Assist SSPI to direct interventions when warranted Provide standards for improvement as it relates to LCFF priorities EVALUATION RUBRICS Student Focused Equity Transparency Performance Ideas 18 © 2015 School Services of California, Inc.

20. The Continuing Evolution of the LCAP Evaluation Rubrics Vision Serve as a tool to ensure LEAs are able to align resources with goals Align with the LCFF design principles Guide reflection and provide helpful ideas Support continuous improvement Extend to all strategic planning and implementation efforts Evaluation Rubrics Concept Used as a tool in creating and assessing LCAP goals Organized around the three planning categories (Conditions of Learning, Engagement, and Pupil Outcomes) Provide an at-a-glance understanding of strengths and needs Not intended to be scored or used to rank LEAs Evaluation Rubrics Activities January SBE Meeting  Present the rubrics concept March SBE Meeting  Share evaluation rubrics draft May SBE Meeting  Share examples of tools and other resources July SBE Meeting  Present final draft Sept SBE Meeting  Final SBE approval 19 © 2015 School Services of California, Inc.

21. Thank you!