1. LAO The State Budget & Adult Education Legislative Analyst’s Office January 2010 www.lao.ca.gov

2. LAO LAO Presentation Overview  Provide a general budget update.  Discuss categorical flexibility generally.  Discuss impact of budget and flexibility on adult education.  Consider related policy questions.

3. LAO Overview of State Budget and Governor’s Solutions Governor identifies $18.9b problem. $6.6b at year-end in 2009-10. $12.3b in 2010-11. Governor’s plan contains $1b reserve. Plan also contains $19.9b in solutions. 40 percent in flexibility from federal government. 40 percent reductions to state spending. 20 percent in fund shifts and ballot measures. Plan triggers additional cuts if federal funds don’t materialize.

4. LAO Proposition 98 Funding Stays Virtually Flat Under Governor’s Proposal 2008-092009-102010-11 Governor's budget proposal$49,000$49,900$50,000 Change - July budget agreement-$83-$568— Overview of Proposition 98 Funding (In Millions) Departs from July budget agreement on Maintenance Factor. Seeks waiver of federal minimum spending requirement.

5. LAO School Districts Face Funding “Cliff” in 2010-11 2007-082008-092009-102010-11 Per-pupil funding$8,653$8,775$8,354$7,702 Percent change—1.4%-3.5%-11.0% Drop in 2010-11 from one-time solutions: Federal stimulus money. Deferrals. Less in restricted reserves.

6. LAO Governor’s Major Budget Proposals Major midyear proposals : Capture $340m in unspent Class Size Reduction Funds. Recognize $228m in revenue limit savings. Major budget-year proposals: Includes $1.9b to restore one-time solutions. Reduces revenue limits by $1.2b for reduced administration costs. $300m linked to district flexibility to contract out.

7. LAO State Tried to Help Manage Cuts By Increasing Flexibility State tried to help LEAs manage cuts by providing flexibility related to: Categorical funding. Reserves. Length of school year. Governor’s budget includes additional flexibility. Questions remain for Legislature : What has the impact been? Should it continue beyond current sunset?

8. LAO Early Reactions to Flexibility Suggest Some Benefits To what extent did flexibility affect your ability to develop and balance a budget?

9. LAO Early Reactions to Flexibility Suggest Some Benefits To what extent did flexibility affect your ability to develop a strategic plan?

10. LAO Early Reactions to Flexibility Suggest Some Benefits To what extent did flexibility affect your ability to fund programs for struggling/at-risk students?

11. LAO …But Need to Weigh These Perceptions Against Programmatic Impact… Results suggest at least some funds being shifted away from : Arts and music. Alternative education. CAHSEE remediation. Career technical education. And, last but not least…

12. LAO Early Results on Adult Education Suggest Funds Being Shifted Away Our district is changing funding for adult education :

13. LAO Early Results on Adult Ed Suggest Some Program Changes Our district is changing its adult education program:

14. LAO Adult Education Funding System Before Categorical Flexibility Funding mechanism had several disadvantages : Growth mechanism on autopilot. Allocation method arcane. No clear sense funds targeted areas with greatest need. No clear sense of how fees contribute to local budgets. General agreement the state could improve upon model. Leaves state to answer several major policy questions.

15. LAO What Is Adult Education’s Core Mission? Data suggest California funds broader adult education priorities than other states. Roughly one quarter of adult education students not enrolled in WIA courses. StateState $Programs California90%9 New York75%6 Florida90%5 Texas25%4 Illinois60%3 Arizona32%3

16. LAO What Is Community College’s Role in ABE, ASE, ESL? Advantages and disadvantages to delivering these courses through either system. Adult education system: Courses cover K-12 content. Coordination with CAHSEE and diploma requirements. Geographically more diverse. Community college system. Could put students on a degree track. More targeted focus on adults. More opportunities for applied learning.

17. LAO How Should CA Provide Career- Technical Education (CTE)? What is effective CTE for adults? Difference between technical training and basic employment skills. Of K-12/CCC articulation agreements under Gov’s CTE initiative, almost 30 percent were for word processing. Big difference in terms of funding requirements. Who should deliver CTE for adults? Again, CCC/adult ed systems need to be coordinated. ROCPs in flexibility – no longer subject to limitations on adults served.

18. LAO How Do We Provide Funding? Once basic programmatic questions are answered, how do we fund programs? StateAllocation Florida85% base, 15% performance. New YorkAll eligible districts. Texas75% attendance, 25% need. Federal questions remain: How can we best leverage federal funding? What will happen with WIA reauthorization?

19. LAO How Do We Determine Efficacy? Data coordination insufficient. As a result, data limited on: Employment after completing adult education. Postsecondary outcomes after adult education. Accountability insufficient : Who should be responsible if a student begins postsecondary education underprepared? How do we tell if our adult ed system is helping to solve our demographic and economic challenges?

20. LAO Contact Information Jim Soland, Legislative Analyst’s Office (LAO): jim.soland@lao.ca.gov (916) 319-8327 www.lao.ca.gov