Yorkingtogether to suppore and prove California's public schools Ausociation of California School ‘Adisistratoxs (ACSA) eet arta 1600 hs diate California Asscition OF School Dusiness Officials (CASBO) eproenng mare m4 000 sel sce tnd olin manag California County Superintendents Eduestionsl ‘Services Assclatfon (CCSESA) pesing a $8 coe spires roe Ceforsa California Federation of “Teachers (CFEAFLCIO) sepa erty $0000 eae cones California Shoo! Boseds ‘Assocation (CSBA) ‘apes uy 1000 K:12 ss does nd cou ofeduatin Brent Catfoma California School Employees Association (CSEA) prestige a 23000 helen California State PEA pring mone ese lan pet, tae rades tn Cea fornia Teachers Anocation (cra) roto 325000 etn Seevice Bemployes International, Union (SEIU) eter ta 50000 ce “ples tn Calieia Leghlative Consultants Peter Bird 916.719.1315 February 4, 2010 Secretary Arne Duncan U.S. Department of Education 400 Maryland Avenue, SW Washington, DC 20510 Dear Secretary Duncan: We are writing to express our serious concern about the proposed California state budget for K-12 education and to ask you to review carefully any waiver request or certification by the Governor that California Is complying with the maintenance of effort (MOE) requirement of the American Recovery and Reinvestment Act, More specifically, we are urging you to enforce that requlrement in order to protect the investment in public educetion for the children of California, ‘ur concern results from proposals by the Governor to reduce funding for K-12 education In California in 2010-11 by $2.4 billion—approximately $400 per student. On Its face this proposal violates the maintenance of effort commitment made by the Governor and the state of California, However, the Governor's Administration claims that it can stil meet the MOE requirement by using a measure of state funding for K-12 education as a percentage of the state General Fund, Unfortunately, the Governor's proposed budget would manipulate this calculation Int least two ways: 4, It proposes to replace a seles tax on gasoline with an excise tax on gasoline. Since the excise tax revenues do not technically count towards the State General Fund calculation, but sales tax revenues do, this “gas tax swap” has the effect of reducing the Genera} Fund portion of the formula. As a result, the budget proposes a cut to K-12 education that is “allowable” because the percentage of the reduced General Fund Is belng maintained. This manipulation allows the Governor to propose a reduction to K-12 education funding of more than $800 million and still claim the state Is maintaining the same level of effort. 2, The proposed budget would shift away from schools in 2010-11, approximately $300 million in property tax revenues that were allocated to schools in 2009-10. Under state law, the state back-fil this loss of property tax revenue with state funds—resulting in no net increase in funding to schools, but showing a $300 million increase in State General Fund support for K-12 education, This “increase” in General Fund support then allows the Governor to propose a separate, real cut of $300 million in funding for schools, while Claiming that the state is maintalning its level of General Fund support for schools ‘The Edveation Coalition 1201 K Street, suite 730, sacramento, CA 95814Secretary Ame Duncan February 4, 2010 Page 2 We fully recognize that the federal government must be sensitive to the financial problems faced by states, but the proposals described above are manipulations of the funding calculations, not reflections of economic difficulties. We respectfully Urge you to review these proposals carefully and then clearly inform the state that ‘your Department will nt allow the maintenance of effort requirement to be ‘manipulated to create the appearance of state funding commitments that are not real, Sincerely, Badercnnss ene be Dowisrdeps ‘Adonal Mack, ACSA Dennis Meyers, CASBO- ike Wickets, OSES ara FF Debra Brown, CSBA ‘Steve Henderson, CSEA “Debbie Look, PTA Estelle Lemieux, CTA Michelle Castro, SEiU cc: Dr, Thelma Meléndez de Santa Ana, Assistant U.S, Secretary of Education Anthony Miller, Deputy U.S. Secretary of Education Roberto J, Rodriguez, Special Assistant to the President for Education Governor Arnold Schwarzenegger ‘The Education Coalition 1201 K Street, Sulte 710, Sacramento, CA 95814SEQUOIA UNION HIGH SCHOOL DISTRICT BOARD OF TRUSTEES. Bon Gimson 480 JAMES AVENUE, REDWOOD CITY, CALIFORNIA 94062-1098 A 6 Manrnez ADMINISTRATIVE OFFICES (650) 369-1412 ‘ALAN SARVER Chale THOMSEN Pataick R. GoMMa ‘SUPERINTENDENT, January 31, 2010 Secretary Ame Duncan U.S. Department of Education 400 Maryland Avenue, SW Washington, DC 20510 Dear Seeretary Duncan: le ‘We have been exiremely impressed with your commitment to education and your deep concern to furs around lowest performing schools in the nation, especially in Califomia. We are supportive of California’s recent Maintenance of Effort (MOB) Assurance and Waiver Application that was submitted to your office on January 11, 2010 as patt of the State”s Federal Stabilization Funds (FSF), Phase TI application, However, we are concerned that some of California's past and current actions might jeopardize 1) California's Phase II application, 2) California's Race-to-the-Top application, and 3) the six billion of State’s Federal Stabilization Funds that has already been allocated to California. Consequently, we would urge you in your approval of California’s MOE application to take the opportunity to make the following three points abundantly clear to our Governor and to our Legislature: “S. California cannot use Forward Funding Accounting (o calculate its Maintenance of Effort + California cannot use Federal Stabilization Funds to support an on-going program. Ss California cannot use Federal Stabilization Funds to backfill cuts that have already been backfilled 1 Forward Funding Accounting California has a very innovated program called the Quality Education Improvement Act (QEIA). This program provides funding for 488 schools performing in the lowest two deciles (lowest 20%) of the state’s academic achievement test, The state's allocation totals $402 million - $500 per student for grades K-3, $900 per student for ‘grades 4-8, and $1,000 per student for grades 9-12, These schools usually contain an inordinately high number of minority students who are located in the poorest parts of rural and urban California, In the Governor's just released budget proposl, the Governor is proposing K-12 reductions of $892.6 million in 2009- 10 and $1.5 billion in 2010-11", ‘Those reductions in 2009-10 would have meant that California would have exceeded your required MOE level by $34 per student. In order (0 get around this, the Governor is proposing that $250 million of next's year QEIA allocation be made on June 30, 2010 - our fiscal year runs from July to June 30, The money will not be spent until next year, 2010-11, However, this change means that the state now satisfies the MOE requirement by $8 per student * See paye 55 of the Goversior Budget Summary 2010-11.This is what we mean by forward funding accounting, If this is allowed, it creates a hole big enough for a school bus to ride through. It may be hard for us to find that school bus in California since we have also cut school transportation by 20%, Ifa state ike California wants to make more reductions in 2009-10, it will ust increase the amount of forward funding. Forward funding makes a mockery out of your MOE requirement, We would request that you prohibit forward funding. ‘We should add a word or two about California's budget schedule, "The budget that is being proposed is for the fiscal year from July 1, 2010 to June 30, 2011. However, the current year budget for 2009-10 will also be impacted. ‘The proposed $892.6 million of cuts in 2009-10 will depend on legislation being past this year, Usually, the key date is the May Revision, which updates all the revenue assumptions and other proposals. ‘The state should calculate a new MOE estimate at that time, Most of us do not expect a 20010-11 budget passed until well after July 1, It could be as late as the fall, That final budget will probably have actions that will impact 2009-10. ‘The actually MOE estimates will not be Known until the budget is passed, Most of us unfortunately expect additional cuts to education. ‘That is one reason why the Phase HI funding and the Race-to-the-Top funding Is so impoztant, “That is also why it so important that we are spending the Fiscal Stabilization funds according to your guidelines and regulations, IL, Using Federal Stabilization Funds ¢o Support On-Golng Programs Your regulations and guidelines have been very specific thatthe stabilization funds are not to be used to support on- going programs. For the most part California has followed those guidelines. However, currently California is in the process of using $355 million of stabilization funds to backfill 2008-09 cuts that were already funded. ‘This was done to {eee up $355 million in state savings to fund the 2009-10 QEIA program, ‘The funding was made especially complicated, but there is no question about the end product, ‘There is also no question that the $335 million of Stabilization Funds are being used to fund curs that were already backfilled. We are afraid that this will stow up in your audits and may Jeopardize our Stage TI funding, our Race-to-the-Top funding, and the $6 billion thatthe state has already received in stabilization funding. ‘Our July Budget for 2009-10 funded the QEIA program from the federal School Improvement Grants. It took a struggle to correct that mistake. ‘The Governor’s veto message of SB 84 (Steinberg) stated that $355 million in federal funds had been indentified to in effect fund the QEIA allocation? ‘The process works as follows: 1, There was $1.5 billlon of categorical cuts in of 2008-09, ‘These categorical cuts were actually made in 2009-10 and immediately restored by cuts in school district's revenue limits - general purpose funding. 2, The state is now in the process of identifying and offsetting $355 million of the 2008-09 categorical cuts that were restored, "Those funds ate now being taken from school districts and are ealled 2008-09 reductions, This will be finished by the end of February. As you can imagine the impacted school districts are extremely upset. ‘Once the $355 million has been taken, the offsets will be backfilled with the federal stabilization funds. ‘The California Department of Education (CDE) has told school districts that “It és important to note thal CDE is not reducing these programs’ emitlements, rather CDE Is using their apportionments as icles 10 reed = »%.Jinstead, my Administration has identified $35$ million in federal Fiscal Stabilisation Funds that have been provided to the State for the purpose of restoring reductions in the 2008-09 fiscal year. As a result, California will have a plan to achieve the savings included in the 2009-10 Budget, while holding QEIA schools harmless.” SB 84 veto message. 2