Budget + Sequestration Impacts on CA Charter Schools

Copyright © 2013 Charter School Capital, Inc.

Budget + Sequestration Impacts on CA

Charter Schools

July 24, 2013

2Copyright © 2013 Charter School Capital, Inc.

WELCOME

• Panelists– Chas Cardall, Orrick, Herrington & Sutcliffe– Branche Jones, Legislative Consultant– John Helgeson, Charter School Capital

Who we are


WELCOME

• Overview• Budget process and impacts

– Funding - Local Control Federal Funding (LCFF)– Cash flow– Accountability

• Sequester• Looking ahead

Agenda


Overview


STATE OF THE STATE

• FY 2013-2014 Budget uses conservative revenue estimates• Payoff of “hidden debt” is an important goal• Education Protection Account and overall education funding• SB740 and CDE Revolving Loan Program shifting to CSFA

Overview


Funding


FUNDING

• Phases of the plan– Legislative– Regulatory– Build-up– Full implementation

• Political Landscape– How we got here

oRole of Prop 30oWhat did people get?

– Collective: Accountability– Cap charter school funding

– Why the Governor believes so strongly?

Overview – Local Control Funding Formula


FUNDING

• Base grant funding – Certified rate card per pupil– Everyone gets this– This year

• Supplemental grant– 20% of Base Grant (counts only once)

oEnglish learneroF&RLoFoster care

– Capped at % of your district, not necessarily your authorizer

Overview – Local Control Funding Formula


FUNDING

• Concentration grant– 50% of Base Grant for each pupil over 55% of the student categories that

qualify for Supplemental Grant– Capped at % of the district your in, and not necessarily your authorizer

• Augmentation– Class size reduction for K-3

oMust be 24:1 or less by full implementationoGradual reduction during phase In (10.4% of Base in K-3/ADA)

– Grades 9-12oMust be spent on 9-12oCollege and career readiness as described in your LC Accountability Plan

What does it mean?


FUNDING

Rate Card

K-3 4-6 7-8 9-12

Base F’13 $5,109 $5,187 $5,346 $6,188

Base F’14 $5,109 $5,187 $5,346 $6,188

Target Base $6,845 $6,947 $7,154 $8,289


FUNDING - LCFF

TY LY Future

ADA 100 100 100

K-3 100 100 100

School Q# 60 60 60

District % 60% 60% 60%

CG Qual: 5 5 5

K-3 Base $5,109 $5,109 $6,845

Revenue $510,900 $510,900 $684,500

Supplemental Grant / CG

Q Pupils 60 80 60

20% of Rate $1,022 $816 $1369

Revenue $61,308 $65,280 $82,140


FUNDING - LCFF

Concentration Grant

Q Pupils 5 - 5

50% of Rate $2,555 $- $3,423

Revenue $12,773 $- $17,113

K-3 Augmentation

K-3 ADA 100 100 100

Rate $531.34 $1,071 $711.88

Revenue $53,134 $107,100 $71,188

Total Revenue

Q: EL/F&RL/FY $638,114 $683,280 $854,941


FUNDING

Prop 30 - Effect of the EPA on GPE Calculation

GPBG

In-Lieu

GPBG

In-Lieu

EPA


FUNDING

July

2013

Augus

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Septe

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Octob

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Novem

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Decem

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Janu

ary

2014

Febru

ary

Mar

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April d

ef J

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ay

May

def

Jul

June

June

def

Jul

July

Augus

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5.00%

10.00%

15.00%

20.00%

25.00%

Base Line

2012-13

2013-14

Fiscal Year 2013 - 2014

Per

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ual

Rev

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Budget Impacts


• LCFF implementation $2.1B• Common Core funding and implementation $1.25B

– $250M one time competitive grants (SBE)• Deferral Buy-down $4.25B• Proposition 39 implementation Energy Efficiency $381M

– Details not yet known

What are additional impacts?

BUDGET IMPACTS


Accountability


• Collaborative– What is it? How does it work?

• Petition requirements– Due July 1, 2014– Academic achievement goals for all students and each subgroup of

students– Annual update by July 1 beginning in 2015– Includes identification of specific actions to meet these goals using a

SBE template• Consulting requirements

– Consult with teachers, principals, other staff, parents, and students in the annual update

CA Collaborative for Educational Excellence

ACCOUNTABILITY


ACCOUNTABILITY

• Revocation– SBE may revoke any charter if the school failed to improve pupil

outcomes across state and local priorities• Interventions if a charter fails to improve outcomes

– Chartering authority shall provide technical assistance to the school, using the rubric created by the SBE

– SPI may assign, at the request of the chartering authority and approval of the State Board, the Collaborative to provide technical assistance



ACCOUNTABILITY

• Authorizer is required to consider revocation if the Collaborative has provided advice/assistance and has made either of following findings:

– The charter school has failed/is unable to implement recommendations– Performance of the school is persistently or acutely inadequate

• A charter school is not allowed to appeal a revocation under new law



Understanding Sequestration


WHAT IS SEQUESTRATION?

• Budget Control Act of 2011– Creates a mechanism to encourage a “give and take” in budget

negotiations known as sequester– Implementation is sequestration

• Definition– “Sequestration is a mechanism to enforce deficit reduction by motivating

Congress to compromise on budget negotiations or face mandatory cuts of $85B”

– Forces federal budget cuts

Definition


• Legislators in DC unable to create a budget with appropriate cuts to reduce the federal budget deficit

• No compromise has been made• $85B of mandatory cuts go in to effect and will impact every federal program

Politics




Federal Deficit – FY 2008 - 2015

2008 2009 2010 2011 2012 2013 2014 20150

200

400

600

800

1000

1200

1400

1600

US Federal Deficit - FY 2008 - 2014


SEQUESTRATION IMPACTS

Non-exempt defense discretionary

28%

Non-exempt nonde-fense discretionary

funding18%

Medicare7%

Non-exempt nonde-fense mandatory

programs18%

Non-exempt defense mandatory programs

29%

Overall $85B in Cuts

What is being cut?


SEQUESTRATION IMPACTS

• Unknown• If Congress does not agree to a compromise, the sequester will continue• Next year, it would start in September; this means that cuts would be

implemented across 12 months rather than 7 months like this year• Projected cut is not 5%, but 7-8%, well above $100B

Will this happen again?


What Can You Do?


WHAT CAN YOU DO?

• We will continue to track the impact of LCFF • Get involved - SBE takes up the regulatory step for the accountability rules

– The Administration wants to run legislation to address it this year• Be careful - actual and projected rates are different• If you have questions…ask us – we’re here to help

Plan


Questions?



Thank You.


877-272-1001

John Helgeson

[email protected]