State budget provisions complicate school reopening under COVID-19 conditions; Mega-deferrals established and major cuts avoided

While touted by Gov. Gavin Newsom and legislative leaders as preserving K–12 funding and positioning schools to reopen this fall, the 2020–21 state budget trailer bill language strips local educational agencies of critical flexibility needed to safely and effectively resume instruction.

Distance learning
Assembly Bill 77 states that in-person instruction should be offered to the greatest extent possible, only allowing distance learning under two circumstances:

  • On an LEA or schoolwide level as a result of an order or guidance from a state or local public health officer.
  • For pupils who are medically fragile or would be put at risk by in-person instruction, or who are self-quarantining because of exposure to COVID-19.

While CSBA believes this language deserves additional clarification by the state, it appears to push LEAs to conduct on-campus instruction while limiting the financial means to do so at time when many LEAs are being pushed to the brink financially. Furthermore, the bill’s language indicates that LEAs can only offer hybrid or distance learning to all students when local public health officials issue orders explicitly recommending distance learning to mitigate the spread of COVID-19. As a result, AB 77 potentially forces LEAs to resume in-person instruction even if they do not have the physical space, equipment, resources or capacity to do so safely and effectively.

Certificated & classified layoffs
Further restricting options for LEAs is the prohibition of layoffs for certificated and specified classified employees (nutrition, transportation or custodial services) in 2020–21. With staffing costs comprising between 80 and 90 percent of local budgets, eliminating budget balancing tools handcuffs governance teams and may lead to deeper-than-necessary cuts in programs that serve students and families. CSBA is reviewing whether the limitation on classified layoffs would override contract language in collective bargaining agreements with classified bargaining units in violation of the state constitution.

While this budget does provide more relief when compared to the May Revision, the many caveats contained in AB 77 cloud the picture for LEAs and leave many schools in a position where they have to consider laying off staff that fall outside the restricted job classifications, and making cuts in other areas such as the arts, sports, and other extracurricular programs.

Among other significant policy provisions:

  • Extends the 2019–20 average daily attendance hold harmless to the 2020–21 school year, contingent on student participation reporting and local Continuity of Learning and Attendance plan elements due by Sept. 30, 2020.
  • Maintains instructional day requirements but allows flexibility for instructional minutes in 2020–21 school year; LEAs may meet the 180 days through a combination of in-person and distance learning.
  • If schools or LEAs are using distance learning, a host of additional requirements to track student attendance would be required, including “a weekly engagement record is completed for each pupil documenting synchronous or asynchronous instruction for each whole or partial day of distance learning, verifying daily participation, and tracking assignments.”
  • Adopts short-term fiscal flexibilities:
    • Increases LEA inter-fund borrowing allowances
    • Allow sale of surplus LEA property for one-time spending purposes
    • Excludes on-behalf pension payments from the Routine Restricted Maintenance Account requirements
    • Extends audit timelines
    • Clarifies LEA uses of Senate Bill 117 COVID relief funds

Breaking down the  deferrals
As previously reported by CSBA, the budget compromise rejects the devasting 10 percent cut to the Local Control Funding Formula that was proposed in the May Revision. However, unlike the Legislature’s budget passed on June 15, the deal does not see a cost-of-living adjustment to the LCFF. The budget includes a total $100 billion in K-12 funding, or $17,073 per student, which would rise to $106.6 billion upon receipt of additional federal stimulus aid.

In lieu of funding cuts called for by Gov. Newsom, the final budget leans on approximately $11 billion in deferrals for schools in 2020–21. However, more than $5 billion of these deferrals could be rescinded if additional federal funds become available.

State budget deferral schedule
In the current fiscal year:
$1.85 billion from the June apportionment deferred until July of 2020

In the 2020-21 fiscal year
$1.54 billion from the February 2021 apportionment deferred until November 2021
$2.375 billion from the March 2021 apportionment deferred until October 2021
$2.375 billion from the April 2021 apportionment deferred until September 2021
$2.375 billion from the May 2021 apportionment deferred until August 2021

To help manage cash flow issues, CSBA’s Cash Reserve Program provides LEAs with a reliable and economical short-term cash flow funding option. There is no cost to apply for a TRAN and no obligation to issue even after boards adopt a resolution to participate in the program. Learn more »

While the budget would allocate $5.53 billion in existing CARES Act federal funds and general fund dollars for COVID-19 closure impacts, the $2.9 billion portion headed to LEAs to address learning loss will be based on LCFF supplemental and concentration grant formulas. CSBA had recommended the $2.9 billion be allocated to all unduplicated students, and not just those attending LEAs that receive concentration grant funding.

Among other funding items of note:

  • Allocates the following amounts in CARES Act and general fund for COVID-19 impacts:
    • $1.5 billion to all LEAs for learning loss, based on special education enrollment
    • $980 million to all LEAs, based on the total LCFF formula
    • $45 million for existing community school models
    • $112.2 million for LEA school meal reimbursements during summer and COVID closures
  • Provides $2.3 billion ($1 billion this budget year) in funding relief for LEA statutory contributions to CalSTRS and CalPERS retirement systems.
  • Provides $645 million in Proposition 98 funding for special education services and supports – $545 million to base rate increases and $100 million for the low-incidence pool.
  • Restores May Revision reductions to K–12 regular public school categorical programs to fully fund career tech, after-school and adult education programs.

Adopts the May Revision “supplemental payment” schedule for the difference between the total Proposition 98 funding level and Test Two in the guarantee for 2020–21, beginning in 2021–22.