In addition to the announcement of a budget agreement between the Governor and Legislature, one key K-12 budget bill is now in print.  AB 77 is the education omnibus trailer bill, meaning it includes many K-12 appropriations and policy changes that go along with the main budget bill (which was also just recently released, SB 121 ). For the big picture, based on what we have learned about the budget agreement, LCFF base grants will remain at 2019-20 amounts, and there will be very few direct cuts to categorical programs. Here is a brief description of key items in AB 77, referred to by the Education Code Sections which are added or amended:
Deferrals - The trailer bill implements large deferrals of payments of the principal apportionment from the 2020-21 fiscal year into the 2021-22 fiscal year. Specifically, the bill takes the following actions to move funds within the 2020-21 calendar year:
  • From June to July ($524.9 million) – this is the amount remaining after the current year deferral ($1.85 billion) is extended
  • From May to August ($2.38 billion)
  • From April to September ($2.38 billion)
  • From March to October ($2.38 billion)
  • From February to November ($1.54 billion)

This amounts to $9.19 billion in additional deferrals in 2020-21, in addition to the $1.85 billion in deferrals put in place in 2019-20. Over $5 billion of these deferrals could be rescinded if additional federal funds become available.
ADA Hold-Harmless – Section 43502 (b) includes language that ADA for LEAs in 2020-21 shall be based on 2019-20 ADA reported at the second apportionment period (P2) for all full school months from July 1, 2019 to February 29, 2020.
Instructional Time/Distance Learning – Starting with Section 43500, the trailer bill includes a number of new provisions related to instructional time and distance learning. There is no waiver of the minimum number of school days requirement (generally 180 days), but an LEA may meet the minimum number of days through a combination of in-person and distance learning. An LEA may meet the number of instruction minutes required for each grade level through a combination of in-person instruction under the direct supervision of a certificated employee, or through the time value of assignments as determined by a certificated employee. Section 43504 states that in-person instruction should be offered to the greatest extent possible, but Section 43503 allows distance learning at an LEA or schoolwide level as a result of an order or guidance from a state or local public health officer. There are a number of additional details related to distance learning that will be the subject of a separate update we will provide within the next few days.
No COLA – Section 42238.021 specifies that the COLA shall be zero for 2020-21. This was expected, but fortunately LCFF base amounts are no longer dramatically reduced (as proposed in the May Revision). The bill also establishes a zero COLA for categorical programs that would normally receive a statutory COLA.
Additional Federal and State Appropriations AB 77 allocates nearly $5 billion of federal funds (mostly Coronavirus Relief Funds) and about $540 million of state General Funds to LEAs through several different formulas. About $1.5 billion is allocated to LEAs based on 2019-20 special education enrollment, about $2.9 billion is allocated to LEAs in proportion to their 2019-20 combined supplemental and concentration grant funding, and nearly $1 billion to LEAs in proportion to their 2019-20 LCFF entitlement. Recall that the May Revision allocated the $2.9 billion on a per ADA basis only to those LEAs that received concentration grant funding in 2019-20, and that did not include the nearly $1 billion of state and federal funds to LEAs based on their LCFF entitlements.
Special Education – The bill provides an increase of $645 million for special education: $545 million to increase the base rate hold-harmless level to $625 per ADA, and $100 million for a low-incidence pool increase.
Supplemental Prop 98 Payments – AB 77 includes language, consistent with the May Revision, to provide supplemental payments above the Prop 98 guarantee, starting in fiscal year 2021-22, in the amount of 1.5% of General Fund revenues. These supplemental payments would be made until they reached a total of roughly $13 billion.
Certificated Employee Summer Layoffs – Section 44955.5 includes language that eliminates the authority, for 2020-21, to layoff certificated employees by August 15 based on receiving less than a 2% increase in LCFF funding.
Classified Layoffs – During fiscal year 2020-21, AB 77 also prohibits termination of classified employees in positions related to nutrition, transportation or custodial services.
Police on School Sites – The trailer bill includes intent language that LEAs evaluate the presence of peace officers and other law enforcement personnel at schools, and consider alternatives options for pupil safety.
Many more details are being released late tonight and we’ll provide additional analysis tomorrow. 

Abe Hajela
Partner | Capitol Advisors Group