SB121 - Education finance: education omnibus budget trailer bill.

Amended IN Assembly June 24, 2025 CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION Senate Bill No. 121 Introduced by Committee on Budget and Fiscal Review January 23, 2025 An act relating to the Budget Act of 2025. An act to amend Sections 1622, 1623, 1630, 8281.5, 8320, 8337, 8902, 14041.5, 14041.6, 14041.8, 32526, 41020.2, 41203.1, 41344.1, 41490, 41601, 42127.1, 42127.6, 42128, 42129, 42238.01, 42238.016, 42238.02, 44258.9, 44283, 44395, 46120, 46211, 46392, 48000.1, 48857, 51225.3, 51284.5, 52064.5, 56836.168, 60151, and 66032.2 of, to add Sections 1631, 17037, 17075.11, 33319.6, 41011.1, 42238.017, 42252.1, 44283.1, 44415.8, 48004, 49506.5, 52065.1, 52073.4, and 53009 to, to add Article 13.5 (commencing with Section 44400) to Chapter 2 of Part 25 of Division 3 of Title 2 of, and to repeal Section 42120 of, the Education Code, to amend Sections 17581.6 and 66007 of the Government Code, to amend Sections 137 and 152 of Chapter 44 of the Statutes of 2021, to amend Sections 121, 126, and 132 of Chapter 52 of the Statutes of 2022, to amend Section 108 of Chapter 48 of the Statutes of 2023, to amend Section 110 of Chapter 38 of the Statutes of 2024, to repeal Section 112 of Chapter 38 of the Statutes of 2024, to amend the Budget Act of 2017 (Chapter 14 of the Statutes of 2017) by amending Item 6100-139-8080 of Section 2.00 of that act, to amend the Budget Act of 2021 (Chapters 21, 69, and 240 of the Statutes of 2021) by amending Items 6100-001-0001 and 7760-101-0001 of Section 2.00 of that act, and to amend the Budget Act of 2024 (Chapters 22, 35, and 994 of the Statutes of 2024) by amending Item 6100-001-0001 of Section 2.00 of that act, relating to education finance, and making an appropriation therefor, to take effect immediately, bill related to the budget. LEGISLATIVE COUNSEL'S DIGEST SB 121, as amended, Committee on Budget and Fiscal Review. Budget Act of 2025. Education finance: education omnibus budget trailer bill. (1) Existing law requires a county board of education, on or before July 1 of each fiscal year, to adopt an annual budget for the budget year and file the budget with the Superintendent of Public Instruction, the county board of supervisors, and the county auditor. Existing law requires the Superintendent to examine the budget and, on or before September 15, approve, conditionally approve, or disapprove the budget, as specified. Under existing law, in the event of the conditional approval or disapproval of the budget of a county office of education, the county superintendent of schools and the county board of education are required, on or before October 8, to review and respond to the Superintendent’s recommendations, including any revisions to the adopted budget and other proposed actions to be taken, if any, as a result of those recommendations, as provided. This bill would require the Superintendent to, in addition to examining the budget of a county office education, review and consider studies, reports, evaluations, or audits of the county office of education that were commissioned by specified entities that contain evidence that the county office of education is showing fiscal distress according to specified standards and criteria or that contain a finding by an external reviewer that the county office of education is at moderate or high risk of intervention, as provided. The bill would additionally authorize the Superintendent to conditionally approve or disapprove a budget that does not provide adequate assurance that the county office of education will meet its current and future obligations and resolve any problems identified in the studies, reports, evaluations, or audits, as specified. (2) Existing law requires the Superintendent to notify the county board of education and the county superintendent of schools in writing if the Superintendent determines that a county office of education will be unable to meet its financial obligations for the current or subsequent fiscal year, as provided. If the Superintendent makes that determination or if the county office of education has a negative certification, existing law requires the Superintendent to, as necessary to enable the county office of education to meet its financial obligations, take one or more specified actions. Existing law requires a county office of education to pay 75% of fees charged by the Superintendent for administrative expenses incurred for undertaking the required actions or for costs associated with improving the county office of education’s financial management practices and requires the other 25% to be covered by the Superintendent. This bill would revise certain provisions related to the above-described requirements, including, among other things, by requiring the Superintendent to additionally notify the president of the State Board of Education, or the president’s designee, if the Superintendent determines that a county office of education will be unable to meet its financial obligations, as provided, including if a county office of education experiences a significant fiscal event that is determined by the Superintendent to have an immediate severe fiscal impact that will cause a county office of education to be unable to meet its financial obligations for the current or subsequent fiscal year. The bill would revise and recast the provision related to fees and costs to instead require a county office of education to pay 75% of, and the Superintendent to pay 25% of, specified administrative expenses incurred or costs associated with improving the county office of education’s financial management practices. (3) Existing law establishes the California Prekindergarten Planning and Implementation Grant Program as a state early learning initiative with the goal of expanding access to classroom-based prekindergarten programs. Existing law appropriates $300,000,000 from the General Fund to the State Department of Education in both the 2021–22 fiscal year and the 2022–23 fiscal year for allocation to local educational agencies as base grants, enrollment grants, and supplemental grants, as specified. Existing law authorizes the department to allocate or prorate unexpended funds returned by or collected from a grant recipient for grants to local educational agencies for costs associated with the educational expenses of current and future California state preschool program, transitional kindergarten, and kindergarten professionals that support their attainment of required credentials, permits, or professional development in early childhood instruction or child development, including developing competencies in serving inclusive classrooms and dual language learners, as provided. This bill would extend the encumbrance, expenditure, and reversion periods for those grant funds, as specified, thereby making an appropriation. (4) The Early Education Act establishes the California Universal Preschool Planning Grant Program with the goal of expanding access universally to preschool programs for 3- and 4-year-old children, as provided. The act requires the Superintendent to develop and administer a grant process and award grant funds to each county that applies for funding, as provided. This bill would extend the expenditure and reversion periods for those grant funds, as specified, thereby making an appropriation. The bill would also extend the deadline by 3 years for a report to be submitted by the Superintendent to the Department of Finance and the appropriate policy and fiscal committees of the Legislature on the expenditure of funds and relevant outcome data in order to evaluate the impact of the grants awarded under this program. (5) Existing law establishes the Inclusive Early Education Expansion Program for the purpose of increasing access to inclusive early care and education programs. Existing law appropriates $250,000,000 from the General Fund to the Superintendent for allocation to local educational agencies for purposes of this program. Existing law authorizes the Superintendent to allocate up to $50,000,000 of the $250,000,000 to address state-level systems building and align local practice with the research and practice-based strategies that best promote pupil outcomes and program quality. This bill would instead reduce the above-described allocation to $10,000,000. (6) Existing law appropriates $2,836,660,000 in the 2021–22 fiscal year from the General Fund to the Superintendent to administer the California Community Schools Partnership Program and requires those funds to be available for encumbrance or expenditure until June 30, 2032. Existing law requires up to 72% of the funds to be available for implementation grants and at least 18% to be available for extending implementation grants, as provided. This bill would authorize funds initially made available for implementation grants that are returned to the State Department of Education to be available for extending implementation grants. By expanding the purposes for which previously appropriated moneys may be expended, the bill would make an appropriation. (7) Existing law requires the Controller to draw warrants on the State Treasury throughout each year in specified amounts for purposes of apportioning funding to school districts, county offices of education, and charter schools. Existing law requires warrants in the amount of $245,604,000 scheduled to be drawn in June of the 2024–25 fiscal year to instead be drawn in July of the same calendar year, except as provided. This bill would require the amount of the warrants scheduled to be drawn in June of the 2024–25 fiscal year to instead be $245,604,000, or the total June principal apportionment payment, whichever is less. The bill would require, for the 2025–26 fiscal year, warrants for the principal apportionments for the month of June in the amount of $1,874,781,000, or the total June principal apportionment payment, whichever is less, to instead be drawn in July of the same calendar year, except as provided. (8) Existing law, the Leroy F. Greene State School Building Lease-Purchase Law of 1976, authorizes the State Allocation Board to apportion state funding to applicant school districts for designated school facilities construction purposes. Existing law creates a county school lease-purchase fund in the county treasury within each county for each school district project in the county. Existing law authorizes funds to be expended from the county school lease-purchase fund by the applicant school district only when specifically authorized by the board for either direct project costs or reimbursements, except as provided. Existing law prohibits the board from approving any projects pursuant to the Leroy F. Greene State School Building Lease-Purchase Law of 1976 and requires the board to only approve and fund school facilities construction projects pursuant to the Leroy F. Greene School Facilities Act of 1998, except as provided. This bill would provide that all funds, including any interest earned on funds, in a county school lease-purchase fund for a school district that remain in the fund on and after January 1, 2026, shall not be reported or returned to the state and would authorize the interest to be used by the school district for capital outlay expenditures for school construction. By authorizing those state funds to be expended by a school district, the bill would make an appropriation. (9) The Leroy F. Greene School Facilities Act of 1998 provides for the adoption of rules, regulations, and procedures, under the administration of the Director of General Services, for the allocation of state funds by the State Allocation Board for the construction and modernization of public school facilities. The act, among other things, provides that a school district is eligible for health and safety funding to replace, reconstruct, or construct new classrooms and related facilities if the school district demonstrates there is a threat to the health and safety of pupils, as provided. This bill would separately authorize a school district to apply for hardship assistance in cases of extraordinary circumstances, as specified. (10) Existing law creates the Learning Recovery Emergency Fund in the State Treasury for the purpose of receiving appropriations for school districts, county offices of education, charter schools, and community college districts related to the state of emergency declared by the Governor on March 4, 2020, relating to the COVID-19 pandemic. Existing law appropriates $6,345,405,000 from the General Fund to the department for transfer to the Learning Recovery Emergency Fund. Existing law requires the Superintendent to allocate these appropriated funds to school districts, county offices of education, and charter schools, as provided. This bill would appropriate an additional $378,650,000 from the General Fund to the department for transfer to the Learning Recovery Emergency Fund, to be allocated by the Superintendent to those local educational agencies operating in the 2025–26 fiscal year, as provided. (11) Existing law establishes the department, under the administration of the Superintendent, and assigns to the department numerous duties relating to the financing, governance, and guidance of the public elementary and secondary schools in this state. This bill would require, no later than September 30, 2026, the state board to approve and the department to post on its internet website criteria and guidance for the selection or development of inservice professional development programs for effective means of teaching literacy in transitional kindergarten, kindergarten, or any of grades 1 to 5, inclusive, with a list of inservice professional development programs that have been deemed to meet those criteria. The bill would appropriate $200,000,000 from the General Fund to the department to make available to local educational agencies to expend from the 2026–27 fiscal year to the 2029–30 fiscal year, inclusive, for purposes of training certificated and classified staff who provide literacy instruction, or who support any teacher who provides literacy instruction, using the professional development programs that meet the criteria and guidance, as provided. The bill would require recipient local educational agencies to report specified information to the department, and would require the department to submit a summary of this information to the Legislature and the Department of Finance, as provided. (12) Existing law requires the accounting system used to record the financial affairs of a school district to be in accordance with the definitions, instructions, and procedures published in the California School Accounting Manual, as approved by the state board and furnished by the Superintendent. This bill would require the accounting system used to record the financial affairs of any local educational agency, as defined, to be designed to provide a separate accounting of expenditures related to actual pa [Text truncated for display. Full text available on Congress.gov.]