The website contains local education agency information pertaining to the $496.6 million in equalization aid and deficit reduction funding provided as part of the 1997-98 Budget Bill. Section 38 of the 1997-98 Budget Bill, (Chapter 299, Statutes of 1997) required each school district governing board to hold a public hearing prior to obligating or expending these funds (See Attachment 1). The statutory language also required special reports of the governing boards' plans for spending these funds to be submitted to the state.

We are pleased to report that as of May 15, 1998, more than 95 percent of the LEAs submitted information concerning their plans for the equalization aid and deficit reduction funding. The following information summarizes the data submitted.

Of the 1,008 LEAs that were required to report expenditures, a total of 967 (95.9 percent) submitted the requested information for at least one of the two years. Some of them, however, submitted expenditures only for 1996-97 or only for 1997-98. The response rate for LEAs submitting the requested information for both years was 88.9 percent. A statewide summary of the information submitted by LEAs is displayed in Table 1.

As indicated in Table 1, the distribution of expenditures in 1996-97 differs significantly from that of 1997-98. In 1996-97, the majority (60.3 percent) of the LEAs’ deficit reduction and equalization funds were allocated as one-time expenditures, and the top three categories of expenditures were "Compensation increases for existing staff" (38.4 percent of total expenditures), "School facilities or school grounds" (23.1 percent) and "Instructional materials or equipment" (12.2 percent). In 1997-98, on the other hand, the majority (83.1 percent) of the funds were allocated as ongoing expenditures, with "Compensation increases for existing staff" accounting for 64.9 percent of the funds spent. Expenditures on "School facilities or school grounds" ranks second among the 1997-98 expenditure categories with 9.1 percent of total expenditures and "Other" expenditures account for the third-highest category of expenditure with 6.4 percent of the total. The distribution of the funds among expenditure categories in 1996-97 and 1997-98 is depicted graphically in Figures 1 and 2.

Several points need to be made regarding the data presented in Table 1. First, the expenditures for most LEAs were based on either their own forecasts or the State Department of Education’s (SDE’s) November 1997 estimates of the amount each LEA might expect to receive from the State. In some cases, the amounts submitted by the LEAs differ by more than 20 percent from the amounts that ultimately were allocated by SDE. Overall, however, the total expenditures submitted by LEAs is fairly close to the statewide total allocated by SDE (approximately $500 million in each year). Second, some LEAs reported expenditures in only one year. Twenty-eight LEAs reported expenditures only for the 1996-97 year, and 43 LEAs reported expenditures only for the 1997-98 year. Third, in about eight percent of the cases where LEAs submitted expenditures for both years, the amounts reported in 1997-98 exceeded or fell short of the amount reported in 1996-97 by 25 percent or more. We have no explanation for increases or decreases of this magnitude.

Finally, in some cases, Department of Finance staff adjusted the amounts districts displayed in specific expenditure categories to ensure that the expenditures were correctly categorized. For example, several districts displayed expenditures for deferred maintenance and purchase or lease of portable classrooms in the "Other" expenditure category. In these cases, the amounts were moved from the "Other" category to the "School facility or school grounds" category. The total amount of such adjustments accounted for less than two percent of the statewide expenditure totals for the two years.