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Class Size Reduction Flexibility Revisited

By Kari Sousa - February 12, 2010

While Class Size Reduction (CSR) flexibility contained in the revised 2008-09 State Budget may seem like old news to many, this flexibility is receiving more attention than ever as many districts are now looking to formerly “sacred cows” – including K-3 Class Size Reduction – to bridge growing budget gaps.  Due to increased questions, we wanted to revisit the article published in March 2009 discussing the “new” class size reduction flexibility provision.

The revised penalty structure is as follows:

 

Student to Teacher Ratio

Old Penalty

Up to 20.44

No Penalty

20.45-20.94

20% or $4,284

20.95-21.44

40% or $8,568

21.45-21.84

80% or $17,136

21.85 and greater

100% or $21,420


Student to Teacher Ratio

New Penalty

Up to 20.44

No Penalty

20.45 – 21.44

5% or $1,071

21.45 – 22.44

10% or $2,142

22.45 – 22.94

15% or $3,213

22.95 – 24.94

20% or $4,284

24.95 and greater

30% or $6,426

Like the old SB 311 penalty provisions, the revised penalty provisions are applied on the statutory 20 maximum students per class.  LEAs (Local Educational Agencies) do not receive K-3 CSR incentive funding for students that exceed the 20:1 ratio.  The Budget Act only changed the K-3 CSR penalty provisions.  All other aspects of K-3 CSR statute remain in place.   In addition, requirements associated with the Quality Education Investment Act (QEIA) remain unchanged. Districts participating in QEIA grant must continue to meet the 20:1 requirement for K-3 CSR in participating QEIA schools.

CSR Implementation Considerations

Eleven existing CSR regulations remain in statute.  The Budget Act only modified the penalty provisions of the program.  As a result, districts are still responsible for filing annual applications and the J-7CSR report. 

Regulations for CSR require implementation first in the 1st grade, followed by 2nd grade, and finally 3rd grade and/or Kindergarten.   Recently, we have received many questions regarding how raising class sizes in certain grades may affect the implementation provisions for K-3 CSR. 

There are no restrictions on a District’s ability to utilize the revised penalty provisions based upon priorities for CSR grade level implementation.  LEAs are locally authorized to increase class sizes in any grade level in which they were eligible for participation in 2008-09.  As long as the district files the appropriate CSR application and J-7CSR designating those grades as participating grades (even if classes are incurring a penalty due to increased class sizes), the implementation provisions will not prevent a district from utilizing the class size flexibility.

CDE has provided further clarification that states that eligibility to participate is based on overall LEA participation, not site level. Districts that had differing levels of participation among school sites as of December 10, 2008 are still be eligible for funding under the new penalty provisions.  Combination classes are also permissible.  For combination classes in grades 3 and 4, incentive funding continues to be available for students in grade 3 only.

Calculating CSR Revenue

When calculating projected K-3 CSR Revenue, remember to calculate revenue by classroom – not by student.  This is particularly important if your district is considering significantly increasing class size.  While CSR revenue is frequently stated on a per-student basis, this funding is limited to 20 students per classroom.  In addition, penalties are calculated on a base of 20 students per classroom. 

Example:  Increasing a classroom from 20 to 30 students would generate only $21,420 ($1,071 per student * 20 students) less a penalty of $6,426 (30% of funding) equaling net revenue of $14,994, or approximately $500 per student.

Assuming an operating cost of $75,000 per classroom, and CSR revenue with the new penalty levels, the following table illustrates the net operational cost per student at differing class size levels.

 

Class Size

Cost per Student

20

$ 2,679

21

$ 2,602

22

$ 2,533

23

$ 2,516

24

$ 2,411

25

$ 2,400

26

$ 2,308

27

$ 2,222

28

$ 2,143

29

$ 2,069

30

$ 2,000

Due to the revised penalty structure, it costs only slightly less per student to operate class sizes at 25:1 than 24:1, so make sure to review the chart and choose class sizes carefully based upon the educational and financial needs of your district.

Maximum Class Sizes

While the revised CSR penalty provisions do not include class size limitations, this does not mean that a district could or should increase class sizes exponentially.  Class size limitations in primary grades 1-3 are still governed by Education Code Section 41376 which limits class sizes to a maximum of 32 students per class, with an average class size of 30 students per class or less.  Class sizes in Kindergarten are governed by Education Code Section 41378, which limits class sizes to a maximum of 33 students per class, with an average class size of 31 students per class or less.

While Education Code establishes class size maximums, make sure to check your local collective bargaining agreements, which may have more restrictive K-3 class size maximums.

Revised CSR Penalty Timelines Only Cover 2011-2012

Please note that the modified CSR penalties are available only through 2011-2012 fiscal year, while all other categorical flexibility is available through 2012-2013 fiscal year.

Editor's Note:  Kari Sousa, CPA is Director of District Support Services with the educational consulting firm Total School Solutions (TSS).