Governor, legislators approve 'subsistence' budget
Published: July 7, 2005
Although the governor and legislators reached agreement on the budget July 5, education leaders were not happy with the spending plan, which fails to restore any of the $3 billion owed schools this year under Proposition 98.
For weeks, newspaper headlines have recounted the millions in spending cuts made by district after district throughout the state. Nevertheless, the governor called the plan the “the best budget agreement California has seen in years.” Democratic Assembly Speaker Fabian Núñez credited Gov. Schwarzenegger for bringing the parties together and "forcing compromises out of all of us."
Those charged with making sure school budgets stretch to cover students’ basic needs, however, found little reason to celebrate.
"The mutual pats on the back and self-congratulatory remarks don’t disguise that fact that this is a bad budget for education," said CSBA Executive Director Scott P. Plotkin. "In fact, it is virtually identical to the budget that was proposed by Gov. Schwarzenegger last January and that we have vigorously opposed for seven months. It falls far short of the level of funding promised by the governor last year and of the needs of California’s schools."
While the governor claimed the budget will exceed Proposition 98 requirements and raise per-pupil spending to an all-time high of more than $10,000, state Superintendent of Public Instruction Jack O’Connell issued a statement denouncing the budget agreement.
“In fact, this budget does not represent a significant increase in funding for our students. It barely keeps our schools afloat at a time when many districts are facing serious budget shortfalls,” he said. “The governor’s portrayal of increased funding … is misleading, as this money simply allows our schools to maintain a shaky status quo.”
The Legislature passed the budget bill July 7 on a vote of 34-4 in the Senate and 65-13 in the Assembly. The governor signed the bill July 11. Budget negotiations early in the week centered on the governor’s proposal to have school districts pick up the state's contribution of $469 million to the State Teachers’ Retirement System. The Legislature, with opinions from both the Legislative Analyst and the Legislative Council that this shift was illegal, had rejected it.
Meanwhile, in his revised May budget proposal, the governor proposed to allocate one-time, Proposition 98 “settle-up” funds – money due schools for past years – to several new programs. CSBA argued that it didn’t make sense to use one-time dollars to create new, ongoing programs, and the Legislature agreed. Therefore, the budget conference committee redirected $235 million in settle-up funds to begin repaying schools for mandated costs. The conference committee budget, therefore, rejected the STRS shift of $469 million and appropriated $235 million in one-time settle-up funds for mandate reimbursement. Altogether, the conference committee's budget allocated $704 million more to schools than the governor’s January proposal.
The current budget agreement, however, calls for the state to continue making the STRS payments (the same as the conference committee budget), but eliminates the $235 million appropriation for mandate reimbursement. This $235 million will be retained by the state to offset roughly half the cost of making the STRS payments. Therefore, the level of K-12 funding in the final budget is $235 million lower than the conference committee budget and $234 million higher than the governor’s original January budget. "This is a relatively small change in a budget of $50 billion and doesn’t even begin to address the needs of schools," said CSBA Assistant Executive Director for Governmental Relations Rick Pratt.
Some education organizations had reported that the $235 million that will be redirected from mandate reimbursement to offsetting part of the state’s STRS costs is Proposition 98 money. However, Pratt said that is not true. When the amount owed schools under the Proposition 98 guarantee was recalculated for the 2002-03 and 2003-04 fiscal years, the state found that it actually owed schools about $1 billion more than they were provided for those years, creating an "amount due" known as settle-up funds.
As part of his agreement with the education community last year, the governor had agreed to repay those settle-up funds at the rate of $150 million per year beginning in 2006-07. The repayments are one-time dollars that do not increase the Proposition 98 funding base, Pratt explained.
Such settle-up funds are repaid from non-Proposition 98 general fund dollars, said Pratt. "Otherwise, if they came from Proposition 98 dollars, we would be repaying ourselves with our own money."
The only other significant change to the K-12 budget is the allocation of $49.5 million to a new program to attract and retain teachers in decile 1-3 schools. Details are not yet available, but it appears to resemble the governor’s “recognition pay” proposal, another version of his previous “combat pay” proposal. However, the money is not actually appropriated in the budget, but is set aside to be appropriated in follow-up legislation.
"The bottom line is that this is a subsistence budget," said Plotkin. "It will allow most districts to hold on to the stripped-down level of program offerings that have resulted from consecutive years of budget cuts, but it will not allow districts to begin restoring programs or make qualitative improvements. And it does nothing to reduce the gap between high academic expectations and meager resources." With nine weeks left before the Legislature adjourns, there is still time for the Legislature and governor to address school funding needs, should they choose to do so. In a statement released shortly after the budget announcement, Núñez hinted that a separate school funding bill could still be introduced this summer. “Now that we have passed a budget that handles the basics, fighting for investments in education must be our number one priority,” he said. “We must continue to pressure the governor to keep his promise to protect investments in California’s public schools.”
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