Governor’s budget would tinker with Prop. 98 formulas

Gov. Arnold Schwarzenegger’s proposed budget for 2007-08 meets Proposition 98’s education funding guarantees. However, it also contains proposals on transportation and child care that would change the way Proposition 98 is calculated in potentially troubling ways, according to Rick Pratt, CSBA’s assistant executive director for Governmental Relations.

First, the governor wants to place child care expenses associated with CalWORKS, the federal Temporary Assistance for Needy Families block grant, under Proposition 98’s funding umbrella. Those costs, budgeted at $269 million in 2007-08, would count toward the Proposition 98 funding guarantee—but without providing any direct aid to education.

“The governor does not propose to increase the guarantee to cover this new cost,” Pratt said. “Instead, the funding would come from within the existing guarantee, meaning that $269 million that would otherwise go to education programs would now go to child care. This is a big issue, and we’re going to fight that.”

Gov. Schwarzenegger also wants to shift the cost of home-to-school transportation, currently $627 million per year, from Proposition 98 to the Public Transportation Account. This would result in a corresponding reduction to the Proposition 98 guarantee.

“This idea has some merit, since the PTA is a healthy account and receives revenue from the sales tax on gasoline that formerly went to the general fund. However, CSBA would want to make sure that in future years, the allocation to schools from that account is sufficient to cover annual cost increases,” Pratt said. “We also have questions about the legality of this shift. We’re looking at whether reducing the Proposition 98 guarantee this way may violate the constitution.”

Following is Pratt’s summary of other aspects of the governor’s K-12 education budget proposal.

Prop. 98 budget summary

The governor’s 2007-08 budget proposal contains only minor programmatic adjustments. In general, the budget includes a $1.8 billion (3.3 percent) increase in Proposition 98 funding, bringing total Proposition 98 funding to $56.8 billion in 2007-08. The state general fund contributes $41.2 billion (72.5 percent) of this amount. The rest comes from local property tax revenues. The state contribution of $41.2 billion comprises about 40 percent of total state general fund expenditures.

Total K-12 funding from all sources is budgeted at $68.6 billion. However, this includes money that is spent on behalf of public schools but not allocated directly to them, such as contributions to the teachers’ retirement system and debt service on state general obligation school bonds. It also includes funds for programs such as child care and adult education that are allocated to school districts but not available for K-12 programs.

Growth and COLA

The budget contains $1.9 billion for a cost-of-living adjustment on all K-12 programs of just over 4 percent. (Note that these numbers will be updated in the May budget revision to reflect updated information on the index used to calculate the COLA.) Once again, however, federal funding for special education will not increase enough to cover the federal share of the COLA, and the governor does not propose to use state funds for this purpose.

K-12 enrollment will continue to decline in 2007-08, meaning the overall budget does not contain an increase for enrollment growth. Statewide, the cost of enrollment growth in growing districts will be offset by reduced funding for declining enrollment districts.

Program changes

Changes to specific program budgets include:

School Enrichment Block Grant: $50 million in one-time funding to continue the Low-Performing School Enrichment Block Grant for a third year. Funds can be used for:

• Assuring a safe, clean school environment
• Providing support services for students and teachers
• Creating incentives to recruit highly qualified teachers and principals
• Small group instruction
• Giving teachers and principals more time to work together to improve academic outcomes

CAHSEE intervention materials: $5 million for school districts to purchase individual intervention materials for students who have failed or are at risk of failing the California High School Exit Exam.

Chief business officer training: $2.5 million to fund training for an additional 700 school CBOs.

Partnership for Success: $1.5 million to fund three partnerships between school districts and a California State University campus to increase eligibility for and admission to CSU.

EnCorps teachers: $10 million to establish an EnCorps Teachers Program to recruit retired individuals into the teaching profession, especially those with expertise in math, science and career technical education. The objective is to add 2,000 experienced retirees to the teaching profession.

Statewide databases: $2.5 million in state and federal funding to continue development of the California Longitudinal Pupil Achievement Data system and $1.1 million in federal Title II funding to continue the development of the California Longitudinal Teacher Education Data System.

Teacher credentialing reforms: Noting that there are 175 different credentials for teachers of career technical education, the governor proposes to introduce legislation directing the Commission on Teacher Credentialing to streamline the credential process.

SARCs: The administration proposes to work with the Legislature, the superintendent of public instruction and other interested parties to redesign the School Accountability Report Cards “so they are parent-friendly and provide the relevant district and site level information that will allow schools to be compared to one another.”

California Program Improvement Management System: $1 million for this system, which would provide low-achieving schools and school districts a unified intervention program to turn around low-performing schools. The system would be used to:

• Analyze assessment data to target areas for intervention

• Access up-to-date information on federal and state accountability requirements

• Use tools, structures and relevant research to respond to these requirements

• Access recommended steps and processes to build a sustainable action plan to accelerate student achievement

K-12 facilities bond

As part of a larger “California Strategic Growth Plan,” the governor is proposing K-12 facilities bond measures for the 2008 and 2010 elections. The proposed 2008 bond would contain $6.47 billion for K-12 facilities, to be allocated as follows:

• $2.931 billion for new school construction
• $1.539 billion for modernization
• $1 billion for charter school facilities
• $1 billion for career technical education facilities

The 2010 bond would contain $5.13 billion for K-12, to be allocated as follows:

• $2.13 billion for new school construction
• $1 billion for modernization
• $1 billion for charter schools
• $1 billion for career technical facilities