Budget update: Voter anger sets stage for action

Analysis from CSBA’s Governmental Relations Department

The results of the May 19 special election should come as no surprise to anyone who has been following the polling data on the ballot measures. The defeat of five of the six measures by nearly 2-to-1 margins had been foretold in survey after survey in the weeks leading up to the election. The measures that failed would have established a state spending cap, created a payment to schools, securitized the state lottery and diverted funding dedicated to state and local First 5 commissions by Proposition 10 and to mental health by Proposition 63.

The only measure to pass did so overwhelmingly. Proposition 1F will prohibit salary increases for state elected officials during years when the state’s budget is out of balance. The approval of this measure was a clear indication of voters' disapproval of the Legislature and Gov. Arnold Schwarzenegger

The following recaps how the propositions faired in the state’s voting booths:

• Proposition 1A—spending cap
  Yes 34.1%
  No 65.9%
• Proposition 1B—payment to schools
  Yes 37.4%
  No 62.6%
• Proposition 1C—lottery securitization
  Yes 35.4%
  No 64.6%
• Proposition 1D—diverting First 5 funds
  Yes 34.2%
  No 65.8%
• Proposition 1E—diverting mental health funds
  Yes 33.6%
  No 66.4%
• Proposition 1F—elected officials’ pay
  Yes 73.9%
  No 26.1%
  

May Revision: ’Devastating and horrible’
With the outcome of the election now known, the next steps will be to address the projected $21.3 billion shortfall Gov. Schwarzenegger has projected the state is facing. On May 14, he released a May Revision that addressed two scenarios, one if the ballot initiatives passed and one if they failed. The plan includes nearly $9 billion in cuts, including:

• $5.3 billion from Proposition 98
• $7.5 billion in borrowing, including $2 billion from cities and counties
• $2.8 billion in revenue accelerations and fees

In the words of Superintendent Jack O’Connell, the plans for education are “devastating and horrible.” Under the governor’s plan, school funding would be reduced by $1.4 billion in the school year ending June 30. This is in addition to the $2.4 billion in cuts to schools approved in February and means that districts would have to cut approximately $235 per student in the coming weeks.

“We have six weeks left in the school year, and our governor is proposing that schools find a way to cut up to $1.3 billion,” CSBA President Paula S. Campbell said. “This is an unfathomable request given the magnitude of cuts already made in the last several years.”

The proposal includes an additional $1.4 billion cut next year. This—once again—is in addition to cuts already approved for next year in February. The Legislature and governor, in enacting a state budget for 2009-10, already approved a $700 million cut to K-12 schools.

True, the governor’s new plan also gives more flexibility to schools by removing restrictions on contracting out and allowing the school year to be shortened by up to seven days beginning in 2009-10 for three years, and additional flexibility proposals are expected later this month. State officials have also stated that federal stimulus funds should backfill reductions to education funding, dampening the effects of these catastrophic cuts. However, after the governor’s proposed budget revision, stimulus funds will backfill less than half of the cuts schools have already taken and are proposed to take throughout the remainder of this fiscal year and next.

To add insult to injury, the May Revision continues to push the state’s cash flow problem onto school districts. The governor is proposing to defer an additional $1.6 billion in payments that school districts and county offices of education should receive in 2009-10 into the next fiscal year. This means they will have to utilize a variety means, including borrowing, to ensure that they can meet their own cash needs.

To date, K-12 schools have been cut been cut $5.4 billion—$3 billion in September and $2.4 billion in February—for the current school year. These cuts will carry forward into next year, when districts and COEs will be reduced by an additional $700 million. Add the governor’s latest proposal to all this, and they will have been cut a total of $9.1 billion in just nine months. Proposition 98 funding would be $51.1 billion next year, taking schools down below the level of funding provided in 2005-06.

What’s next?
In an unusual move, a 10-member budget conference committee has been convened and will meet for the first time tomorrow. At this time it is not certain what the plan and timeline for the committee are. More information is expected at tomorrow’s hearing.

Action needed from the education community
Each new budget enactment results in cuts that are more devastating than the last round. Based on these past actions, any changes to either the 2008-09 or 2009-10 budgets would likely include more cuts to education. Many in the Capitol believe that federal stimulus funds will offset the cuts and that increased flexibility can mitigate any further impact. They need to hear emphatically that this is not the case. While the federal dollars will be beneficial, they are limited and don’t come close to the level of cuts districts are facing. Increased flexibility is always desirable, but giving some limited flexibility over a small portion of resources with one hand while hacking away at school budgets with the other is neither balanced nor proportional nor realistic if schools are expected to educate our children.

Cuts to education already have and will continue to harm the support and services students need to reach the high academic expectations we have set for them. Please contact your legislative representatives today and reinforce this message: Schools are an investment we can’t afford to cut.