State’s windfall boosts school funding, allows Prop. 98 settlement
Published: June 1, 2006
California School Boards Association Executive Director Scott P. Plotkin praised the “balanced approach” Gov. Arnold Schwarzenegger took in his recently revised budget plans that, in part, implement the settlement of a landmark lawsuit brought by educators against the governor.
“This is a budget we can work with,” Plotkin said during the Fiscal Crisis and Management Assistance Team’s annual teleconference on the budget with leading education association officials, key legislators and Education Secretary Alan Bersin.
Buoyed by higher tax receipts than expected, schools stand to gain more than $2 billion this year in one-time funding and $800 million more for Proposition 98’s ongoing funding base starting in the 2006-07 budget year, under revised budget plans announced by Gov. Arnold Schwarzenegger May 12. In all, the state has some $7.5 billion more than was expected when Schwarzenegger released his 2006-07 budget proposal in January.
Those extra revenues triggered restoration of the “maintenance factor” funds that had been withheld from Proposition 98-guaranteed funding levels for schools in previous years. They also gave the governor the money he needed to settle CTA v. Schwarzenegger, a lawsuit filed against him in 2005 by the California Teachers Association and state Superintendent of Public Education Jack O’Connell over Proposition 98 funds.
During the recent teleconference, Plotkin agreed with Bersin’s previous description of the suit as “a colossal waste of time,” but CSBA and ACSA had been compelled to intervene in the litigation earlier this year to join in the defense of constitutional funding guarantees for education and to secure a voice in the lawsuit’s outcome.
Approximately $3 billion remains to be allocated to schools under the settlement. Of that, $300 million would be paid in 2007-08 and the remainder parceled out in $450 million annual payments through 2013-14.
Plotkin shared concerns voiced by other panelists during the teleconference about continuing challenges with declining enrollment, audits of mandated programs, the need for more teachers who meet new federal standards and other issues, but he also joined the other speakers’ conciliatory remarks on the governor’s annual “May Revision” of state revenue projections and spending plans.
“This is not an argument that there’s a problem, but it is a discussion about the devil being in the details,” Plotkin said. “The menu of choices that the governor is providing on the budget gives us the opportunity to help reconcile those differences.”
Budget details
Rick Pratt, CSBA Assistant Executive Director, Governmental Relations, was also enthusiastic in the analysis that he prepared shortly after the revised budget was released.
“In general, this is one of the best K-12 budgets in memory. Total funding for average daily attendance will end up being 7.7 percent higher this year than last, and it will increase another 4.8 percent next year,” for a total rise of nearly 13 percent between 2004-05 and 2006-07, Pratt said. “This should be enough to enable districts to begin restoring programs and making other qualitative improvements.”
Overall, the revised budget proposal would dedicate $2 billion to schools in one-time expenditures that do not increase the ongoing funding commitments to education under Proposition 98. The largest single one-time allocation, $650 million, would go toward reimbursement of prior-year state mandates for local schools. Other one-time payments, to be allocated to school districts and county offices of education by ADA, include:
- $250 million for instructional materials (approximately $40 per ADA).
- $250 million for K-12 art and music equipment supplies.
- $250 million for physical education equipment grants.
- $400 million for a teachers’ fund for classroom supplies and materials (approximately $65 per ADA).
Smaller one-time amounts would go to other specific programs ranging from $65 million for supplemental instruction for the high school exit exam to $1.8 million for a mathematics teacher pilot program. The governor is also calling for an $800 million increase in ongoing Proposition 98 funding for the following programs beginning in the new budget year that starts July 1:
- $320.4 million to fully fund annual cost-of-living adjustments (now calculated at 5.92 percent, up from 5.18 percent in January) for revenue limits and all state-funded categorical programs.
- $102.4 million (for a total of $307.2 million) to fully eliminate the revenue limit deficit.
- $100 million (for a total of $300 million) for revenue limit equalization.
- $200 million in a new proposal to improve the ratio of students to counselors to 500-to-1 in middle schools and 300-to-1 in high schools.
“For some school districts, the combination of COLA, deficit reduction and equalization funding will result in revenue limit increases of as much as 7 percent or more,” Pratt said.
However, governance teams should remember that the revenue limit does not account for all of their district’s revenue, and that increases for state and federal categorical programs will be less than 7 percent. Therefore, districts should compute their ‘blended’ COLA and keep that in mind when negotiating employee pay raises, Pratt said. The state Assembly and Senate are expected to act on the governor’s proposals by mid-June, with two-thirds approval in each house required. Schwarzenegger will also have to sign off on the final plan.
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