Governor's budget relies on revenue plan to avoid deeper cuts
Published: January 10, 2012
California voters could be key to closing an anticipated $9.2 billion gap in the 2012-13 budget under a proposal by Gov. Jerry Brown, but such a tax measure may not yield the $6.9 billion the governor is counting on, the state’s non-partisan Legislative Analyst said Monday.
The governor’s plan attempts to close the budget shortfall with a combination of cuts—$4.2 billion, primarily from education and health and human services—along with increased revenues and other funding shifts.
The revenue plan the governor hopes will qualify for the November 2012 ballot calls for increasing the personal income tax on the state’s wealthiest taxpayers and boosting sales taxes by one-half percent for five years. But the LAO said the initiative may only produce about $4.8 billion in revenue in the 2012-13 budget year, with slightly more in the following years.
Nevertheless, estimates may continue to vary right up to the election since the incomes of high-wage earners are “highly volatile from one year to the next,” the analyst said.
“School board members throughout California were hoping that the governor’s latest budget proposal would help bring some stability to the state by resolving the chronic underfunding of public schools that has been exacerbated by the current recession,” said CSBA Executive Director Vernon M. Billy. “Unfortunately, what California’s public schools are confronted with in this budget is the prospect of flat funding or additional cuts, if the governor’s revenue projections don't hold true.”
For K-14 schools, the approval of such a revenue package in November could mean an increase of $2.5 billion. Combined with the natural increase in the Proposition 98 guarantee, funding would jump to $52.5 billion in 2012-13, up from $47.6 in the current year. This increase in funding would be used to reduce inter-year deferrals by $2.3 billion and pay for the $2.1 billion deferral approved this year.
The governor once again proposes a trigger mechanism in the spending plan that would be pulled if voters reject his initiative providing for new revenues. This would result in the Proposition 98 guarantee dropping by $2.4 billion. Additional savings would be achieved by shifting debt service on school bonds into the guarantee. This results in a $4.8 billion reduction to Proposition 98 programmatic funding. This reduction would include the elimination of the $2.2 billion repayment for deferrals noted above and an additional reduction of $2.6 billion that, according to the governor, would equate to shortening the school year by three weeks.
“CSBA will be working closely with the administration and the Legislature to ensure that this budget is fair to public schools, and that it provides the highest level of revenue and local decision-making authority possible,” said Billy. “We will also work vigorously against any attempts to undermine the constitutional requirement for school funding guaranteed by Proposition 98. In the meantime, we will caution school boards to budget on what they know, instead of what they are being told to hope for.”
New funding model
The governor’s budget contains some significant proposals for school finance that restructure how schools are funded. The governor proposes to implement a "weighted student formula" funding model that in concept is based on a plan that was spelled out by Alan Bersin, Goodwin Liu and Michael Kirst in 2008. Under the proposed funding model, each student would generate a base grant amount, and unspecified weights that come with additional funding would be added for English learners and students who qualify for free and reduced-price meals. There would be an additional weight—and funding—when there are high concentrations of at-risk students.
The funding for the weighted formula would be provided by consolidating all but a handful of categorical programs into a single funding source. Excluded from this would be federally mandated programs such as special education, as well as funding for school nutrition and afterschool programs established by Proposition 49. This new model would be phased in over five years beginning in 2012-13.
In the interim, additional flexibility would be provided, expanding the list of flexibility programs to include those that would be used to provide the funding for the new weighted student formula. The most notable included are K-3 Class Size Reduction and Economic Impact Aid. Additionally, the governor proposes to eliminate Home to School Transportation.
Mandates
The spending plan maintains the elimination of most mandated programs, and those not eliminated would be included in a block grant. Districts could opt to access funds from the $200 million mandate block grant and in return would agree to comply with the requirements of the mandates that remain. Excluded from the block grant—and still required of districts—would be mandates related to health and safety issues, such as immunizations, as well as collective bargaining. The proposal also addresses significant outstanding mandates, the second science course required for high school graduation and Behavioral Intervention Plans by eliminating the mandates and making them discretionary.
Transitional kindergarten
Under the proposal, the phased-in changes to the entrance age for kindergarten starting with the 2012-13 school year would remain; however, the requirement that districts offer placement in a transitional kindergarten program would be eliminated. Districts would be able to offer it at their discretion. Districts would be able to claim funding for a second year of kindergarten by complying with an existing provision that requires parents to sign a document to allow their student to continue in kindergarten for another year.
This effectively begins the 2012-13 budget season in Sacramento. In the immediate future, decisions will need to be made about which funding initiative various interest groups will get behind. Although the governor is going to push hard for his measure, other measures provide more revenue to schools.
Legislative hearings will begin in earnest in the coming weeks.