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Legislative Update: Governor’s Proposition 98 proposal revives minimum guarantee downward 

A new report from the Legislative Analyst’s Office details the series of Proposition 98 accounting maneuvers in Gov. Jerry Brown’s proposed 2017-18 budget and offers optimism that the May revision will reflect stronger revenues than the initial budget assumes.

Click here to view the LAO’s Proposition 98 analysis

Click here to view the LAO’s EdBudget Table

A series of accounting maneuvers in Gov. Jerry Brown’s proposed budget revises the Proposition 98 minimum guarantee for 2015-16 downward by $379 million (shifting 15-16 from a Test 2 to a Test 3 year) and, consequentially, pulls the 2016-17 guarantee down by $506 million and keeps Test 3 for that year. The proposed guarantee for 2017-18, also a Test 3 year, is $73.5 billion, an increase of $2.1 billion from the 2016 Budget Act but significantly lower than the state’s Legislative Analyst’s Office November estimates. A maintenance factor of around $1.6 billion is created as a result of these and other accounting maneuvers proposed in the budget.

 In CSBA’s Jan. 13 Forecast Webcast, CSBA Legislative Advocate Teri Burns clarifies that, “these adjustments don’t mean money is being taken away from districts, it’s just money that has never actually gone to districts - it does not represent a ‘cut.’”

Dennis Meyers, assistant executive director for governmental relations states that these maneuvers amount to, “ three year total reduction in the Prop 98 guarantee of about $1.7 billion. While districts won’t see any less cash in the current year, the proposed maneuvers reduce what districts and county offices would otherwise be entitled in 2017-18. That’s especially tough when governing boards are looking at several years of increasing pension and healthcare costs.  We will argue that this difference is a real impact between what we believe districts and county offices of education should be getting and what the governor is proposing.”

The LAO says that state revenue estimates from the administration are low, stating that, “By May, General Fund revenue in 2017-18 could be significantly higher than assumed in January. Holding other factors constant, these higher revenue estimates would increase the 2017-18 guarantee.”