Schools, the May Revision, and the budget deficit explained

Governor Jerry BrownGovernor Jerry Brown yesterday rolled out the May Revision to his 2012-13 State Budget proposal to address the now $15.7 billion deficit. He proposed to close the budget gap through a $4.1 billion increase in cuts to state employee compensation, welfare, health care, higher education, courts, and other government programs, for a total of $8.3 billion in cuts.

Gov. Brown attributed the higher level of budget gap to the January revenue forecast being too high by $4.3 billion, Proposition 98 spending increasing by $2.4 billion, and the federal government and courts blocking budget cuts $1.7 billion. Although the Governor’s May Revision reflects an increase in Proposition 98 funding, the growth is used to increase the deferral buy back and offset lower property tax estimates.

The magnitude of the state budget gap has increased, but the structure of the Gov. Brown’s proposal for K-12 education remains essentially the same: assumption of passage of a November tax initiative with increases in Proposition 98 used to maintain existing program and reduce deferrals. Failure of the tax initiative and its resulting loss of revenue will continue to fall largely on K-14 schools with proposed cuts of $5.5 billion and real programmatic reductions of $2.7 billion.

Policy Issues

Many of the main policy provisions from the Gov. Brown’s January Budget remain, with some modifications:

  • Weighted Student Funding Formula
    • Increase the base grant from $4,920 to $5,421 per pupil
    • Require existing deficit factor reduction to be restored before the formula is fully implemented
    • Grade span adjustment (K-3, 4-6, 7-8, and 9-12) added to acknowledge cost differences
    • Weighting for English Learners and low-income students drops from 37% to 20% and these funds would be required to be spent on those students
    • Home-to-school transportation and Targeted Instructional Improvement Grant funds are add-ons to the formula
    • The continued phase in of the formula in 2013-14 would be contingent upon the creation of an accountability system
    • Phase in of the formula increases from five years to seven years
  • Transitional Kindergarten—Brown retains his proposal to eliminate Transitional Kindergarten but acknowledges declining enrollment erodes the savings; this savings, which Brown now estimates to be $91.5 million, would be used to restore reductions to preschool programs
  • Mandate Block Grant—Continues proposal to block grant mandate funding and distribute it on a per average daily attendance basis; the May Revision eliminates the ability for districts to use the current mandate claiming process and would repeal six of the highest-cost mandates
  • Deferrals—Increase of $392.9 million for a total of $2.6 billion to reduce interyear deferrals from $9.5 billion to $6.9 billion


If Gov. Brown’s tax initiative does not pass in November 2012, $6 billion in additional cuts will go into effect on January 1, 2013, of which $5.5 billion would be to Proposition 98 funding. The May Revision equates the funding decrease to the equivalent of the cost of three weeks of instruction. Schools will be provided flexibility to reduce the school year by a combined 15 days in 2012-13 and 2013-14. It is unclear how this school-year reduction would be applied, but it is fairly certain it would need to be negotiated at the local level.

The governor’s proposal to reduce deferrals by $2.6 billion would be eliminated if the trigger reduction is implemented. The remainder of the trigger cuts would come from continuing the January proposal to shift the cost of general obligation bond debt service for K-14 facilities into the Proposition 98 guarantee.

When asked how schools should react to the Governor’s Budget relying on the tax initiative, Brown recommended that districts “plan a prudent budget based on their understanding of what we’re trying to do.”

This report is published here courtesy of School Services of California.   It was written by Michelle McKay Underwood, Michael Ricketts, and Kathleen O’Sullivan, all of whom are on the firm’s staff.  

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2 Responses to “Schools, the May Revision, and the budget deficit explained”

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  1. mcdez on May 18, 2012 at 5:57 pm05/18/2012 5:57 pm

    • 000

    More gimmicks and not nearly enough funding for our students. CA is 47th in the state in what we spend per pupil. CA has the highest student to teacher, student to counselor and student to administrator ratios — in the nation. We’ve lost art, music, drama, counselors, school nurses, librarians, libraries, computer labs, after school programs, athletics. The past four years have been a bloodbath in staff and programs. It’s time to actually fund our students in an amount that can cover what the state has set as their standards. Its time to invest in our students, rather than chip away at our schools, year after year after year. No more cuts. No more deferrals. No more gimmicks.

    The governor is holding our students hostage, so he can pass a tax initiative that will not have a significant positive impact on our schools. That’s pretty low if you ask me. Our schools, which get 40% of the budget, will absorb 90% of the cuts if the governor’s initiative doesn’t pass. This is what is called blackmail.

    The PTA/Molly Munger initiative is the only initiative that will start to restore our schools. Many of our school districts are hanging by a thread and the governor’s siphoning away more money last year due to his realignment plan, his initiative that only pays money that has already been taken from schools (maybe) and now his proposed Weighted Student Formula will further damage school districts that are already compromised. PTAs and educational foundations can not fill in the huge gap that has been created. Many districts don’t even have the resources for PTA fundraising and educational foundations — and so the gap widens even further for some -creating varying degrees of inequity, again – in an overall compromised system.

    The PTA/Molly Munger, Our Children, Our Future initiative relies on a broad based, sliding scale tax, after deductions. It sends money directly to our schools, NOT the Sacramento black hole! It mandates parent input into how the money is spent and mandates strict accountability. The initiative also makes it a felony to misuse the funds. Got it Gov.?

  2. Joette on May 16, 2012 at 9:55 am05/16/2012 9:55 am

    • 000

    there are plenty of bogus programs and departments in california that can be cut instead of education and police and firemen. Governer Brown get you head out of where the sun doesn’t shine and do some soul searching and quit screwing with the middle class’ lives. Cut the crap.

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