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The Prop 30 windfall – not yet



When Proposition 30 won on Tuesday, it led a sweep of nearly two dozen local school parcel taxes and close to a hundred local school bonds approved by Californians that together will bring in tens of billions in new revenue for education. And some of those voters are already asking when their local schools will be rehiring laid-off teachers, reopening school libraries, and installing new technology. It will not be easy to explain that, at least for this year, new revenue from Proposition 30 won’t be visible to the naked eye.

As EdSource Today has reported more than $2 billion of Prop. 30 funds will go toward paying down some of the state’s late payments to schools. Remaining funds won’t  backfill the $8 billion that K-12 schools have been cut in the past five years, about $1,400 per student.

The panel was moderated by Ron Bennett, left, CEO of School Services, Inc., with panelists Joel Montero of FCMAT, Molly McGee Hewitt of CASBO and Rick Simpson from the Assembly Speaker’s office. (click to enlarge).

“In some ways, I worry about it being very similar to what happened when the lottery came in,” said Molly McGee Hewitt, executive director of the California Association of School Business Officials (CASBO), during a post-election webcast Thursday afternoon produced by School Services of California. “The number one question I’ve been asked my entire professional career since the lottery is ‘What the heck have you all done with all that lottery money?’ As if we’re keeping it in a back room.” [The state lottery provides about 1.5% of K-12 education revenues, or some $800 million per year]. She said she worries that maybe backers of the ballot measures oversold it a little bit to the public.

“Proposition 30 wasn’t a windfall for anybody; it sort of stops the bleeding,” explained Rick Simpson, deputy chief of staff for Assembly Speaker John Pérez. “But it does help stabilize the state general fund as well as public schools.”

Ron Bennett, the president and CEO of School Services, who moderated the event, underscored that point, telling about a meeting he had in a large school district a few days ago. District officials told him that if Prop. 30 had failed, they would have had to cut $60 million this year. “Now they only have to cut $19 million,” said Bennett, noting, with some irony, that they’re very relieved about that.

That’s because in its first year, more than $2 billion of Prop 30 funds will be used to start paying off the nearly $10 billion in deferrals, those late payments that forced cash-strapped district to borrow money.  Those payments should free up funds so in 2013-14, districts will start to see some real money.

But that’s not what the public is necessarily expecting, and the finance experts spent a good part of the hour-long webcast discussing the need to make sure people understand the situation. They called for greater transparency regarding education spending by putting more effort into keeping the public informed.

Joel Montero, right, CEO of FCMAT, answers a question from Ron Bennett of School Services, Inc. (click to enlarge).

“Proposition 30 creates a massive communication problem. Business folks now have to go out and talk to people who have a particular expectation,” said panelist Joel Montero, CEO of the Fiscal Crisis and Management Assistance Team (FCMAT), which helps school districts manage their finances. Their task, said Montero, is to explain the deferral situation and emphasize that it took a while to get into this situation and it will take a while to get out of it.  “Eventually that does save school districts money, but that’s a fairly complex concept when everybody thinks that Proposition 30 passes and all of a sudden we have more money to spend.”

It’s not just the public that may not understand where the Prop. 30 money is going this year, but teachers, administrators, and even school board members aren’t necessarily clear about it, added McGee Hewitt. She said groups like CASBO and School Services will need to step up training for school boards, and called for greater collaboration and cooperation between district business officials and superintendents.

“I think that it’s a wonderful day and I’m grateful to where we’re going,” said McGee Hewitt. “I’m a little bit hesitant to think that happy days are here again. I think that we have a long way to go to get to that again.”

Filed under: Elections, Policy & Finance, School Finance, State Education Policy

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6 Responses to “The Prop 30 windfall – not yet”

  1. Richard Moore (@infosherpa) said

    on November 10, 2012 at 10:38 am

    >>>reopening school libraries

    Didn’t you just love the commercials with Moonbeam in school libraries?

    This is a guy who vetoes state money for public libraries because, “Libraries are a local responsibility.”

    He presides over a state with the worst level of school and public library service in the nation.

    We would have to build 1000 public library branches and hire 5000 school librarians to be AVERAGE.

    Currently only 8% of our school libraries have the services of a credentialed teacher librarian. That is 720 for 9000 schools.

    To pretend that Prop. 30 will reopen school libraries is the height of fantasy.

    Brown will be back with another desperate rescue operation next year. But we won’t understand it because we have the lowest reading level of the 50 states.

  2. Rob Manwaring said

    on November 9, 2012 at 5:01 pm

    If I were advising districts right now, I would tell them to hold off on any decisions until next week. My guess is that in the middle of next week the LAO will come out with their fiscal forecast for next year’s budget, and some of the air may let out of people’s balloons.It is possible that even with the passage of Prop 30, there is still a budget gap that needs to be solved in the Jan 10 budget.

    Will all of the cuts in the budget and one-time actions in the current budget actually work out? Will Prop 30 actually generate $8.5 billion as assumed in the budget. DOFs estimate of revenues for the current year are down 2 percent from the budget forecast. What will happen with redevelopment funding? Prop 30 was a huge step forward, but there will likely be some more work to do to finally achieve balanced budgets moving forward. I was surprised that these issues didn’t seem to come up in the talk yesterday.

    • Navigio replied

      on November 9, 2012 at 5:26 pm

      LAO already did some analyses but you make a good point about the revenue estimates. Even in earlier analyses, their estimates differed from the gov’s. And things have changed since even then. I wonder whether the gov will use the amount of deferral backfill as the ‘fudge factor’ if things do end up being too different.

  3. el said

    on November 9, 2012 at 10:44 am

    What it does do is allow money that is already in budgets to be spent with less concern about managing cash flow to ensure there is enough to meet payroll in June.

  4. navigio said

    on November 9, 2012 at 9:42 am

    *sigh*

    It wasnt prop 30 that created the massive communication problem, it was the people who talked about it that did that. Shooting oneself in the foot invariably happens when one tries to be selective about how one communicates reality. Of course a populace that cant be bothered with detail doesnt make avoiding that any easier.

    • Kathryn Baron replied

      on November 9, 2012 at 1:39 pm

      Navigio, The folks interviewed agree with you. They never implied that Prop 30 created the problem; they said the backers may have gone a little overboard in discussing its promises.

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