Despite lowered state revenue projections and Gov. Jerry Brown’s prediction that an economic recession could come any moment, state funding for K-12 and community colleges will rise nearly $3 billion for the fiscal year starting July 1, under the May revision of the 2016-17 state budget released on Friday.
A $1 billion drop in expected revenue in April provided the rationale for a fiscally cautious Brown to repeat his warning to legislators not to add new spending, including for early education. Based on historic averages, a recession should have started already, so the state is living on borrowed time, he said. And California, which relies on taxing the wealthiest 1 percent, is subject to huge revenue plunges during a recession. “There are no halcyon days ahead,” he said.
The Brown administration is now projecting $2 billion less for next year than was forecast in January, resulting in less money to put aside in the state rainy fund. But that decline won’t affect Proposition 98, the formula that determines education funding. Prop. 98 funding would increase to $71.9 billion in 2016-17 or $2.8 billion more than the revised total for the current year, a 4 percent increase. Proposition 98 spending would be $3.5 billion more than the Legislature appropriated last year.
Total General Fund spending would rise $6.5 billion, to $122.2 billion.
The revised budget would steer most of the additional money for K-12 to the Local Control Funding Formula, the state’s education financing system that provides districts with extra dollars for students with the highest needs: English learners, low-income children and foster youths. Districts would receive an additional $2.9 billion ($100 million more than in Brown’s January budget). With the new money, the formula would be 96 percent funded, which the Brown administration defines as restoring all districts to the inflation-adjusted amounts they got before the 2009 recession. Districts with high proportions of high-needs students already have received more than that.
Brown is also proposing $1.4 billion in one-time spending for next year. That’s less than half of the $3.6 billion one-time spending in this year’s budget. Brown’s budget summary encourages districts to use the money for a range of purposes: teacher training with extra help, known as induction, for beginning teachers; textbook and technology purchases; and building maintenance districts have postponed. But under state law, they can use the dollars however they want.
Extending Proposition 30’s income tax increase on the state’s highest earners, a measure that will be on the November ballot, would soften the impact of a recession, Brown said, while refusing, as he has in the past, to endorse it. Saying that he sold Proposition 30 to voters in 2012 as a “temporary tax,” he said, “I will let voters make up their minds. Prop. 30 will just keep things the way they are. I am prepared to manage with or without it.”
Assuming no recession and the expiration of Proposition 30 after 2018, the Department of Finance forecasts Proposition 98 revenue rising to $74.5 billion in 2017-18, then flattening the following year.
K-12 schools receive about 89 percent of Prop. 98 revenue, with community colleges receiving most of the remainder and less than 1 percent going to other state education agencies. The projected $2.8 billion increase in total Prop. 98 funding for next year over the revised Prop. 98 level for 2015-16 is 4.1 percent more.
Responding to an acute projected teacher shortage in hard-to-staff areas such as special education, math and science, the Legislature is considering several bills aimed at boosting the number of teachers, including loan forgiveness programs and teacher residencies in low-income districts. Brown hasn’t taken a position on the bills, but his budget reflects his preferences. It includes limited funding to revive CalTeach, the California Center for Teaching Careers. With $2.5 million, the Commission on Teacher Credentialing would promote teaching as a profession to high school and college teachers, direct candidates to teacher preparation programs and reach out to out-of-state teachers.
Brown also proposes $10 million in one-time grants to colleges and universities to develop four-year programs producing both an undergraduate degree and a teacher credential. California steered away from this approach decades ago, when it required teacher candidates to obtain a bachelor’s degree before obtaining a credential through a one- or two-year post-graduate program. But the added expense and time of getting a credential have become a disincentive for pursuing teaching.
Incentive for CSU
The 23-campus California State University system would receive an extra $25 million to improve what are now low graduation rates, especially of low-income students, under the revised budget. The money would be contingent on the CSU system “articulating clear, coherent plans for the university as a whole and for each campus” to boost four-year graduation rates and to get low-income students who receive federal Pell grants to graduate at rates similar to more affluent students who do not receive those grants.
Of the students who started as CSU freshmen in fall 2011 and enrolled in 12 or more units in their first term, only 19 percent graduated within four years. Only 12 percent of Pell‑eligible students graduate within four years, compared with 25 percent of non‑Pell‑eligible classmates, according to statistics released by the governor. The overall graduation rate increases to 57% after six years, the CSU says.
In a statement Friday, the CSU said it “applauds the governor for making degree completion a top state priority” and “remains committed to reaching even more ambitious degree completion goals and closing the achievement gap among low-income and under-served students.” But CSU officials added that they are still seeking an additional $101 million in general funding for such things as expanding enrollment and adding classes.
Proposed general fund spending for higher education remained relatively stable. Brown’s revised budget calls for $14.3 billion in general revenues for community colleges, Cal State, University of California and the Cal Grant financial aid program. That is just $25 million, or 0.2 percent, higher than last year’s spending. It is, however, $267 million less than the January proposal, a drop that officials attribute mainly to more federal money available to subsidize the Cal Grants.
For students and their parents, the good new bottom line is that the freeze on tuition for all three systems of colleges and universities will continue for another year under Brown’s plan.
EdSource higher education reporter Larry Gordon contributed to this report.