Democrats in the Legislature may find themselves at odds with Gov. Jerry Brown on two issues that will factor large when Brown reveals his revised state budget Tuesday: how to spend billions in unanticipated revenue and how to reshape Brown’s sweeping plan for funding K-12 education.
As of now, the state is on target to collect $4.5 billion more than expected in personal income taxes, according to the Legislative Analyst’s Office. Democratic leaders in the Legislature have no shortage of ways they’d like to see that money spent, such as expanding mental health care, restoring adult dental care, eliminating fees for preschool that went into effect this year, and providing more state aid for college students.
The problem for them is that as much as 90 percent of that extra money may be legally bound for K-12 and community colleges. Normally, under Proposition 98 (later modified by Proposition 111), which defines spending minimums for education, school districts and community colleges can count on about 40 cents of every dollar in state revenue. But when times are good, as they are this year, and the state owes districts for past cuts and missed cost-of-living increases, as is the case, then it can rise to 90 cents on a dollar.
Of course, with all things Proposition 98, these figures are subject to interpretation/manipulation by the Department of Finance based on technicalities of the law. So some money could end up on the non-Prop. 98 side of the ledger.
The LAO has concluded that the extra revenue is a one-time bump, resulting from wealthy individuals cashing out capital gains and dividends before higher federal taxes for upper-income earners went into effect in January.The ever-prudent Brown will likely agree that this money won’t be recurring.
Both Sen. Carol Liu, D-Pasadena, and Assemblymember Joan Buchanan, D-Alamo, who chair the education committees in the Senate and Assembly, have called for using a piece of the windfall to help school districts train teachers and acquire technology and materials needed to implement the Common Core standards. But Brown instead may want to speed up paying off $6 billion in late payments to schools, known as deferrals; he has said that’s his priority. Accelerating the scheduled payoff will free up more money for the classroom sooner than Brown had projected. It also would quicken the implementation of Brown’s Local Control Funding Formula, or LCFF, which Brown has projected to be phased in over seven years.
Will Brown compromise on the funding formula?
The other big question is how much Brown will alter the LCFF to accommodate critics within his own party. Probably not much, based on his full-throttle defense of his proposal at a press conference two weeks ago. He vowed then “to fight with everything I have and whatever we have to bring to bear” to pass his plan as is. Few expect that will be the final word, though, as the LCFF goes through negotiations.
Brown is proposing a uniform base spending amount per student: about $6,800 per student once fully phased in. He’d steer an additional 35 percent for every low-income student and English learner: from $2,220 for those in K-3 to $2,688 for those in high school. On top of this supplement, Brown is proposing a “concentration grant,” a bonus per student for those districts in which high-needs students make up at least a majority.
Democrats have praised the framework of the LCFF: simplifying and making funding more uniform; targeting more money to disadvantaged youth; shifting more control over dollars from Sacramento to the districts. But Senate Democrats have proposed changes to the formula, and Assembly Democratic leaders, while not laying out an alternative, have raised similar concerns. Here are four issues that Brown may address in the revised budget tomorrow:
- Will the base be raised?
Brown has said that no district will get less money under the formula and that districts’ pre-recession base spending, plus COLAs, will be restored. But suburban districts with few high-needs students argue that they won’t actually be held harmless and instead will lose hundreds of dollars per student.
- Will he modify the concentration factor?
Senate Democrats aren’t persuaded that this money, to counter the impact of living in high-poverty neighborhoods, is needed or distributed wisely; Brown wants to allocate it by district, not by school site. They’re proposing to rechannel the money to increase the base spending for all students and the supplement for disadvantaged children. Brown could compromise by limiting the bonus money only to districts with the highest concentrations of targeted students.
- Will he stiffen accountability provisions?
Under his principle of local control, Brown would give districts more power to spend money as they choose. To ensure that supplemental dollars are spent on the intended students, he would require that district write a detailed spending and academic plan, with the money tied to academic improvement. County offices of education would examine the plan.
But not only legislators but also advocates for poor kids and English learners want tighter requirements; Senate Democrats would reimpose state controls if the extra money doesn’t bring results.
- Will he remove some programs from the formula?
Brown has excluded two big categorical programs, totaling $1.3 billion, from formula: home to school transportation and desegregation dollars, called TIIG. The LAO and Public Policy Institute of California argue those formulas are inequitable already and shouldn’t be protected. Advocates of teacher training and career technical training say funding for these legislative priorities should be preserved and not left to local control. The one area that Brown is expected to substantially revise is adult education (see sidebar).