Increases in state money for K-12 schools and community colleges are projected to slow starting in two years, when temporary taxes from Proposition 30 start drying up. But for now, there’ll be buckets of money.
In the fiscal year starting July 1, schools are expected to receive $7.8 billion more than Gov. Jerry Brown had budgeted for them this year. That’s about a 12 percent increase, according to the state budget
the governor announced Friday. The state cut schools disproportionately to other programs and services during the recession, and so they are entitled to a bigger share in the recovery, Brown said at a press conference.
The surge in revenue will raise what the state is obligated to spend through Proposition 98 next year for schools and community colleges to $65.7 billion. K-12 schools will get about 90 percent of the total, with the bulk of new money – $4 billion – going to the Local Control Funding Formula, a new system channeling more funding to districts with high concentrations of English learners and low-income students. It is now the primary source of schools’ operating budgets. That spending total would be an 8.7 percent increase, an average of about $670 per student more than districts got last year. The increase for schools, Brown said, “protects kids, particularly those who face the biggest barriers to success.”
But Brown, concerned about committing that much to ongoing spending, wants to use some of the new dollars for one-time uses. That will include $1.1 billion that districts will be encouraged to spend to implement the Common Core standards in math and English language arts, the new English Language Development Standards for English learners and the Next Generation Science Standards. Two years ago, the state appropriated $1.25 billion for that purpose.
Next year’s budget will also channel $750 million – $250 million in each of the next three years – for a career and technical education “incentive grant.” That money will supplement the $500 million budgeted the last two years for the Career Pathways Trust Program, which prepares students for college and careers, and will require matching money from districts, charters and county offices of education.
While Brown said that schools and community colleges deserve a bigger share of the new revenue, they are also legally entitled to it. In a rare alignment of fiscal stars, they will get nearly every dollar of the unanticipated increase in General Fund revenue this year because of the statutory requirements of Proposition 98, a funding formula for schools that voters passed in 1988. It requires that, in some high-revenue years, the state repay schools and community colleges for the Prop. 98 IOUs accumulated in poor revenue years.
This is a repayment year, and the new, higher Prop. 98 base obligation will continue to 2015-16. But the University of California and the California State University systems aren’t entitled to any of that, since they are funded outside of Prop. 98. UC officials are threatening to raise tuition by 5 percent next year if they don’t get more than the $120 million that Brown has budgeted.
Other social and health programs will have the same problem. Nearly all additional non-Prop. 98 revenue in 2015-16 will go into a new rainy day reserve, not ongoing programs, under the terms of Proposition 2, which voters approved two months ago.
The proposed $65.7 billion generated by Prop. 98 in 2015-16 represents a 39 percent increase since 2011-12, raising per-student spending by $2,600 during that time. The Legislative Analyst’s Office calculated that the proposed average per-pupil spending will be about $200 per student above the pre-recession level of 2007-08, adjusted for inflation, although under the Local Control Funding Formula, many districts will get less (see graph, with caveats). Average per-student spending will still continue to lag behind most states. (Update: The Legislative Analyst’s Office issues an overview of the proposed state budget on Jan. 13. You can read it here.)
Increased revenues will enable the state to pay the last $1 billion installment of the $10 billion in late payments owed to schools, known as deferrals, which compounded cash-flow headaches for many districts during the recession. However, districts will also be paying about $1 billion more in teacher and administrator pensions in 2015-16 under a deal to keep the California State Teachers Retirement System solvent. That obligation will rise to $3.1 billion per year in additional payments in 2019-20.
In two other areas, Brown had mixed news for school districts.
- Brown’s budget summary indicated, and Michael Cohen, director of the Department of Finance, confirmed that the governor intends to end the current state program for funding school construction bonds, which has totaled $35 billion since 1998. Instead of issuing bonds and funding all districts on a first-come, first-served basis, Brown plans to scale back the state’s overall commitment and target money, on a sliding scale, to districts without the property tax base and financial resources to build schools, according to a summary of the budget (page 27). The document details his objections to the current system and says that the administration is open to discussing the new formula.
- Brown also said the administration is open to changing the policy that places a cap on district budget reserves that the California School Boards Association has strongly objected to. Brown inserted the language, potentially limiting how much districts can keep on hand for emergencies, late in the budget process. “The administration appreciates the concerns expressed by stakeholders regarding potential caps on school district reserves and will engage in a dialogue with these groups in the coming months to protect the financial security and health of local school districts,” the budget summary stated.
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