Legislative Analyst Mac Taylor speaks at the EdSource 2015 Symposium in Sacramento on April 30

As Gov. Jerry Brown prepares to release his revised state budget for the coming fiscal year next week, educators around the state are looking forward to hearing about the additional funds they will receive, a dramatic departure from the bleak years of the recession, when they braced themselves for further cuts.

Even for the state’s most experienced school finance experts, predicting how much California’s schools will get in new revenues is a next to impossible task.

This year the task is especially challenging because of the unanticipated interplay between two voter-approved initiatives – Proposition 98, approved by voters in 1988, and Proposition 2, championed by Brown and approved by voters just last November – on top of many unknowns about how much tax revenue the state will generate from a variety of sources.

One thing is clear: Schools and community colleges will be the big – and possibly only – winners when it comes to dividing up the extra revenues.

The Legislative Analyst’s Office and others estimate that California’s surging economy could generate between $4 and $8 billion more than the state had projected.

“Schools are the big winner,” Mac Taylor, the state’s legislative analyst, said at EdSource’s 2015 symposium, held last week in Sacramento in collaboration with the California State PTA.

The additional funds will arrive at a welcome time for schools, which are still digging out from the impact of deep cuts made during the recession. Schools are also implementing a range of reforms, including the Common Core State Standards and the Local Control Funding Formula, which prescribes eight priority areas in which school districts are expected to show improvement.

Complicating how the new revenues will be allocated is the unanticipated interplay of Prop. 98 and Prop. 2, which could result in all non-education social services and state government departments winding up with little additional money or none at all.

That’s because Prop. 98, setting the minimum levels of school funding, requires that the state’s first priority in revenue-rich years is to bring funding levels for schools and community colleges up to the level they would have enjoyed if there had not been a recession. That amount, called the “maintenance factor,” currently totals $2.6 billion.

Prop. 2, meanwhile, mandates that the state set aside the first 1.5 percent of state revenue, plus additional dollars when the state is flush with tax receipts from capital gains, to pay down state debt and build a rainy-day fund. Money for Prop. 2 would be diverted from funding for non-education programs and services.

“It is a very unusual situation for my bosses – the members of the Legislature and the governor – that they may have to deal with this very strange world,” Taylor said. “They will have to take some actions to balance all the competing demands.”

Under one possible scenario that Taylor and the LAO laid out, the non-Prop. 98 side of the budget could receive $1 billion less next year than they got this year, possibly even requiring spending cuts that would put the Legislature in a bind and pit school advocates against a range of other interest groups. Taylor said programs subject to cuts could range from health and social services to higher education and criminal justice programs.

“There are many scenarios where the bottom line will be worse, where the Legislature will have to act to bring the budget in balance,” Taylor said.

Mike Herald, legislative advocate for the Western Center on Law and Poverty in Sacramento, said he expected legislators would find it “unpalatable” to reduce funding for human services in a year where there is going to be a substantial surplus. “It’s hard to explain to disabled adults surviving at poverty levels on Supplemental Security Income that they can’t get any increases for food when there are billions of dollars more in state revenue,” Herald said.

Brown’s budget for next year, which he proposed in January, assumed $7.8 billion more from Prop. 98 through a combination of increased state and property tax revenues for 2014-15 and 2015-16. About $4 billion of that will go toward ongoing funding for the Local Control Funding Formula, which provides extra money to school districts with high numbers of low-income children, foster youth and English learners.

“That is an enormous amount of new money in a relatively short period of time,” Taylor pointed out.

But school districts also face rising expenses, including increases in pension obligations for teachers and administrators that will be phased in, reaching $3.7 billion more per year by 2020-21.

Taylor noted that despite the massive inflow of funds to the schools in inflation-adjusted dollars, schools will only receive on average about $200 more per student than they did in the  2007-08 school year, when funding peaked.

“But if you think about what we went through, the worst recession in decades, the fact that we have bounced back and are above where we were at the beginning of the Great Recession, that is not bad,” he said.

 

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  1. Manuel 2 years ago2 years ago

    Excuse me, but I can't help but be distrustful of this reportage. Is Mr. Taylor saying that schools will get 2007-08-level funding plus $200 in 2015-16? Or is this in some year in the future, when the LCFF formula was expected to reach that level? (According to Ed Code 42238.025(d)(2) the target year is 2020-21, seven years after LCFF was first implemented in 2013-14.) Therefore, I have to ask: what is the expected level of per capita … Read More

    Excuse me, but I can’t help but be distrustful of this reportage.

    Is Mr. Taylor saying that schools will get 2007-08-level funding plus $200 in 2015-16? Or is this in some year in the future, when the LCFF formula was expected to reach that level? (According to Ed Code 42238.025(d)(2) the target year is 2020-21, seven years after LCFF was first implemented in 2013-14.)

    Therefore, I have to ask: what is the expected level of per capita funding under LCFF for 2015-16? How close will the funding be to the levels spelled out in Ed Code 42238.025(d)(2)(C)? The article implies that Mr. Taylor is talking about 2015-16 but I find it really hard to believe that the “gap” has been made up in two years instead of seven.

    If possible, please clarify.

    Why am I asking about this? Because LAUSD’s Superintendent ,on the advice of the his CFO, claims that there is no money to pay for the recently negotiated pay raises. BTW, the increase in districts’ contribution to STRS is 2.48% over 2013-14 rates. I don’t see how that is going to break the budgets since this is roughly $50 million more spent on pension contributions out of a $6+ million budget. But, as always, the devil is in the details.

  2. Henry 2 years ago2 years ago

    According to the most recent information I can find, http://www.lao.ca.gov/LAOEconTax/Article/Detail/60, California's Tax Expenditure Programs ("...departures from the normal tax structure...designed to favor a particular industry, activity, or class of persons.") paid out about 55 billion last year. Cut all TEPs by 10% across the board and we have 5.5 billion dollars a year, which covers the maintenance factor with a lot left over for the rest of the state. Personally, I would like to see all TEPs … Read More

    According to the most recent information I can find, http://www.lao.ca.gov/LAOEconTax/Article/Detail/60, California’s Tax Expenditure Programs (“…departures from the normal tax structure…designed to favor a particular industry, activity, or class of persons.”) paid out about 55 billion last year.

    Cut all TEPs by 10% across the board and we have 5.5 billion dollars a year, which covers the maintenance factor with a lot left over for the rest of the state.

    Personally, I would like to see all TEPs done away with for ten years with only those that serve the common good phased back in after a thorough vetting.

  3. Gary Ravani 2 years ago2 years ago

    "$200 more per student than they did in the 2007-08 school year, when funding peaked" A little more funding than was received in 2007-08? Wow! My recollection is around that time CA ranked around 40th of the 50 states in adjusted dollars per student for K-12. "Never look a gift horse" and all that, but i think we can put a check on the irrational exuberance of believing CA's schools are going to be … Read More

    “$200 more per student than they did in the 2007-08 school year, when funding peaked” A little more funding than was received in 2007-08? Wow! My recollection is around that time CA ranked around 40th of the 50 states in adjusted dollars per student for K-12. “Never look a gift horse” and all that, but i think we can put a check on the irrational exuberance of believing CA’s schools are going to be rolling in dollars.

    And we do have to be concerned about the social safety net. It is little use to think the schools can totally make up for the conditions of poverty many students live in. Recall that 2/3rds of the measured achievement gap is related to out of school factors. Keeping kid families and communities healthy will be a major contributor to more school success.

  4. SD Parent 2 years ago2 years ago

    I ditto Paul's sentiment. The LAO--with its report on doomsday scenarios if Prop 98 mandates are followed and it's reports to legislative committees that show just the increases in Prop 98 funding (without the increased pension costs, inflation, costs of implementing CCSS, and where ed funding was in 2007-08)--seems to be working hard to promote the idea that education is flush with funding and doing well. How about if Mac Taylor does a … Read More

    I ditto Paul’s sentiment. The LAO–with its report on doomsday scenarios if Prop 98 mandates are followed and it’s reports to legislative committees that show just the increases in Prop 98 funding (without the increased pension costs, inflation, costs of implementing CCSS, and where ed funding was in 2007-08)–seems to be working hard to promote the idea that education is flush with funding and doing well.

    How about if Mac Taylor does a follow-up to his “Year-Three Survey: Update on School District Finance in California” to determine just how many of the class sizes, programs, and services have been brought back with all that funding? (The answer for our district, which is 63% LI/EL/FY, is next to nothing: while K-3 is finally going to 1:24 in 2014-15, the other grades are still higher than they were; there is essentially no funding for gifted education–the district disbanded the department during the recession and offers no site funds; off campus integrated learning is still gone, many schools have just one day of library service, etc.) How about if that study also includes how much of the supplemental and concentration grant funds are actually going toward the LI/EL/FY students vs. back-filling ongoing structural deficits and instituting long-delayed pay raises?

    I do feel for the other social services, but we can’t ignore the fact that education is still struggling. K-14 education was barely making it before the recession, it was starved the most during the recession, and it is just now getting an “airline-sized snack” which doesn’t come close to sufficiency. In the short term–like 2015-16–things will look good, but then Prop 30 starts to expire, and everything put in place will contract (again). Until we commit to adequate and reliable/stable funding for education in CA, we are cheating our 6.2 million children (who will become the adults of tomorrow).

  5. Stephen Marcy 2 years ago2 years ago

    I work for LAUSD and I don’t expect a dime to reach my classroom. It never has before.

  6. Paul Richman 2 years ago2 years ago

    Wish that the issue didn't have to be characterized by terms like "big winners." Providing adequate resources for California's students isn't a competition; it's the state's primary obligation. It is good news that with all the important changes we are making to our public education system, and the large number of students with higher needs, California is finally starting to commit more of the needed resources. We also need a long-term plan for adequate and … Read More

    Wish that the issue didn’t have to be characterized by terms like “big winners.” Providing adequate resources for California’s students isn’t a competition; it’s the state’s primary obligation. It is good news that with all the important changes we are making to our public education system, and the large number of students with higher needs, California is finally starting to commit more of the needed resources. We also need a long-term plan for adequate and stable funding so we’ll never have another budget year when kids are somehow “losers.”