Update: The story was updated Jan. 10 to elaborate on the Department of Finance’s per student spending projections.
Gov. Jerry Brown said Thursday that he opposes two education initiatives – as currently written – planned for the November election ballot, a $9 billion school construction bond and a proposal to extend Proposition 30’s tax on wealthy taxpayers.
Brown made the comments at a press conference in which he presented a state budget proposal that includes a 5.6 percent increase in ongoing K-12 per-student spending for 2016-17. A summary of the budget can be found here.
Brown called the proposal for a 12-year extension of Proposition 30, a temporary tax that expires in two years “fatally flawed” because it would prohibit diverting any of the money into the state’s rainy day fund for general state spending. Building up that reserve to cushion the impact of the next economic recession is one of Brown’s priorities, and Brown spent much of the press conference warning of the likelihood of another downturn. “If you don’t remember anything else, just remember, everything that goes up comes down,” Brown said. His proposed $122.6 billion general fund budget would add $2 billion to the rainy day fund, bringing the total to $8 billion.
The California Teachers Association, the California Federation of Teachers, the Service Employees International Union and the California Hospital Association have drafted the Prop. 30 extension, which is now awaiting approval from the state Attorney General’s office to begin collecting signatures. By continuing the surcharge on couples making over $500,000 and individuals making more than $250,000, it would yield an estimated average of $7.5 billion in annual revenue, which would go primarily toward funding K-12 schools and community colleges, with money left over split between health care for children and the General Fund. Without the additional money, school revenues are expected to flatten in two years, at the same time that school districts face an additional $2 billion per year in added pension costs for teachers and administrators within the next four years.
But, to Brown’s displeasure, the proposed language says, “None of these revenues can be spent on state bureaucracy or administrative costs or be diverted to budget reserves.” Brown said that excluding money from the rainy day fund would add to instability in revenues that are already too dependent on capital gains taxes on the top 1 percent of wage earners. “You would put more weight on capital gains revenue without protections in debt repayment and the rainy day fund,” he said.
The sponsors of the initiative could amend it to satisfy Brown’s objections, but they’d have to do so by Monday to meet the deadline for changing wording of initiatives under review, said Becky Zoglman, associate executive director of the California Teachers Association. In a statement Thursday, the groups that submitted the initiative said, “An extension of Prop. 30 revenues is a critical component to keeping our state on track and not letting us slide back into years of deficits and cuts. We look forward to more conversations with the governor and are hopeful we can address his concerns.”
The Coalition for Adequate School Housing, or CASH, a coalition of school districts and school builders and architects, already have gathered enough signatures to place a $9 billion school bond on the November ballot, the first school bond in California since 2006. But for the last two years, Brown has called for changing the first-come, first-served process in which the state matches local districts’ contributions for new construction and renovation. He said the system enables wealthier and larger districts with staff to prepare construction projects to rush to the front of the line. Brown also indicated he wants a smaller bond. Brown said he’d work with the Legislature on an alternative plan; one option, needing a two-thirds vote in the Assembly and Senate, would be to put a bond on the June ballot.
With Prop. 30 still feeding revenue to the General Fund, K-12 schools would do well again in 2016-17 under the proposed budget. Districts will see an average increase of $512 in Prop. 98 per-student spending or 5.6 percent – roughly half of the unusually large $1,011 per-student increase in the current year, according to the Legislative Analyst’s Office. (The state Department of Finance cites a lower number: $368 more per student next year, which reflects a revision upward of the 2015-16 Prop. 98 entitlement.)
Most of the new money – an average of $470 per student – would go to the Local Control Funding Formula, the new school financing system that steers extra dollars to English learners and low-income, foster and homeless youths. Districts with large percentages of those students would see an increase of more than $470 per student, and those with few high-needs students would get less.
Brown includes no additional spending for preschool, but is proposing to give more flexibility in current state funding for transitional kindergarten, preschool and a preschool quality system. Funding from those three programs would be combined into a new $1.6 billion Early Education Block Grant that can be targeted to low-income children.
Under current state law, districts are required to provide transitional kindergarten to children who turn 5 between Sept. 2 and Dec. 2 if their families request it, regardless of how much money the family makes. The governor plans to introduce language that would change that requirement, so each district could decide whether to allocate the funds only for low-income children. The proposal also would give districts funds that currently are allocated directly to nonprofit and private organizations that provide preschools.
Total funding for Proposition 98, the primary source of money for K-12 schools and community colleges, would increase $3.2 billion from the 2015-16 budget to a record $71.6 billion. Total K-12 spending, including one-time additional revenues, would increase nearly $4.7 billion. Of that increase, $2.8 billion would go to the Local Control Funding Formula. There would also be $1.2 billion in one-time spending, split evenly per student. Districts could spend it however they want.
The proposed budget would provide $30.4 billion for higher education, an increase of about $1 billion, or 3.4 percent, compared with 2015-16. The nine-campus University of California would receive about $8 billion, while the 23-campus California State University would receive about $6.5 billion. California’s community colleges would receive about $13.6 billion. Each system would use some of the additional funding to boost student enrollment. Funding for financial aid would increase by about $225 million, to a total of $4.8 billion.
The higher education budget would also include $171 million in one-time funds for UC to pay down the unfunded liability of the system’s retirement plan, under a deal the governor made last year with UC President Janet Napolitano. In exchange for the added funding, the system would keep tuition frozen through 2016-17. UC and CSU would also receive $35 million each in one-time funds for deferred maintenance.
EdSource reporters Susan Frey and Fermin Leal contributed to this article.
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