Regarding the $1 billion in one-time funding for K-12 schools that Gov. Jerry Brown proposed last week in his 2017-18 budget: The word is don’t count on it – at least not next year.
In what a school consultant is calling a “bait and switch,” the Department of Finance is saying that the money won’t be available until May 2019 at the earliest – and possibly only partially then. The department will release the funding after it’s sure that the revenue projections on which the budget is based came true.
“While we recognize that there may be some who would prefer that these one-time funds be released sooner, given the recent and demonstrated volatility of revenues, we believe that postponing the release of these funds in the manner we have proposed is a prudent policy in light of this uncertainty,” department spokesman H.D. Palmer wrote in an email.
Brown didn’t mention the delay in his May 11 press conference in which he released his revised state budget plan. He said that K-12 schools would get $2.8 billion more, a 5.4 percent increase to the current budget. But within hours, Department of Finance officials began telling district officials in meetings that more than a third of the new money – the one-time funding that districts could use however they want – would be withheld for nearly two years. The $1 billion would equal about $166 per student statewide.
The $1.4 billion increase to the Local Control Funding Formula – the primary source of districts’ general spending – that Brown also has proposed would not be delayed, Palmer said.
Brown’s budgeters predict that an economic recession, with a loss of state revenue, is right around the bend, and so are being extra cautious. They also want to avoid repeating what has occurred the past three years, in which actual revenues came in below the forecasts on which the budgets were based. Rather than lower next year’s budget to meet the minimum funding, Brown’s K-12 budget would be $600 million above minimum and set a new level for Prop. 98, the formula for allocating money to K-12 schools.
But Dennis Meyers, the California School Boards Association’s assistant executive director for governmental relations, said that providing schools with more money than the minimum Prop. 98 guarantee “is not a bad thing; it should be celebrated.” Brown, he said, “shouldn’t be trying to protect the state from ‘over-appropriating’ when funding for schools is so far below the national average.”
Meyers said that the Department of Finance can assert that districts can use their reserves next year to cover the $1 billion while they wait to be paid in 2019. But if Prop. 98 revenue falls short next year, districts may not get all – or any – of the amount, he said.
As a result, School Services of California, a consultant that works with districts, is telling district officials not to build the money into next year’s budget. “Don’t book it” is its advice.
Kevin Gordon, who called the tactic “bait and switch,” said it is “not fair to announce one-time money that may never show up.” Gordon, the president of Capitol Advisors Group, also a lobbying and consulting firm for districts and county offices of education, said that denying money that’s budgeted for next year, “only exacerbates misunderstandings and clouds numbers” at a time that districts are facing very difficult pay and benefits negotiations with teachers and staff.
And parents working on a district’s Local Control and Accountability Plan, setting priorities for next year, won’t understand they can’t use the $1 billion, Meyers added.
Brown did get support for his proposal from the Legislative Analyst’s Office in its analysis of the education proposals in the revised state budget. Noting that the increase for Prop. 98 next year is nearly equal to the increase in state revenue, sequestering some of the increase is “reasonable,” it said.
“The administration’s contingency proposal is one way the state can provide a cushion in the event of an economic slowdown or downturn, allowing the state to adjust reserved school funding without making reductions to the Local Control Funding Formula or other ongoing school programs,” the legislative analyst wrote. Reserving a small portion of Prop. 98 funding is preferable to making retroactive cuts, it report said.
Bob Blattner, another Sacramento-based consultant who advises school districts, agreed with the legislative analyst. He said that districts have asked Brown to make the Local Control Funding Formula a funding priority over one-time funding, and that’s what he did in the revised budget.
Districts “should be grateful for the Brown Administration for its creative (though not necessarily easy to understand) solution for providing for schools what they were asking for, within the constraints of state budget realities,” he wrote in a memo.
Lower Prop. 98 guarantee
Another budget proposal is also irritating education advocates. One of the “tests” for determining the level of Prop. 98 funding in years with slow revenue growth guarantees that K-12 schools and community colleges get at least get the same percentage increase in funding provided to other areas of the budget. Test 3B, as the provision is called, has provided
a supplementary funding six times since it was adopted in 1990.
Brown is proposing that legislators suspend the 3B supplement for three years, starting in 2018-19. The Brown administration estimates districts could lose $850 million combined over three years – money that could be used to protect non-education areas, perhaps shoring up Medi-Cal, which could see big cuts under President Donald Trump’s health care plan.
Meyers said that the school boards association will press lawmakers to reject the idea. Suspending funding under Prop. 98 requires a two-thirds majority of the Legislature, since it was a constitutional amendment. That has happened only twice. But this supplementary payment feature is a statute, requiring only a majority vote to suspend it. That makes it all the more likely that Brown will get his way.
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