In California budget deal, no cuts for K-12 but billions in late payments to schools

June 23, 2020

Gov. Gavin Newsom at a press conference in May 2020.

Gov. Gavin Newsom and legislative leaders announced Monday that they have reached an agreement on the 2020-21 budget that will preserve spending for K-12 schools and community colleges at current levels but potentially could result in funding cuts of nearly $1 billion combined for the University of California and California State University.

The budget will also provide language that will prevent the layoffs of teachers and many other school employees over the next year — actions that unions representing teachers and other employees, known as classified workers, had strongly lobbied for. These protected employees will include bus drivers, custodians and nutrition workers but not classroom aides.

While not the increase that Newsom had sought in his pre-COVID-19 budget in January, there should be enough funding to assure the reopening of school this fall, Newsom said at a press conference Monday. “I think the funding will substantially exist,” he said. “We think a lot of that anxiety is mitigated.”

To help with reopening costs, Newsom agreed to add $1 billion in one-time federal dollars under the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act and to distribute the money to more districts to address learning lost during school closures. The total CARES Act funding for K-12 will rise from $6 billion to $7 billion.

Newsom and the Legislature face a July 1 deadline and have been negotiating a particularly difficult budget for several weeks. The coronavirus pandemic has pushed the state into a recession and sent state revenues plunging. That created a projected $54 billion revenue shortfall for next year; Proposition 98, the formula that determines spending for community colleges and K-12 schools, is projected to fall by $14 billion from what Newsom proposed in January, to $70 billion.

Newsom and the Legislature assumed, in separate versions of the budget, that the federal government would provide additional stimulus aid to make up for the shortfall. The U.S. House passed the $3 trillion HEROES Act that would include more than $1 trillion in aid for state and local governments, but the Senate has not taken it up, and Republican leaders have questioned the need for more aid.

Without that extra funding, Newsom had proposed cutting K-12 spending by 8% — $6.4 billion — and making $5.7 billion in late payments to school districts, called deferrals. But yielding to the Legislature in negotiations, Newsom agreed to rescind the cuts and instead issue a record $12 billion in deferrals.

Under deferrals, which former Gov. Jerry Brown and the Legislature used to get schools through the Great Recession, school districts can spend more than they’ll be funded for, with the understanding they will receive full payment in the following fiscal year, 2021-22. That strategy can create cash flow problems for districts; if federal funding does come, the state won’t have to impose $6 billion of the deferrals.

Passage of the HEROES Act will also determine whether UC’s and CSU’s budgets will be cut significantly. Newsom had proposed cutting $1.17 billion in combined cuts and to rescind $770 of that amount through federal funding. The final deal calls for cutting $970 million — $470 million for UC and $500 for CSU — which would be restored with federal coronavirus assistance.

In a joint statement, Newsom, Senate President Pro Tempore Toni Atkins and Assembly Speaker Anthony Rendon expressed continued optimism that Congress would help California and the other states. “Californians are doing their part — now it’s imperative for our federal partners to pass a responsible and comprehensive relief plan so states and local communities can continue to keep Americans safe while leading our national economic recovery,” the statement said.

The Legislature also had proposed a 2.3% cost of living adjustment, but the final agreement drops that, while keeping the Proposition 98 minimum guarantee at $70.5 billion.

Compromise on layoffs

Disagreements over staff layoffs had been one of the sticking points in negotiations. The California Teachers Association had argued that a return to school would require more, not fewer employees: bus drivers, health aides, counselors and teachers potentially splitting duties between distance learning and classroom instructions. Organizations representing school boards and administrators agreed in principle, but said that they should have flexibility to make employment decisions based on their own staffing needs.

Legislative leaders proposed waiving two state laws to prohibit any layoffs to teachers and classified workers. Newsom opposed a blanket waiver; the compromise, according to a staff member familiar with the negotiations, will exempt three areas of work by classified employees: custodial work, nutrition and transportation. Not receiving protection from layoffs will be classroom and special education aides, after-school workers and administrators. Under current law, classified workers can be laid off with 60 days’ notice.

Money for learning loss

Newsom and legislators also disagreed over how to distribute nearly $2.8 billion in federal CARES Act funding for districts to address learning loss. That money must be spent by Dec. 31. Newsom wanted the funding to go only to districts with high concentrations of high-needs children: low-income students, English learners, foster students and homeless students. The Legislature’s formula would distribute the money among more districts.

The compromise is what the Equity Coalition, a group of student advocacy and civil rights groups had proposed. It will also include money for districts with high-needs students that don’t reach the concentration level Newsom had proposed. In addition, the extra $1 billion will be distributed more broadly to all districts. Districts will have flexibility to spend the money on all students.

“This agreement reflects our shared commitment to supporting schools, and is built on a foundation of equity — allocating billions of dollars for students most affected by learning loss and continuing our state’s leadership toward reforming the criminal justice system,” said the joint statement.

Other provisions

Instructional time: Because of the coronavirus’ unpredictable impact on the year ahead, with districts expecting to go in and out of distance learning and hybrid models of learning, districts sought flexibility in the school year and daily instructional minutes. They will get the latter but not the former. The minimum year will remain 180 days for traditional school districts and 175 days for charter schools. But they will have flexibility in calculating daily instructional time, with a minimum 4 hours per day for most grades for in-person instruction or a combination of in-person instruction and distance learning (see section 43501 of trailer bill AB 77)

Distance learning: As a result of great inconsistency among districts and schools in providing remote instruction since March, Newsom and legislators are setting requirements for distance learning (see sections starting 43502 of trailer bill AB 77).They include:

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