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Meeting each other halfway, Gov. Gavin Newsom and legislative leaders have agreed to raise TK-12 general funding by nearly 13% for school districts and charter schools for the fiscal year that begins July 1. That was a key sticking point in the 2022-23 state budget that they settled over the weekend when they began releasing 29 budget “trailer bills” they are expected to vote on this week.
In a big development for higher education, the deal also includes a long-awaited, though tentative, expansion of the Cal Grant, the state’s main financial aid program. The changes, contingent on available revenue, would make an additional 150,000 students eligible for aid starting in 2024-25 — including about 109,000 community college students who’d become newly eligible for awards to cover nontuition expenses like food and housing.
For school districts facing staff shortages and inflationary costs, the deal would produce a $9 billion boost to the Local Control Funding Formula. It provides districts the bulk of their discretionary money, with extra funding tied to the percentage of English learners and low-income, foster and homeless children they enroll. Newsom had offered a 9% increase in his May budget revision; the Legislature’s counter-offer was for 16%.
Despite ominous signs of market instability and $6 per gallon gas prices that could set off a recession and slice tax revenue, the final budget would keep the same revenue projection in the May revision and the Legislature’s proposal: a record $110 billion for Proposition 98, the formula that determines how much state revenue goes to community colleges and TK-12 schools. Instead, Newsom and the Legislature fought over how much spending should be in one-time spending, which could be pared back in a downturn, or ongoing funding.
The deal on the funding formula, reflecting that disagreement, led to other funding compromises on home-to-school transportation, community schools and relief for school districts hit with double-digit attendance and enrollment losses. With an unparalleled surge in state revenue during the past two years, schools are projected to receive $35 billion more than the Legislature appropriated a year ago. There was at least something for almost everyone.
“Everybody will probably be able to point out things they aren’t happy about in this budget, but unless you’re fresh out of school, you’re unlikely to ever see a better one,” said Bob Blattner, a Sacramento-based school consultant. He cited additional funding for student transportation. “Districts have spent decades trying to fix the broken funding model for student busing — this budget delivered it.”
Assemblyman Patrick O’Donnell, D-Long Beach, who chairs the Assembly Education Committee, called it a “historic budget for the pre-K to 12 system” during an Assembly hearing Monday. “We are listening to districts suffering from” declining enrollment, school transportation costs, pension expenses and inflation, he said.
Budget highlights include:
Enrollment compromise: Districts would have the funding option of a three-year rolling average of student daily attendance. This method would spread out the financial hit of future enrollment drops in most school districts. Districts that experienced a double-digit drop in attendance and high chronic absenteeism in 2021-22 because of surges in Covid infections would be able to use pre-pandemic attendance figures for one more year. In return, they must be able to document that they adequately provided independent study for students who were quarantined. The combination of the three-year averaging and “hold harmless” funding for 2021-22 would cost $2.6 billion, according to the Assembly budget summary.
Learning Recovery Block Grant: The $7.9 billion in one-time funding from the state general fund, usable through 2027-28, would be distributed by the number of students eligible for supplemental money under the Local Control Funding Formula. More restrictive than the Legislature had sought, the money could be used for intensive tutoring, additional learning time, accelerated learning strategies, early literacy intervention, mental health and counseling services and other learning supports. The block grant includes $650 million for community colleges.
Expanded Learning Opportunities Program: The $3 billion in additional funding, for a total of $4.4 billion in funding moving forward, would enable schools to offer 9-hour days – typically a 6-hour instructional day plus 3 hours of expanded learning – and summer or intersession for K-6 schools statewide. Per student funding would be $2,750 per “high-needs” student in those districts with at least 75% low-income, English learners, foster and homeless children. Once that funding is allocated, the remaining funding will be distributed to districts with fewer than 75 percent “high-needs” students, estimated at $1,250 per student. All districts will be allocated funding and must offer the program to “high-needs” students.
Flexible block grant: Although called an “Arts, Music, and Instructional Materials Discretionary Block Grant,” the $3.6 billon in one-time funding could be used for operational costs, including paying for increases in districts’ pension payments for teachers and classified staff though CalSTRS and CalPERS.
Community schools: Newsom had proposed an additional $1.5 billion on top of the $3 billion funded in the current budget; the Legislature proposed no funding. The compromise would be $1.1 billion.
Reading coaches: In May, Newsom proposed $500 million over five years to hire literacy coaches and reading specialists for low-income elementary schools; the Legislature proposed nothing. The compromise would be $250 million, targeted for the highest poverty schools, with $25 million set aside to train literacy coaches in evidence-based literacy strategies.
School transportation: School districts had received no new funding for eight years. Additional funding was a top priority of the Legislature. Those districts that have been favored under the existing, outdated formula would now receive an annual cost-of-living increase. All other districts would be reimbursed 60% of their expenses, plus annual COLAs. The cost to the budget would be $660 million in 2022-23. The state would also spend $1.5 billion for zero-emissions vehicles over the next 5 years.
School facilities: There would be $4.2 billion for school modernization and new construction, including $1.3 billion allocated from the last state bond and $2.9 billion from the state’s general fund over the next two years.
Teacher residencies: The $184 million in new funding for teacher residencies, which are effective in training and retaining new teachers, would create new a new residency program, for school counselors.
Career pathways: With $500 million from the state’s General Fund, the budget would establish the Golden State Pathways Program to fund partnerships bringing together low-performing or low-income school districts with higher education institutions and employers. The focus would be on career opportunities and regional employment needs in computer science, health, education, including early education and child development, and STEM, with attention to climate resilience.
The budget agreement was celebrated by students and community college leaders who for years have been advocating for changes to the Cal Grant program, which critics say is overly complex and leaves too many students without aid.
Under the reformed Cal Grant program, there would no longer be a GPA requirement for community college students seeking awards. They currently need a 2.0 GPA to be eligible for those awards, something that is often a major barrier, particularly for older students who have trouble tracking down high school transcripts.
The budget deal would also simplify the Cal Grant program by consolidating it into just two awards: one for community college students and another for four-year students.
It was previously unclear if the final budget would include Cal Grant reform. Newsom last year vetoed a bill making similar changes and his budget proposals this year didn’t include a Cal Grant overhaul. The apparent compromise on Cal Grant expansion will only kick in if there is enough revenue available in 2024-25 to support the changes.
The budget deal is “the right first step to transform” the Cal Grant, the Fix Financial Aid Coalition said in a statement. The coalition includes 35 organizations including the statewide student governments for the community college system, the University of California, and California State University.
“The inclusion of the Cal Grant Equity Framework in the final budget represents a victory for those who would otherwise be unable to afford a higher education in California,” the coalition added.
Eloy Ortiz Oakley, the chancellor of the state’s system of 116 community colleges, called students “clear winners in this budget,” noting that the budget deal “charts a course for future Cal Grant expansion that will help make state financial aid more equitable for community college students.”
Proponents of the Cal Grant expansion cautioned that the governor and lawmakers must follow through with funding in 2024, even if there is a recession before then.
The 2022-23 budget would include $500,000 for the Student Aid Commission to begin implementing the Cal Grant changes, which proponents viewed as an indication that lawmakers and Newsom are serious about the changes.
Other higher education investments include 5% base funding increases in 2022-23 for both UC and CSU — a $200.5 million increase for UC’s general fund and $211.1 million increase to CSU’s general fund. That was disappointing news to the 23-campus CSU system, which was seeking a larger funding increase amid high inflation and the state’s budget surplus.
In a statement, CSU interim Chancellor Jolene Koester said significant investments are needed for staff compensation, deferred maintenance and to close equity gaps in student achievement.
“Considering the state’s unprecedented funding surplus, it is disappointing that additional support to address these important priorities was not allocated,” Koester said.
Koester added, though, that the system is “appreciative” of Newsom’s pledge of ongoing funding increases in future years through the multiyear compacts that he has announced for CSU and UC. Under the compacts, the university systems will get 5% annual funding increases over the next five years in exchange for them making progress on goals such as increasing graduation rates, enrolling more students and making college more affordable.
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