Add $4 billion more for schools, community colleges to revenue projections

State revenues continued to surge the past two months, bringing in an additional $10.3 billion than Gov. Gavin Newsom projected in his January budget for the 2021-22 fiscal year. Schools and community colleges can anticipate $4 billion as its share of the unexpected revenue from December and January — if current projections for the remaining of the fiscal year hold up.

Newsom chose an unusual source to announce the financial news: the popular social media site viewed by millennials and younger viewers, TikTok. The 26-second video was then reposted on Twitter. “That’s going to put us in a position to do even more to help small businesses, to support our vaccine administration and to support our efforts to safely reopen our public schools for in-person instruction,” Newsom said. “This is money that will also allow us more resiliency and to help build our reserves.”

About 38% of the state’s General Fund revenue goes to K-14 schools through the Proposition 98 formula. When they passed this year’s budget in June, three months into the Covid recession, Newsom and the Legislature projected an $8.6 billion drop in Prop. 98 funding. Instead, because of what’s been called a K-shaped recession — big unemployment and income loss of low-income families but a rocketing recovery by the wealthiest 1% of earners, who pay about half of the state’s income taxes — the year is projected to end up more than $21 billion ahead of last year’s $21 billion Prop. 98 forecast.

Newsom won’t officially change the figure until his May budget revision. While he said the extra money would help reopen schools and help students recover from lost learning time, others will call for using the newfound cash to pay off the full $11 billion in short-term debt, called deferrals, owed to schools. Last month, Newsom proposed paying off $7.3 billion and carrying $3.7 billion over to next year.