Legislative Analyst’s Office predicts a huge increase in funding for K-12 and community colleges

Benefiting from the fastest rise in state revenues in decades, the Legislative Analyst’s Office predicted Wednesday that K-12 schools and community colleges can expect $20 billion for new spending in 2022-23, a windfall that follows a record post-pandemic year of funding.

The amount through Proposition 98, the state formula that determines the minimum funding for K-14 schools from the general fund, is projected to be $102.7 billion, the first time that funding will exceed the $100 billion threshold, according to the LAO’s annual fiscal outlook. Community colleges usually receive about 11% of Proposition 98 funding, with nearly all of the remainder going to districts, county offices of education and charter schools.

Half of the additional $20 billion next year will be from revenues in 2020-21 and 2021-22 exceeding what the Legislature budgeted for the current year. That will carry over as one-time money next year. The other half will be ongoing funding from the rise in the Proposition 98 guarantee.

The LAO is also projecting a 5.35% cost of living increase next year, the highest rate of inflation in 15 years. Legislators usually factor that into increases in funding for the Local Control Funding Formula, the source of districts’ general funding, as well as funding for special education and other programs.

The LAO predicts that the K-12 average daily attendance this year will drop 3%, or 170,000 students, from pre-pandemic levels to 5.9 million students. It will drop an additional 170,000 students by 2025-26, but this will be offset by the addition of 230,000 children in transitional kindergarten, a new grade for 4-year-olds that the state is phasing in over several years.