Bleak budget picture awaits Legislature’s special session
School funding guarantee already suspended
Published: December 1, 2010
New and returning lawmakers will start out more than $6 billion in the red, the Legislative Analyst’s Office warns in a new report. The state Legislature will convene a special session on the current year’s budget Dec. 6.
Prospects for the 2011-12 budget year that begins July 1 are even worse. In the budget proposal that new Gov. Jerry Brown must submit by Jan. 10, he’ll have to address a $19 billion chasm between general fund revenues and expenditures—and that’s on top of the $6 billion current-year gap, unless that’s resolved before then, according to the LAO report, “California’s Fiscal Outlook.”
Things don’t get better anytime soon. Annual shortfalls of $20 billion are projected well into the future unless state officials are able to address the ongoing disparity between funding sources and spending commitments that accounts for that structural deficit. And, with public schools accounting for more than 40 cents of every state budget dollar under Proposition 98’s minimum funding guarantee, schools are sure to be facing hard times for years to come. (The minimum requirement is suspended for the current budget year, part of an ongoing fiscal meltdown that has seen state funding for public schools cut by $18 billion over the past three years.)
“For 2011-12, we project the minimum guarantee will be about $2 billion lower than the 2010-11 spending level” under Proposition 98’s constitutionally required funding levels for K-14 education, according to the report.
“If the Legislature funds schools at our projected minimum guarantee in 2011-12, it would mean billions of dollars in programmatic cuts to education but not contribute a single dollar to closing the $25 billion budget problem,” the report states. “These reductions would occur at the same time as school districts exhaust one-time revenues from the federal American Recovery and Reinvestment Act (ARRA) of 2009 and the Education Jobs and Medicaid Assistance Act of 2010.”
Rather than recommend a solution for that problem, however, the LAO report piles on. Some $8 billion that’s already been appropriated to schools has been deferred in recent fiscal quarters—17 percent of K-14 program support, by the LAO’s calculations—to help the state shore up its own finances. The LAO suggests the state should renege on $1.8 billion in deferred K-14 payments that are supposed to go out in July 2011 for expenses authorized in the current budget year.
“Given most districts have been cautious in increasing 2010-11 program support as a result of the recent deferrals and some districts have been unable to access cash sufficient to support new spending paid for by the new deferrals, many districts would not be significantly impacted in 2010-11 if the new deferral payments were eliminated,” in the LAO’s judgment.
“In essence, rather than encouraging school districts to hire new staff for half of the 2010-11 school year merely to have the new staff and even more existing staff laid off next year, the state would be encouraging school districts to retain their existing staff levels and plan for fewer layoffs next year. Such action would help minimize the funding cliff that could result next year,” the report advises.
The report also notes that several categorical program requirements have been suspended to give LEAs more control over scarce resources, and it suggests greater and longer-term flexibility would help. And, the report continues, “The Legislature might want to consider fundamental school finance reform that could take a couple years to develop.”
There may not be much choice in that regard. CSBA has taken the state to court in a bid to require California to align its school finance system with the responsibility the state imposes on the schools to prepare all its students for college and career.
Easy links: