California currently ranks 47th in per-pupil spending, with an average of $7,571 spent per student, in comparison with the national average of $9,961.
Those figures may decrease even further, however, due to massive cuts to education in the new state budget.
The long-delayed budget agreement was signed into law by Gov. Arnold Schwarzenegger on July 28. (Read an overall California budget analysis.)
Last year’s budget, signed in September 2008, contained $58.1 billion in Proposition 98 spending -- this year it was reduced by $9 billion at $49.1 billion for fiscal year 2009-10.
Funding for education is the largest obligation charged to California’s General Fund. This year’s budget agreement contains spending reductions, revenue-limit reductions, categorical funding reversion, payment deferrals, a future Proposition 98 funding obligation, and a host of other gimmicks and changes outlined in detail below.
School administrators, particularly those in school districts that have already made large budget cuts, are being advised that they should prepare for midyear cuts.
California 2009 budget effects: K-12 education
Proposition 98 spending reductions
- Reduces Proposition 98 spending by $6.1 billion over the two-year period relative to the February budget package, including $5.3 billion in K-12 education and $850 million in community college reductions.
- The budget agreement reflects total 2008-09 Proposition 98 spending of $49.1 billion -- the minimum level guaranteed by Proposition 98 – which is $9.0 billion (15.5 percent) lower than the level assumed in the 2008-09 Budget as enacted in September 2008.
- Reflects a 2009-10 funding level of $50.4 billion for K-14 programs covered by the Proposition 98 guarantee.
- $4.5 billion (8.2 percent) lower than the level assumed in the 2009-10 Budget enacted in February.
- Provides a statutory mechanism and continuing appropriation to restore Proposition 98 funding to the level where it would have been absent 2008-09 reductions. The outstanding future obligation to schools due to the “maintenance factor” is $11.2 billion. At this time it is undetermined how that money will be repaid to schools.
Reversion of 2008-09 K-12 categorical funds
- Reduces 2008-09 Proposition 98 spending by reverting $1.6 billion in K-12 categorical funds that had not been distributed to school districts at the close of the 2008-09 fiscal year. These funds are subsequently provided to school districts in 2009-10.
- Reduces 2009-10 funding by $80 million for Basic Aid school districts’ categorical programs to provide a proportionate reduction to non-Basic Aid districts’ revenue limit reductions.
Revenue limits reductions
- Reduces K-12 revenue limits by $4 billion to achieve 2009-10 savings. The reductions include a $1.6 billion reduction to offset the restoration of categorical funds reverted in 2008-09.
Deferrals from local government for schools
- The budget amendments include a total of $1.7 billion shifted from redevelopment agency revenues and fund balances to K‑12 schools that serve the redevelopment areas and the housing built by redevelopment agencies. This shift may be made from reserves or current income, including tax increment, proceeds of land sale or bonds, interest or other earned income, or borrowing the 20 percent of the tax increment that is normally dedicated to the low and moderate income housing fund.
- The state will borrow $1.9 billion from Proposition 1A local government property tax revenues and will shift those funds to the county‑level Supplemental Revenue Augmentation Funds (SRAF). From these funds, $850 million will be used to fund courts, prisons, and Medi‑Cal, hospital, and K‑12 school bond expenses that would otherwise be funded from the state General Fund. The other $850 million is used to fund K‑12 school costs offsetting Proposition 98 General Fund costs.
Additional payment deferrals
- Due to state cash flow shortfalls, approximately $2 billion in K‑12 payments for 2009‑10 will be moved from scheduled payment dates in the first few months of the 2009‑10 fiscal year to December of 2009 and January of 2010.
- The payment schedule for K‑12 apportionment funding and categorical funding will be revised to distribute 5 percent of total payments in each of July and August and 9 percent in each of the remaining months.
Quality Education Investment Act
- The Quality Education Investment Act (QEIA) of 2006 provides money to under-performing schools to help lower their class sizes and does not count toward the Proposition 98 guarantee. The final budget package suspends a statutorily required $450 million General Fund payment in 2009-10 funding for the QEIA program. Instead, ongoing Proposition 98 funding will be provided for QEIA in 2009-10.
- School districts that receive QEIA funding will receive a comparable reduction to their revenue limits payments, but are eligible to apply for additional federal Title I funds in 2009-10.
- The budget agreement extends the QEIA program by one year, to 2014-15.
Future Prop 98 'Maintenance Factor'
- Establishes a statutory obligation to make $11.2 billion in future “maintenance factor” payments as a result of funding reductions in 2008-09. Payments would be required in future years until the obligation is paid in full.
CAHSEE
- The budget plan protects the California High School Exit Exam (CAHSEE), which will remain as a condition of graduation for most students.
- Students with disabilities will be excluded from the CAHSEE requirement beginning in 2009-10 until the State Board of Education authorizes an alternative exam for disabled students.
Veto of Home-to-School funding
- In a line-item veto, the governor cut $3.9 million to student transportation at State Special Schools, which the governor states are duplicative because federal special education funds are available for this purpose.
Other budget effects on K-12 education
- Allows school districts to reduce the school year by up to five instructional days through 2012-13 without losing incentive grants. Schools are provided flexibility to reduce instruction by up to five days, if necessary, to accommodate this reduction without losing any incentive funding they receive to maintain a 180‑day school year.
- Schools are provided additional flexibility to reduce the amount of money they must set aside for facility maintenance and to use funds from the sale of surplus property for non‑facility related purposes.
- Suspends the requirement that school districts purchase newly adopted instructional materials through 2012-13.
- Allows school districts, until Jan. 1, 2012, to sell surplus property and authorize a school district to deposit the proceeds from the sale of surplus school property, purchased entirely with local funds, into the general fund of the school district and to use those proceeds for any one-time general fund purpose.
California 2009 budget effects: social services
Cost-of-Living Adjustments (COLAs)
- Beginning in 2010-11, eliminates automatic COLAs for CalWORKs and SSI/SSP.
Child Welfare Services reduction.
- A gubernatorial veto reduces funding to counties by $80 million.
Several program eliminations, reductions rejected
- Rejects the governor’s proposals to eliminate the CalWORKs program, the Cash Assistance Program for Immigrants, and the California Food Assistance Program.
Short-Term CalWORKs savings
- Achieves savings of approximately $510 million in 2009-10 primarily from reducing county block grant allocations for welfare-to-work services and child care. To help counties achieve these savings, budget legislation exempts families with a very young child, or two or more children under age 6, from work participation requirements through June 2011.
Healthy Families Program
- Rejects the governor’s proposal to eliminate HFP, which provides health care coverage to low-income children. Instead reduces General Fund support for HFP by $179 million from the level in the February budget plan. This reduction would result in longer waiting lists for enrollment and other actions that would further reduce the caseload.
