July 24, 2009

Legislature Acts

By David Walrath

2008-09 Budget 3.0 and 2009-10 Budget 2.0

This morning the Senate completed action on the budget deal.  The Assembly completed action this afternoon.  This deal essentially incorporates the Assembly Floor Report that was sent yesterday. For more details click here for the Senate Analysis of the Education portion.

For school districts, a significant piece of the agreement is the continued shifting of cash flow.  The Proposition 1A local government property tax shift, the Proposition 42 local government property tax shift and the redevelopment agency property tax shift to county offices of education and school districts will cause school district funding in 2009-10 to include a greater proportion of local property tax revenue.  School districts will not know what portion of their revenue limit will be property tax funded until all of the various local shifts are completed.

Because property taxes are paid in December and April, school cash flow from July through December could be constrained as the property tax shift actions take place. 

Will There Be a 2009-10 Budget 3.0?

While the budget action addresses a significant portion of the state budget deficit, current expectation is that a $3 to $6 billion gap will reappear in the next 3 to 4 months.  All schools should review their expenditures and reserves to recognize the possibility of an additional mid-year reduction to school funding.  Nobody wants to go through another round of cuts. If the budget is out of balance I expect accounting changes and borrowing will be used to close gaps prior to actual cuts.

Yesterday in the Assembly Floor report there was reference to additional federal stimulus funds for schools.  These are not new stimulus funds.  They are the stimulus funds schools already anticipate for receipt in October.