February 14, 2008

State Budget Update

The Senate Budget Committee acted during the evening of February 13 to make its first round of mid-year budget reductions.

The most significant education proposal was to use Public Transportation Account funds ($409 million) for current year Home-to-School Transportation costs.  This reduces the Proposition 98 base for the current year and, therefore, also for 2008-09.  The Committee also adopted $507 million in other Proposition 98 savings.  The important point is that these reductions were on funds that were not otherwise expected to be allocated to schools during the current year.  This is a reduction that is intended to create no harm. 

Finally, the Senate did propose to make a one-time transfer of the July advanced apportionment from July to September.

This deferral will increase the cash flow problems faced by school districts.  The education community is working to provide greater flexibility for those districts which may have serious cash flow problems because of this proposal.

Today the Assembly followed the Senate actions regarding reducing the current year budget by almost $500 million for K-12 education by approving the Public Transportation Account shift and deferring the advanced apportionment from July to September.  While there are a few minor differences between the Senate and Assembly action; we anticipate those minor differences will be fully resolved in time for the Legislature to send a mid-year package to the Governor by February 22.  We do not have detail on all the mid-year funding reductions, that detail probably will not be available until early next week.

The Assembly, as did the Senate, attempted to ensure that any reductions would not have an immediate or direct effect on school district 2007-08 programs.

The Legislative Analyst’s Office (LAO) will be releasing her analysis of the 2008-09 State Budget next week.