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June 17, 2009
Budget Conference Committee Update
By David Walrath
For those of you who like to read the summary first, the Budget Conference Committee (BCC) actions for K-12 increased school district fiscal and programmatic flexibility, reduced the cut to home-to-school transportation, reduced (by $680 million) the Governor’s proposed May Revision cuts to revenue limits and provided categorical program cuts to basic aid districts to reflect revenue limit deficits for non-basic aid districts. The BCC also proposed additional (up to $500 million) in federal stimulus funds for K-12. While many of these actions will survive to the final budget deal, do not expect the up to $500 million and the $680 million actions to survive.
For those of you who want more detail, the following are some of the more specific actions:
The BCC adopted its K-12 budget adjustments yesterday afternoon. The BCC actions are an important step toward reaching final agreement on a 2008-09 budget and a 2009-10 budget. Sacramento observers, including me, do not believe this is the final budget, or that the budget will have the votes necessary to pass and have a commitment from the Governor to sign it. The BCC is narrowing the points of difference and expanding the areas of compromise. This means the next budget proposal will have fewer areas where compromise is necessary.
Given that the budget dance is still in process, what can K-12 school districts expect? The easiest key is anything that passes the BCC with bipartisan support from both the Assembly and the Senate members will be in the final budget deal. The following is what was approved with bipartisan support in both the Assembly and Senate:
- Elimination of Public Transportation Account funding for home-to-school transportation, with a backfill from the Proposition 98 General Fund, to result in a 20% reduction in home-to-school transportation funding.
- After cut, add home-to-school transportation to Tier 3 categorical flexibility.
- No penalties if districts reduce instructional days to 175 per year until 2012-13.
- Allow 2009-10 access to additional categorical aid ending balances similar to the 2008-09 access to transfer to district general fund.
- Eliminate the remaining one percent contribution to Routine Restricted Maintenance to 2012-13.
- Allow site sale proceeds to be deposited into district general fund for approximately three years.
- Allow school districts to use existing instructional materials and not buy new through 2012-13.
- Approve American Recovery and Reinvestment Act (ARRA) funds for special education.
- Approve ARRA funds for formula Title 1.
Other approved and adopted budget actions that did not have unanimous approval:
- $1.4 billion 2008-09 reduction to Proposition 98.
- $3.1 billion 2009-10 Proposition 98 guarantee reduction (effect is a $680 million increase compared to the Governor’s May Revision).
- Make reductions in revenue limit by increasing deficit factors.
- Further reduce categorical aid to basic aid districts to reflect increased revenue limit deficits.
- Adjust July, August and September apportionments to 5%, 5% and 9% respectively, that has the effect to defer $1.7 billion in state funds to school districts within 2009-10.
- Remove California High School Exit Exam (CAHSEE) passage as a graduation requirement, but keep CAHSEE for NCLB accountability. Limit CAHSEE to one test administration.
- Reduce required reserve for economic uncertainties by one-third for 2009-10 but be back at full reserves by 2011-12.
- Have the Superintendent of Public Instruction convene the Standards and Criteria Committee to modify budget and financial AB 1200 criteria to treat one-time federal ARRA funds as if they were ongoing funds, even though the federal government requires them to be considered as one-time funds.
- Clarifies that the Constitution requires a maintenance factor when Proposition 98 Test 2 is more than Test 1. This would be effective July 1, 2011.
- Increase ARRA state fiscal stabilization funds to K-12 by $500 million.
For those of you who want even more detail click on the following links to view the BCC staff report for BCC actions:
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