January 11, 2010

More Detail on State Budget

The Governor’s 2010-11 Budget proposals are as interesting for what they do not do as for what they do propose. On Friday we sent a summary of the budget’s major provisions. The following are some of the other provisions and the holes in the proposal, but first a general comment about the proposal.

My belief is this budget proposal is not a serious proposal. It is full of unreasonable expectations (the $6.6 billion in federal funds), a series of gotchas (you do not like the UC and CSU cuts – well then I will propose to restore them and cut social services even deeper) and proposals that will be subject to litigation with the state in a difficult legal position (redefine the gas tax so schools and local government get less).Another legal issue would be the manipulation of Proposition 98 that is contrary to current law the Governor negotiated and signed last year. The Budget expectation for additional law changes regarding classified employee pensions and teacher employment rights will not find a lot of support.

The Governor is a realist. Consequently, the conclusion I reach on this budget is that he is saying – “I do not have an answer to the fiscal problems we face and I can not find enough Republican or Democratic votes to have a balanced budget based on realistic assumptions.” The budget ball is being kicked into the Legislature’s court with a hope that they can find a solution.

Other 2010-11 Governor’s Budget Provisions

Child Care

The major General Fund workload adjustments for Child Care are as follows:

• CalWORKs Child Care Adjustments – A decrease of $13.8 million to reflect revised estimates in the caseload-driven CalWORKs Stage 2 ($12.6 million) and Stage 3 programs ($1.2 million).
• Extended Day / Latchkey Program – A decrease of $5 million in one-time funding appropriated for the phase out of the program that was enacted in 2009-10.
• Backfill One-Time Funds for Pre-School – An increase of $65.5 million to backfill a like amount of one-time funds used in the current year.
• Cost-of-Living Adjustment – A decrease of $5.9 million to reflect a -0.38 percent COLA for applicable programs.

Mandates

Mandates – An increase of $14.5 million for K-12 mandates.  As a result of a lawsuit that requires all education mandates be paid or suspended, the Administration proposes to suspend all K-14 education mandates with the exception of the following mandates which will be fully funded:

• An increase of $7.7 million for mandated costs related to interdistrict and intradistrict transfers.
• An increase of $6.8 million for mandated costs related to the California High School Exit Exam.

Behavioral Intervention Plans – An increase of $65 million for the ongoing costs of mandated behavioral assessments and intervention plans.

New Schools

$29.5 million in funding for new schools established after the categorical base year was created last year.

School Facilities

$51 million for funding the 2008-09 Emergency Repair Fund required by the Williams settlement.

Class Size Reduction

Capture of current and budget year savings from school districts increasing class sizes ($340 million for 2009-10 and $550 million for 2010-11).

What is Not Proposed

• Any Changes to Tier 1, Tier 2 and Tier 3 categorical aid deficits (other than for the negative COLA) or flexibility provisions.

• No new state school facility bond.

• Possibly no new funding for approved but unfunded School Facility Program projects after December 18, 2008.

• No changes to school district apportionment deferrals.

• No funding for the Maintenance Factor that was supposed to start being repaid in 2010-11.

• No change to State Teachers’ Retirement System contributions or benefits.

~Dave Walrath