A Commitment to K-12 Education

On January 10, Governor Jerry Brown released his 2011-12 budget proposal addressing a $25.4 billion two-year budget shortfall.  In his opening statement to legislators he noted,

Governor Brown Presents 2011-12 Budget

This Budget proposes a far-reaching realignment of government functions by restoring to local government authority to make decisions that are best made closer to the people, not in Sacramento. My plan also envisions reorganizing state government to make it more efficient and save scarce tax dollars by consolidating or eliminating functions. Since it will take some time to fully implement these changes, I propose to ask the voters for a five-year extension of several current taxes so that we can restructure in an orderly manner with minimal disruption.

We begin 2011, after the longest budget stalemate in the history of California, with a budget gap of more than $25 billion. Short-term measures and gimmicks adopted in recent years did not solve our problem and in fact made it worse. This Budget closes our short-term budget gap and also eliminates projected future deficits.

The Budget focuses on the core functions of government and maintains essential services. Nowhere is this more important than in our public schools, which have taken big cuts in recent years.

As California’s economy begins to recover — and recover it will — our restructuring plan will make California government more transparent, efficient and responsive to the people.

This is a tough budget for tough times. I look forward to working with you and taking decisive action without delay.

Proposed Solutions

The Governor made it very clear he believes the first step in closing the budget shortfall must be the enactment of spending cuts in the next 2-3 months. Specifically, the Governor proposes $12.5 billion in spending reductions affecting a wide array of government services: Medi-Cal, CalWORKS, the University of California, California State University, community colleges, In-Home Support Services, and state employee compensation.

Arguing that California’s fiscal problems cannot be solved entirely through spending reductions or in one year alone, the Governor next proposes to increase revenue over two years by $12 billion. His revenue enhancement plan includes extending temporary taxes enacted in 2009 by another five years.

In his press conference outlining the budget, the Governor indicated his intention to have all proposed cuts signed into law well prior to a public vote in June to extend taxes.

Public Education is a Priority

K-12 education is protected from deeper cuts in the January budget and that is a welcome change in message for public schools.  However, if the proposed June election to extend taxes is not successful, K-14 education will be exposed to another $4 billion in spending reductions over two years (2010-11 and 2011-12).  For the average school district this amounts to a loss of more than $600 per student.

Even if new revenues are achieved, to maintain current spending levels the Governor proposes deferring $2 billion in payments to schools.  Adding this new deferral to those already in place, would bring the total delayed payment to schools to $9 billion (over $1550 per student).   Districts would be authorized to spend this amount in 2011-12, but will not receive those dollars from the state until 2012-13.  Deferred state apportionments require districts to manage cashflow carefully, and in the case of districts already in fiscal distress, may result in the need for a state emergency loan to avoid insolvency.

More favorably for school districts, the budget proposes to extend categorical program flexibility for an additional two years.  First implemented in 2009, this flexibility permits districts to temporarily divert funds earmarked for class size reduction, facility maintenance, and instructional materials to general purposes.

The Legislative Analyst’s Opinion

On January 12, the Legislative Analyst’s Office (LAO) released a preliminary assessment of Governor Brown’s proposals and expressed the opinion they are policy-based and sound, offer reasonable estimates of the size of the budget problem, and focus on ongoing rather than one-time solutions.

Notably, the LAO did not dispute the Governor’s assertion that schools have “borne the brunt of recent state budget reductions.”  As illustrated in the slide below, K-12 education has declined 14.5% since 2007, while other budget sectors have taken disproportionately less cuts.  Accordingly, the LAO raised no objections to the the Governor’s plan to exempt K-12 education from the $12.5 billion in program cuts being proposed in the rest of the budget.

Copyright School Services of California, 2011. Used with permission.

Uncertain Future for Schools

This Governor has worked hard to address an almost unsolvable fiscal problem: closing a $26 billion budget gap. It must also be acknowledged that schools are treated far better than other state-funded programs and services.  That this budget, at best, will only continue deferring payments to maintain K-12 spending levels is a clear indication of the seriousness of the current situation.

The whole house of budgetary cards proposed by the Governor rests upon the uncertain foundation of voter approval for tax extensions.  It is clear; planning for the worst while hoping for the best remains the prudent course of action.