A closer look at the 2018-19 California budget proposal

February 6, 2018 Staff Writer

Gov. Jerry Brown has released his 2018-19 proposal for the upcoming fiscal year. As he released it, Brown emphasized during a press conference his long-standing philosophy that education is a local matter, and making progress on student achievement will not be solved in Sacramento but rather in the classroom.

His remarks focused on the theme of maintaining “fiscal prudence,” and encouraged the Legislature to begin budget conversations with “precaution,” since the state’s progressive tax system significantly relies on taxing the high-income earners. This is particularly relevant in light of the recent federal tax reform bill signed by President Trump in late December, as California policymakers determine what the fiscal impact will be to the state. As a result, there is a heightened uncertainty and unpredictability with our volatile revenue system.

ACSA Executive Director Wes Smith said the association applauds the governor’s commitment to implementing the Local Control Funding Formula and supporting schools in their efforts.

“As an organization focused on student advocacy and equity, ACSA recognizes the challenges ahead to meet the expectations of continuous improvement and the Statewide System of Support,” Smith said. “The governor’s plan to fund the LCFF funding targets ahead of schedule is a significant first step in ensuring California students have the necessary resources to be successful. ACSA believes the budget is just part of the puzzle for growing the next generation of leaders. Providing equitable funding for low-performing districts, special education programs, as well as marginalized students, puts California on the path to strengthen pupil achievement, school climate and pupil engagement.

“California public educators are positioned to have an incredible impact on our students and ACSA aims to steward the process toward excellence.”

Smith also noted the years-long, ongoing efforts ACSA and other education groups have committed to communicating the need for a stable, long-term funding plan for schools.

“ACSA sees the governor’s budget proposal as an opportunity to solidify a long-term funding plan for California schools,” he said. “In order to solidify the legacy of equity and local control, our state’s policymakers must set goals to extend the funding targets and ensure that LCFF base funding is sufficient to meet all of our school’s growing fiscal commitments. We see an opportunity for growth and collaboration as we intend to work side-by-side with lawmakers to assemble a spending plan that fully meets the needs of California students.”

ACSA Legislative Advocate Martha Alvarez has provided the following analysis of the budget proposal:

K-12 funding overview

Gov. Brown’s budget proposes a General Fund budget plan of $131.6 billion, a 4.1 percent increase from the current fiscal year. As a result, this year’s investments in K-12 public education are comparable to the year-over-year augmentations schools have received since the November 2016 passage of Proposition 55, the temporary income taxes. The budget proposes to fund the Prop. 98 minimum guarantee at $78.3 billion, a $3.1 billion increase compared to the 2017-18 funding levels. This results in an average increase of $465 per-pupil over the level provided in the 2017-18 budget.

As part of the $78.3 billion provided through the Prop. 98 minimum guarantee, the budget includes the following proposals for public education:

  • Local Control Funding Formula: Nearly $3 billion to fully fund 100 percent of the formula targets two years ahead of schedule. However, as a trade-off the budget proposes requiring local educational agencies to show how their budget expenditures align with the strategies detailed in the Local Control and Accountability Plans for serving students generating supplemental grants.
  • One-time discretionary funding: $1.8 billion in one-time discretionary block grants allocated on a per-pupil basis equivalent to $295 per ADA, and as in years past, funding will offset any outstanding mandate reimbursement claims.
  • System of Support: The budget provides a $70 million investment in ongoing Prop. 98 funds to further implement the state system of support. Of this amount, $55.2 million would go toward county offices of education to assist in the improvement of school districts identified for differentiated support, and $11.3 million to continue funding the California Collaborative for Educational Excellence.
  • Special education: In response to the 2015 recommendations of the California Statewide Special Education Task Force, the recent report by the Public Policy Institute of California and building upon last year’s discussions with stakeholders, the administration proposes requiring SELPAs to complete a local plan template that aligns services and resources noted in their local plans with the goals identified in their members district’s LCAPs. Most notably, $167 million would be dedicated to increase the availability of inclusive early education and care for children ages 0 to 5 years old. A $10 million ongoing Prop. 98 allocation would also be made for SELPAs to work with county offices of education to provide technical assistance to local educational agencies to improve student outcomes as part of the system of support.
  • Teacher shortage: The administration proposes $100 million in one-time Prop. 98 funds to increase and retain special education teachers, with half of the funding earmarked for a Teacher Residency Program aimed at preparing and retaining special education teachers, and the other half dedicated to one-time competitive grants to local educational agencies developing or implementing new or existing locally identified solutions that address a local need for special education teachers.
  • Career technical education: While the funding for the CTE Incentive Grant Program expired at the end of 2017-18, and the Department of Finance had shown no interest in re-establishing a dedicated funding stream for such programs, the administration proposes an ongoing increase of $200 million Prop. 98 funds to establish a K-12 specific component of the Strong Workforce Program to encourage the establishment and support for K-12 CTE programs that are aligned with needed industry skills. An additional $12 million in ongoing Prop. 98 funds would support local industry experts who would provide technical support to local educational agencies operating, or proposing to operate, CTE programs.
  • K-12 school facilities: As a result of the passage of Prop. 51 in November 2016 to authorize $7 billion in state general obligation bonds for K-12 schools, the budget proposes approximately $640 million in bond authority for 2018-19 to fund new construction, modernization, CTE and charter facility projects.
  • Cost-of-Living-Adjustments: The proposed budget includes an increase of $133.5 million in Prop. 98 funds to support a 2.51 percent COLA for the categorical programs that remain outside of LCFF, including special education, child nutrition, foster youth, American Indian Education Centers, and the American Indian Early Childhood Education Program.

Other budget items

Charter school facility grant program – Proposes an ongoing increase of $28.3 million to support projected charter school ADA growth and align available funding with estimated programmatic participation. 

Special education – Decreases special education funding by $10.2 million to reflect a projected decrease in special education ADA.

Local property tax adjustments – Proposes a decrease of $514 million in Prop. 98 General Funds for school districts and county offices of education in 2017‑18 as a result of higher offsetting property tax revenues. In addition, a decrease of $1.1 billion Prop. 98 General Funds for school districts and county offices of education in 2018‑19 as a result of increased offsetting local property tax revenues.

Average Daily Attendance – Proposes a decrease of $183.1 million in 2017‑18 for school districts as a result of a decrease in projected ADA from the 2017 Budget Act, and a decrease of $135.5 million in 2018-19 for school districts as a result of further projected decline in ADA next year.

ACSA perspective 

Despite the uncertainty of how the recent federal tax reform will impact California’s state revenues, the governor continues to make investments in public education, both in terms of supporting LCFF implementation and paying down past debts. He is also staying the course in funding CTE through a proposed new structure and staying committed to funding adult education. The governor and his staff have been very clear that he is not supportive of any initiatives outside of his own priorities, particularly in light of the budget constraints. 

It is important to remember that this is just a proposal, and there are more than six months to go before the 2018-19 state budget is finalized. The governor’s proposed budget and, more specifically, his commitment to fiscal restraint and resistance to new policy priorities from the Legislature will face both policy and budget committee scrutiny in the coming months. Over the next five months leading up to the constitutional deadline of June 15, the Legislature will initiate the formal and public deliberation process to discuss the governor’s budget proposal and craft their own alternatives. In his last year in office, it is unlikely that the governor will be open to much movement on the creation of any new programs and the enactment of universal preschool, in particular, could face considerable resistance from his administration.

In the final 2017-18 budget compromise, the Legislature adopted trailer bill language directing the California Department of Education to develop a differentiated funding rate for full-day and part-day kindergarten programs, with the goal of incentivizing schools to provide full-day kindergarten programs by 2018-19. To date, CDE has not released this report, yet the new Budget Blueprint makes a reference to making this a priority. 

Lastly, Assembly Speaker Anthony Rendon (D-Paramount) established last year a Blue Ribbon Commission on Early Care and Education to improve services for children ages 0-3, and to develop options for establishing universal pre-kindergarten for all four-year-olds. Providing additional investments for childcare and early childhood education could continue to be a budget priority for Assembly Democrats in the coming year. AB 1754, which has four authors including Kevin McCarty, would establish the “Pre-K for All Act of 2018” and require the state to provide all four-year-old children who meet certain eligibility criteria with access to early care and education programs. This bill is a work in progress and will be amended to include details in the near future.

Unlike its Assembly counterparts, the Senate has not released highlights of potential budget proposals. The Senate Democrats are currently undergoing transition as Senate President Pro Tem Kevin de Leon is termed out this year and a new leader (Sen. Toni Atkins, D-San Diego) takes over this leadership role in March 2018. In the 2017-18 budget, the Senate was successful in negotiating one-time Prop. 98 funds be used to fund their priorities for teacher recruitment and professional development efforts. 

For ACSA and other key education stakeholders, one of the chief outstanding questions to respond to is where should increased Prop. 98 funding be allocated after the LCFF funding targets are reached. This begs the question whether the base grants need to be adjusted and increased to compensate for the increased liabilities and fixed costs districts are dealing with, or whether a new LCFF funding target should be established. While the Legislature has until Feb. 16 to introduce new legislative and policy proposals, it is rumored that Assembly member Al Muratsuchi will introduce a bill to establish new LCFF funding targets. Questions also remain on where special education equalization funding and home-to-school transportation fall in the list of priorities for both the Legislature and LEAs. 

A topic that will likely result in lively discussions is the future of CTE K-12 programs now that the CTE Incentive Grant program is in its last year of funding. Of note, last week AB 1743 was introduced by Assembly member Patrick O’Donnell (chair of the Assembly Education Committee) to continue funding the CTE Incentive Grant Program for three additional years at $500 million annually, with a 1:1 local/state match. The bill, which is considered a starting point for discussion for a permanent CTE funding model, would not fund new CTE Incentive Grant applications, but instead is intended to continue funding existing CTE programs that have been evaluated and certified by the California Department of Education as being “successful.” More than 12 Assembly members have signed on as authors or coauthors of AB 1743, including Kevin McCarty, chair of the Budget Subcommittee on Education (D-Sacramento).

It is no surprise that the Legislature and the governor will direct their attention to the national political landscape, as there are several policies with significant fiscal implications that could negatively impact the state. These include an impending threat to repeal the Affordable Care Act that could cost the state more than $20 billion in federal subsidies, as well as changes to immigration, trade and climate change policies that could disrupt communities throughout California.

Public education is in the strongest position it has been in a decade and our students are the beneficiaries of the good work we’ve done in our schools, our communities, and inside the State Capitol. But ACSA acknowledges that there is more work to be done. As student advocates, ACSA believes the improvements and increases to funding are critical. The governor’s Local Control Funding Formula has placed additional responsibility on local decision making which empowers all of us to be more effective leaders. It forces all of us to recognize the successes and challenges we have in our districts and how pursuing long-term investments to stabilize public education is crucial for current and future students. 

Moreover, a responsibility rests with lawmakers to confront the growing impact of pension obligations on school budgets. Last fall, the Sacramento Bee reported that school districts will pay an additional $500 million to make up for lower investment returns. That is in addition to a 2014 CalSTRS bailout from the Legislature that is costing the state, school districts and teachers billions in additional contributions. 

As a major education stakeholder, ACSA will be actively engaged in the budget discussions with the administration to ensure our best interests are upheld. Throughout this legislative season, ACSA will keep members apprised of all budget negotiation discussions until the budget is completed by the June 15 constitutional deadline.

The full budget can be found at www.ebudget.ca.gov/FullBudgetSummary.pdf

For questions or additional information, contact ACSA Legislative Advocate Martha Alvarez at malvarez@acsa.org.

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