02.25.10: Mixed News in LAO Recommendations for 2009-10 and 2010-11 State Education Budget
First the good news: Based on current law, if there were no changes, the state would owe Proposition 98 an additional $2.2 billion in 2009-10 and an additional $3.2 billion in 2010-11 compared to the Governor’s budget proposed funding level.
Now the rest of the news: The Legislative Analyst’s Office (LAO) believes the Governor’s budget proposal has significant legal risk and, consequently, believes the policy and legal foundation should not be adopted by the Legislature. Instead, the LAO presents two options: 1) suspend Proposition 98 which would avoid all of the legal risks; or 2) increase state revenues by $6 billion and provide almost all of those funds to Proposition 98, or make program cuts equal to $3.2 billion in other parts of the State Budget, or a combination of revenue increases and other program expenditure cuts.
Undoubtedly there are other choices; however, in framing the issue with these two options, the LAO essentially pushes a recommendation to suspend the Proposition 98 requirement in both 2009-10 and 2010-11.
A Proposition 98 suspension appears to be a more probable choice for the Legislature because there are not sufficient votes for a $6 billion tax increase, nor does there appear to be sufficient votes to cut $3.2 billion more in other parts of the State Budget as already proposed by the Governor.
The LAO, while providing the Proposition 98 suspension option, does not indicate what level of Proposition 98 funding ought to be provided after suspension. They do make the following recommendations:
- The LAO recommends that the Governor’s proposed $1.5 billion in school revenue limit cuts, targeted to administration and presumed savings from contracting out, not be adopted.
- The LAO recommends that there be $800 million in targeted reductions for K-12 and additional targeted reductions for community colleges for a total of approximately $1 billion in targeted reductions.
- If the Legislature proposes to reduce beyond that level then the LAO suggests those reductions be made as general revenue limit reductions and/or additional reductions to the categorical flexibility program adopted through 2012-13.
The LAO also makes a series of additional recommendations, some of which would be operative in the budget year, some in subsequent fiscal years.
Budget Year
For the budget year, the LAO recommends Home-to-School Transportation and K-3 Class Size Reduction be incorporated into the categorical flexibility item.
The LAO also recommends creating a new school improvement program using the federal school improvement grant funds coordinated with existing Proposition 98 settle-up funds used for the Quality Education Investment Act for 2011-2013. The program would provide approximately $900 per pupil for students in the lowest 10% of schools in the state as defined by academic achievement and dropout rates. Incorporated within this recommendation is the suggestion that, in 2013-14, saved Proposition 98 settle-up funds (approximately $1 billion) would be used to fund currently unfunded state mandates.
After Budget Year
The LAO recommends changing the Kindergarten age for enrollment to be age 5 on September 1 commencing 2012.
We will provide an update tomorrow on the LAO recommendations for child care and development and the Governor’s budget proposals for teacher retention, dismissal and rehiring.
