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any questions  send to rmoreno293@gamil.com or call 714-393-0389 I AM HERE …Tuesday, May 13, 2014
GOVERNOR RELEASES MAY REVISION

Today, the Governor released his May Budget Revision which forecast increased revenues of $2.4 billion. This increase, however, went to cover health care coverage under Medi-Cal, emergency drought assistance, added funding to meet the Proposition 98 guarantee and additional contribution to the California State Teachers Retirement System (STRS).

The May Revision maintains $4.5 billion, an increase of 10.9 percent, to fund the second year of implementing the Local Control Funding Formula (LCFF), and approximately $6 billion to eliminate all remaining school deferrals.

Additionally, the Governor and Legislative leaders recently announced an agreement on a constitutional amendment for a rainy day fund which would replace ACA 4, currently scheduled for the November ballot.

The Major K-12 Education Highlights in the May Revision:

  • Approximately $450 million to address the STRS funding shortfall. The Administration proposes a plan which would include increased contributions from the state, school districts and teachers. This represents the first year contribution coming from all three entities and would increase in subsequent years.
  • A net increase of $242 million in Proposition 98 General Fund over the three-year period of 2012-13 to 2014-15 for K-12 and California Community Colleges due to changes in state General Fund revenue and lower property taxes.
  • A $103.1 million increase in 2013-14 and a $121.1 million increase in 2014-15 for local educational agencies (LEAs) as a result of projected increases in average daily attendance.
  • A $26.7 million one-time increase for technical assistance and grants to LEAs to address the technology requirements for successful implementation of the Common Core.

The Major Community College Highlights:

The May Revision makes the following adjustments to the Community College budget but this is essentially the January budget proposal:

  • $148 million (an increase of $60.5 million) for deferred maintenance – no matching funds will be required for the deferred maintenance funds.
  • $50 million in one-time funds to support the Economic and Workforce Development program at the Chancellor’s Office. These funds will provide resources for community colleges to develop, enhance, and expand career technical education programs that build upon existing regional capacity to better meet regional labor market demands.
  • $6 million ($1.4 million one-time, $4.6 million ongoing) to upgrade bandwidth and replace technology equipment at community colleges to support student success technology initiatives including electronic transcripts, planning, student evaluation and the online education initiative.

Other Budget Highlights:

Implementing Federal Health Care Reform – Compared to what was projected in the January budget, 1.4 million more people will be covered through Medi-Cal, at a cost of an additional $1.2 billion. Enrollment is now expected to rise from 7.9 million in 2012-13 to 11.5 million in 2014-15, for a total cost increase of $2.4 billion.

Rainy Day Fund Agreement – Under the agreement, the state would be required to make annual payments of $1.5 billion to the Rainy Day Fund and the deposits could be used to pay outstanding debt.

Rather than transfers of capital gains revenue in excess of 6.5% of General Fund revenue, as was proposed in the January budget, the agreement would make transfers when capital gains revenues are in excess of 8% of General Fund revenues.

The agreement also establishes a Proposition 98 reserve to smooth out school spending and thereby minimize future cuts. This reserve would make no changes to the Proposition 98 calculation and would not begin to operate until the existing maintenance factor (money that is owed to schools) is fully paid off.

What’s Next?

The May Revision is the update to the Governor’s budget proposal based on updated revenue and expenditure data. The Senate and Assembly will now review the Governor’s May revision proposal and each house will adopt their own budgets. The two houses will then convene a Conference Committee to address any differences in their respective budgets before sending a single budget to the Governor. The Constitution requires a budget to be adopted by June 30th.

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