|Legislature Passes Budget to Governor
The California Legislature approved a $156.4-billion state budget on Sunday, capping a week of intense negotiations over education, social services and environmental policies.
Last night, the Legislature passed the state’s budget spending plan, along with several budget trailer bills, on a partisan vote. This is the fourth year that the Legislature has passed a budget by the constitutional deadline since the voters passed Proposition 25.
Governor Brown, Senate President pro Tem Darrell Steinberg and Assembly Speaker Toni Atkins reached agreement on a solid sustainable budget that provides funding for education, invests in preschool, pays down debt, puts money in the General Fund reserve and stabilizes teacher’s pensions.
The budget provides $4.77 billion to fund the second year of implementing the Local Control Funding Formula (LCFF), and approximately $5.1 billion toward reducing the school deferrals balance.
Highlights of the Legislature’s budget proposal include:
Major K-12 Education Highlights
- Increases funding for the implementation of the LCFF to $4.77 billion. This is $250 million above the Governor’s January proposal ($4.5 billion) provided to close the LCFF funding gap. The budget proposal also provides $26 million for County Offices of Education to reach full implementation of the LCFF (in 2014-15 the target levels will be increased by a 0.85 percent cost-of-living adjustment).
- Provides $5.1 billion to pay down the K-14 deferrals. In the event that revenues come in higher than projected, an additional $991 million payment would be triggered to eliminate education deferrals in the 2014-15 fiscal year.
- Provides $450 million for reimbursement of K-12 education mandates with the intent that funding freed up from this payment be dedicated to the implementation of Common Core.
- Dedicates $250 million in one-time funding for career technical education (CTE).
- Adopts education trailer bill language requiring school districts to document and justify local reserves that exceed the state’s recommended levels.
- Specifically, the education trailer bill included language, contingent on approval of the Rainy Day Fund initiative on the November ballot, that would cap local district reserves. If passed in November, the Rainy Day Fund initiative would require that excess capital gains revenues be deposited in a General Fund reserve and a Proposition 98 reserve. In any year following a deposit to the Proposition 98 reserve, local district reserves would be capped for one year. The local cap would be either two times or three times the state’s recommended reserve level, depending on the size of the school district.
Major Community College Highlights
- Provides $140.4 million to allow for a 2.75% increase in enrollment growth and adopts trailer bill language requiring the Chancellor’s Office to develop a new enrollment growth formula that directs more funding with districts with high poverty rates and low college access rates.
- Provides $148 million (an increase of $60.5 million) for deferred maintenance – no matching funds will be required for the deferred maintenance funds.
- Provides $170 million for student success programs, including $100 million for the Student Success categorical program and $70 million to support activities outlined in colleges’ Student Equity Plans.
- Adds $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.
- Provides $47.3 million for a 0.85-percent cost-of-living adjustment.
- Provides $498 million to pay down the Community College deferrals. In the event that revenues come in higher than projected, an additional $94 million payment would be triggered to eliminate education deferrals in the 2014-15 fiscal year.
Major Early Childhood Education Highlights
Provides $155 million for the State Preschool Program to expand access, increase preschool provider rates, reduce family fees and improve quality. Including:
- 7,500 additional full-year, part-day preschool slots
- 500 additional alternative payment slots
- 1,000 general slots
- An increase in the standard reimbursement rate of 5%
- $50 million for quality grants to LEAs
- $35 million in one-time money targeted to professional development and facilities
- Teachers must have a minimum of 24 units of Early Childhood Education (ECE). There are no new qualifications requirements for paraprofessionals.
Other Major Budget Highlights
- 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.
- Approves $437 million for Medi-Cal to support implementation of the Affordable Care Act.
- Provides a Child Nutrition Cost-of-Living Adjustment (COLA) to update reimbursement rates for meals served through the state child nutrition programs.
Now that the Legislature has passed a budget by the constitutional deadline or risk losing pay as required by Proposition 25, the Governor has until June 30 to reduce the budget funding level through his line-item veto (“blue pencil”) power.
Caution: This report is based on a preliminary analysis of the budget. Some proposals may change as additional details become available. We will provide you with additional reports on any new and significant findings.