ERIC ED514659: School Finance Highlights 2010-11

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by  ERIC

JANUARY 2011
REPORT
School Finance Highlights 2010–11
As Gov. Jerry Brown prepares to release his budget proposal for the upcoming fiscal year, California
must contend not only with a massive projected deficit for 2011–12, but also a sizable gap in the current
$87 billion general fund budget. For both years combined, the state’s budget deficit is about $28 billion.

The state entered 2010–11 with a long- going forward. The current year situation
California faces several financial standing imbalance between ongoing provides important context for understand-
challenges spending and income. Unrealistic assump- ing Brown’s budget proposal for the upcom-
tions—including, for example, banking on a ing year and its potential impact on K–12
Some of the methods that policymakers used to
large increase in federal funding that has not education.
address budget deficits in the recent past are, or
materialized—have helped create that ongo-
soon will be, unavailable. For example:
ing gap. This pre-existing structural deficit Revenues for K–12 schools are down nearly
n All federal stimulus funds to help states with makes it especially challenging to close the 10% this year compared with 2007–08
their budget problems have been distributed. current shortfall. The 2010–11 state budget was the third in a
Most of that funding must be spent by the end In addition, many of the options used to row with a substantially reduced funding
of September 2011, and “EduJobs” funding address past deficits are now, or soon will be, level for K–12 education as compared with
must be spent by the end of September 2012. closed off. And the budget deficit is not the 2007–08, the year before the recent reces-
(See page 2.) state’s only financial challenge. (See the box sion significantly impacted the budget. The
to the left.) drop-off has been most acute in the current
n The state can no longer borrow from local
Leading up to the release of his 2011–12 year. According to data from the Califor-
governments as a result of Proposition 22,
budget proposal, Brown signaled an intention nia Department of Education (CDE), the
passed by California voters in November 2010.
to get the state to face up to its dire fiscal situ- state’s K–12 education system received a total
n Temporary tax hikes enacted in 2008 are ation. In December 2010, before being sworn of $71.1 billion in 2007–08 from all local,
expiring, and many one-time revenue sources
into office, Brown sponsored two meetings state, and federal sources and is receiving
such as accelerated tax receipts have already
designed to build a common understanding $64.4 billion in 2010–11.
been used.
of the problem. At a forum with education A sizable portion of that total—about
The state will eventually have to cover other large leaders, Brown said “the day of reckoning is $7.8 billion in 2010–11—does not directly fund
payments: upon us.” Regarding education specifically, current operations of K–12 schools but rather
he said, “I can’t promise you there won’t be goes to state agencies such as the CDE, debt
n Unfunded liabilities of at least $100 billion in
more cuts because there will be.” service on local capital projects, and programs
government employee pension funds.
The governor made these statements just such as adult education and child care. Con-
n A $10 billion deficit in the Unemployment two months after state policymakers sus- sidering only the operating funds for K–12
Insurance Fund. pended Proposition 98 as part of enacting a schools, the total revenues are $62.9 billion
budget for 2010–11. It was only the second time for 2007–08 and $56.7 billion in 2010–11, a
n Repayment of $15 billion borrowed to close
state leaders had suspended the measure since decrease of $6.2 billion or nearly 10%.
deficits in the recent past.
voters passed it in 1988, establishing in the state These funds come from five sources—
constitution a minimum funding guarantee monies from the state general fund and local
for K–12 schools and community colleges. property taxes that count toward the Propo-
EdSource thanks Joyce and Larry Stupski for
This EdSource report discusses that bud- sition 98 minimum funding guarantee, fed-
underwriting the research and writing of this report.
getary decision and others made in 2010–11 eral dollars, miscellaneous funds that local
that will affect K–12 education this year and school agencies raise, and lottery funding.
EdSource® is a not-for-profit 501(c)(3) organization established in California in 1977.
Independent and impartial, EdSource strives to advance the common good by developing and widely distributing trustworthy, useful
information that clarifies complex K–14 education issues and promotes thoughtful decisions about California’s public education system.
EDSOURCE REPORT
Figure 1 shows the amounts of K–12 educa-
tion funding from those five sources and how School districts receive funding in two forms
they have changed during the past six years.
Funding comes to local education agencies—school districts, county offices of education, and charter
schools—either as restricted or unrestricted.
State funding has seen the greatest drop
Education revenues from the state’s gen- Unrestricted revenues, which represent about 70% of the average district’s funding, can be spent at the
eral fund and local property taxes have district’s discretion. These monies are often referred to as general purpose funds. The primary source
declined substantially since 2007–08. For of unrestricted or general purpose monies is revenue limit funding, which some people refer to as “ADA
example, state funding went from $37.8 bil- funding” because it is based on a district’s average daily attendance.
lion in 2007–08 to $32.0 billion in 2010–11.
Restricted revenues are dedicated to a specific category of activities or type of students (e.g., English
In percentage terms, that 15.3% reduction is
learners). Many of these latter funding sources are thus called “categorical” programs.
similar to the 16.2% decrease in total state
general fund expenditures between those
two years.
Along with revenue reductions, Cali- figure 1 K–12 education revenues from the state’s general fund dropped dramatically in 2008–09
fornia’s schools must contend with fund-
ing delays. A total of $7.3 billion for services
$70
provided in 2010–11 will not arrive until the $62.3 $62.9
early part of 2011–12. The amount of delayed $59.7 billion billion $59.7 $60.0
funding represents 23% of the Proposition 98 $60 b$il1li.o0n $$15..04 $$05..92 b$il0li.o8n b$il0li.o8n b$i5ll6io.7n Legend
general fund spending on K–12 education. $5.0 $5.2 $5.2 $0.8 Lottery
Local property taxes are collected by $6.8 $6.4 $4.4 Local Misc.
$50 $6.9 $9.4
counties, but the state determines their dis- $10.6 $8.0 Federal
Funds
tribution among local governments, includ- ns) $11.9 $12.6
iisnnid ges creahdbouloycl asst’m iopanrlo lepareg retthnyac nitea stx.h reThe vdeee ncu8re.e4as%s ew adinse ccgloeinnne-- s (in billio $40 $11.7 $13.0 $13.4 $11.5 P TrLoaoxpceeasrlty
ar $30
eral fund revenues but still significant. oll
D
Fortunately for schools, the state’s education
finance system requires the general fund $20
$37.1 $37.8 State
$35.0
to backfill any decrease in their property $31.2 $32.0 General
$30.0
Fund
tax revenues.
$10
Extra federal funding will soon be exhausted
Federal stimulus funding partially compen- $0
2005–06 2006–07 2007–08 2008–09 2009–10 2010–11
sated for reductions in state general fund
and local property tax revenues. Through Note: This does not reflect certain revenues for California’s K–12 education system—namely, local debt service, contributions from the
state general fund and local property taxes that do not count toward the Proposition 98 minimum funding guarantee, and other state
the American Recovery and Reinvestment
funds. In 2010–11, those funds totaled about $7.8 billion. Those monies generally do not support current operations of K–12 schools.
Act that Congress enacted in February 2009,
California’s K–12 education system received
Data: California Department of Education (CDE) EdSource 1/11
more than $6 billion. Those funds will soon
be exhausted, and federal policymakers are Special Education, and Title I of the Elemen- projected to provide 7.7%, a slightly reduced
not currently planning to provide another tary and Secondary Education Act, which portion. Local miscellaneous funds include,
installment. However, they did pass an provides grants to school districts to support for example, interest income; parcel taxes;
“education jobs” bill in August 2010, which students from low-income families. lease and rental income; and donations from
provided California school agencies with an parents, foundations, and local companies.
additional $1.2 billion for saving or creating Other, smaller funding sources have remained One factor contributing to the predicted
positions. The EduJobs money must be spent relatively stable decline in local miscellaneous funding could
in 2010–11 and 2011–12. Local miscellaneous sources provided 8.7% be a decrease in interest income, in part due
The remainder of federal funding comes of total revenues in 2008–09 and 2009–10, a to districts spending down reserve funds that
from programs such as Child Nutrition, little more than is typical. This year, they are would otherwise earn interest. The statewide
2 n School Finance Highlights n January 2011 © Copyright 2011 by EdSource, Inc.
EDSOURCE REPORT
total of districts’ interest income went from 2005–06 and 2007–08. On a per-pupil basis, spend on K–12 schools and community col-
$469 million in 2007–08 to $268 million in the lottery is expected to provide about leges each year. The complicated set of tests
2008–09, according to the Education Data $130 in 2010–11—$112.50 in unrestricted related to Proposition 98 also gives state
Partnership website. More recent data are not funds and $17.50 dedicated to instructional leaders the ability to both adjust spending
available, but anecdotal evidence suggests materials. downward when state revenues are low and
that spending of reserves has only increased suspend the guarantee in a given year. But in
since 2008–09. Proposition 98 offers limited protection to both cases, the process also creates a promise
The state lottery is projected to provide education funding that, over the long term, the funding levels are
about $800 million—a smaller amount Proposition 98 provides a process for deter- supposed to be restored to what is referred to
and percentage than it provided between mining the minimum amount the state must as the long-term Test 2 level.
Understanding the three tests of Proposition 98
The minimum spending level under Proposition 98 is determined by one of three “tests” or formulas. Several factors influence which test is used to set the
minimum guarantee, but the most important are the annual changes in statewide K–12 student attendance, per capita personal income, and per capita general
fund revenues.
Requirement
TeST 1
Percentage of General K–14 education must receive a minimum percentage of general fund revenues, currently about 40%.
Fund Revenues
When is it operative?
Times used: 2
When it would provide more money than Test 2 or 3. It has been used in 1988–89 and 2009–10.
Requirement
K–14 education must receive at least the same amount of state aid and local property tax dollars as received the prior year, adjusted
TeST 2
for changes in attendance and per capita personal income.
Adjustment Based on
Statewide Personal Income
When is it operative?
Times used: 12
Generally, when state general fund revenues experience normal or strong growth over the prior year. (Specifically, it is used when
the percentage growth in state per capita personal income is less than or equal to the percentage growth in per capita general fund
revenues plus 0.5%.)
Requirement
K–14 education must receive at least the same amount of state aid and local property tax dollars as received in the prior year,
TeST 3 adjusted for changes in attendance and per capita general fund revenues, plus 0.5% of the prior year Proposition 98 spending
Adjustment Based on amount.
Available Revenues
When is it operative?
Times used: 7
Generally, when general fund revenues fall or grow slowly over the prior year. The intent is to allow, but not require, education funding
to be responsive to the state’s reduced revenue level. (Specifically, it is used when the percentage growth in statewide per capita
personal income is greater than the percentage growth in per capita general fund revenues plus 0.5%.)
Proposition 98 can be suspended for a year with a two-thirds vote of the Legislature and concurrence of the governor. If suspended,
SUSPenSIon
policymakers have great discretion as to the level of funding they provide. Besides 2010–11, it was also used in 2004–05.
Times used: 2, including
in 2010–11
If Test 3 is used, or if Proposition 98 is suspended, the state keeps track of the amount that would have been provided if Test 2 had been
in effect. Eventually, the state must bring spending up to what it would have been if Test 2 had consistently applied. Restoration is to
MAInTenAnCe FACToR begin in the next year in which the percentage growth in per capita general fund revenues exceeds the percentage growth in per capita
personal income. (Specifically, the minimum amount that must be restored in a given year is one-half of the difference between those
two percentages times the current-year level of general fund revenues.)
When state leaders craft a budget for the upcoming fiscal year, they must estimate what the minimum Proposition 98 spending level
will be before the fiscal year starts. If, during the course of the fiscal year, the estimate turns out to be too low, the state must later
SeTTLe UP
make up the shortfall. The amount of the shortfall is often referred to as the “settle up” amount.
© Copyright 2011 by EdSource, Inc. January 2011 n School Finance Highlights n 3
EDSOURCE REPORT
Proposition 98 funding has not been funded at the figure 2 K–14 Proposition 98 funding estimates, 2005–06 through 2011–12: In recent years, actual
long-term Test 2 level for several years funding has been substantially lower than long-term Test 2 levels
Figure 2 indicates that the last year that
the state funded schools and community $65
colleges at the long-term Test 2 level was 60.3 60.7 61.2
59.1
$60 57.9
2005–06. The gap between the “actual
55.5
funding level” and the “long-term Test 2 $55 53.3 56.6
funding level” represents education’s call ns) $50 53.3 54.6
o
orenv esntautee gdroollwarths icno tmhees f ubtaucrke .t oW ah ehne aslttahtye n billi $45 49.1 49.5 49.7 47.5
level, policymakers will have to get the rs (i $40
a
K–14 education funding level back on oll
D $35
track. This is not the same as paying back
all the “lost” funding, but it does mean that $30
Long-Term Test 2 Funding Level
the Test 2 funding level is the default mini-
$25 Actual Funding Level
mum whenever the state can afford it and
that some compensation is made when fea- $20
2005–06 2006–07 2007–08 2008–09 2009–10 2010–11 2011–12
sible. The restoration to the long-term
(Estimated)
Test 2 funding level does not have to occur Fiscal Year
all at once. In fact, in the past the restora-
Data: Legislative Analyst’s Office (LAO) EdSource 1/11
tion has been gradual.
This year’s K–14 Proposition 98 funding level is Charter school funding reflects the changes 2010–11, charters are getting $410 per pupil
$49.7 billion that regular public school funding has through the categorical block grant. This
For 2010–11, the K–14 Proposition 98 undergone amount is down from the $500 they began
minimum estimated at the time of budget California’s method of funding charter receiving in 2007–08, reflecting cuts to cat-
adoption was $53.8 billion. (The minimum schools and the amount they receive is egorical programs that the K–12 education
would have been based on Test 1, not the derived from the general school funding sys- community as a whole has absorbed. Char-
long-term Test 2 amount.) Providing that tem. Charters receive a general purpose block ters cannot apply separately for categorical
level of funding would have required more grant that is similar to districts’ revenue limit programs included in the block grant (can-
revenue increases or cuts to noneduca- funding in purpose and amount. In addition, not be double funded). But they can apply
tion services than policymakers wanted charters automatically get categorical pro- for other programs—such as K–3 Class Size
to make. Instead, they suspended Propo- gram dollars through a block grant and may Reduction, subsidized meals, and other
sition 98 and provided $49.7 billion. As apply for other categorical funding. Char- smaller programs—that are outside the block
Figure 2 shows, the Legislative Analyst’s ters also receive a grant in lieu of Economic grant. Some charter schools also receive fed-
Office (LAO) estimates that the 2010–11 Impact Aid (EIA). Both the categorical block eral Title I funds to provide extra support to
Proposition 98 actual funding level is more grant and “in lieu of EIA” grant are discre- low-income students.
than $9 billion below the long-term Test 2 tionary, meaning that the funding can be Charter schools that began operating in
requirement. spent as charter schools choose. In addition, 2008–09 or later are also receiving a supple-
The $49.7 billion provided in the 2010–11 charter schools receive the same amount of mental categorical block grant payment of
budget act represents a slight increase from lottery funding per pupil as districts get. $127 per pupil. This is to compensate for a
the $49.5 billion in Proposition 98 funding in Charter schools’ general purpose block design flaw in a policy enacted beginning
2009–10. However, now that 2009–10 is over grant amounts vary depending on the grade two years ago. When lawmakers decided in
and all of the state’s revenues and expendi- span they serve and are based on the average February 2009 to reduce funding for about
tures have been accounted for, the Proposi- of what the state pays in revenue limit fund- 40 categorical programs and make the fund-
tion 98 minimum funding level for 2009–10 ing. The funding amounts for charter schools ing discretionary, they specified that local
should be adjusted to $51.4 billion, accord- therefore reflect the recent decreases to rev- school agencies would get the same percent-
ing to the Legislative Analyst’s Office. The enue limit funding. age of the statewide total funding for those
state must eventually settle up the difference The categorical block grant is provided programs going forward as they did in a “base
between what was provided last year and that in place of a few dozen of the categorical pro- year” (generally 2008–09). For example, if a
recalculated minimum. grams for which districts receive funding. In district or charter school received 1% of all
4 n School Finance Highlights n January 2011 © Copyright 2011 by EdSource, Inc.
EDSOURCE REPORT
the funds allocated statewide for those pro- figure 3 estimated 2010–11 funding rates for all charter schools
grams in the base year, then it would receive
1% of the reduced amount in subsequent K–3 4–6 7–8 9–12
years. Because charter schools that began $5,054 $5,128 $5,278 $6,142
General Purpose Block Grant
operating only recently did not have a well-
established “base year” funding amount, they $410 $410 $410 $410
Categorical Block Grant
were precluded from receiving funding for
the newly flexible categorical programs. The $5,464 $5,538 $5,688 $6,552
Total
$127 per pupil is meant to compensate these
new schools. Data: California Department of Education (CDE) EdSource 1/11
Figure 3 shows the funding rates for char-
ter schools as estimated by the California passed by the state’s voters in November LAO, the state owes $3.24 billion to K–12
Department of Education. 2000, requires school districts to provide schools and $383 million to community col-
The extra general purpose money that charters serving at least 80 students from leges for a huge backlog of reimbursements.
some charters also receive in lieu of EIA the district with furnished and equipped And late payments must include interest.
funding is allocated based on the number facilities that are reasonably equivalent to In the 2010–11 budget, policymakers took
of students at a school who are identified as other buildings in the district. some action on this issue. Specifically, they
low-income or English learners. It is esti- provided $90 million to partially cover the
mated that charters will get $319 per eligible The 2010–11 budget package contained cost of mandates in 2010–11 ($80 million for
pupil in 2010–11. Students who are both important policy changes—most notably K–12 and $10 million for community col-
low-income and English learners generate regarding mandates leges) and $210 million to cover some of the
double the amount, similar to what happens Although the overall 2010–11 budget reflected unpaid K–14 claims from prior years. In addi-
with noncharter schools. A concentration some unrealistic assumptions, it also con- tion, lawmakers:
bonus is provided if the majority of students tained some important policy changes. The n Modified the two most costly mandates—
in the school are eligible. A minimum per- grim fiscal environment prompted lawmak- high school science graduation require-
school amount of EIA funding is granted to ers to modify state mandates on schools in ments and behavioral intervention plans
very small schools. If the number of eligible order to reduce the state’s liability for cover- for Special Education students—in an
students exceeds state estimates, the actual ing the cost of compliance. They also changed attempt to eliminate them.
amount per pupil would be reduced because the way the state funds the K–3 Class Size n Reduced requirements and thus costs
the funding comes from a fixed appropriation. Reduction program. associated with three mandates.
Like noncharters, charter schools also n Suspended for the time being all or part
receive Special Education funding and must State provides $300 million for K–14 mandate of 13 mandates—eight that apply only to
use a portion of their general purpose funds reimbursements in 2010–11 K–12 schools, two for community col-
to cover the costs of educating any special- When California voters approved Proposi- leges only, and three that apply to both
needs students whom they serve when state tion 4 in 1979, they established in the state schools and community colleges.
and federal funds are inadequate to fully constitution a guarantee that the state would n Authorized a working group to analyze
fund those costs. reimburse local governments—such as the cost-effectiveness of the remaining
Charter schools can receive funding for school districts—for the cost of implement- mandates and recommend whether to
facilities or actual building space through ing any new state-required program or keep, modify, or eliminate them. The
three main avenues. First, they can access higher level of service. working group must develop its recom-
state bond funds for facilities construction. However, the state has come far short of mendations by March 15, 2011.
Second, if they are serving a primarily low- fully reimbursing local school agencies dur- For more information about changes to man-
income population, they can receive rent or ing the past several years. In December 2008, dates, see: www.edsource.org/assets/files/misc/
lease assistance. In 2009–10, the state began a San Diego Superior Court ruled that this lawmakers-education-mandates-2010-11.pdf
providing rent/lease-assistance as grants, breach was illegal. But former Gov. Arnold
rather than as reimbursements after the costs Schwarzenegger’s administration appealed A budgeting change reflects uncertainty in the amount
are incurred. However, funding for this pro- that decision, and the governor and Legisla- needed to fund K–3 Class Size Reduction
gram in 2010–11 must first be used to reim- ture continued to require that many educa- Many school districts have taken advan-
burse eligible charter schools for 2009–10 tion mandates be followed, with virtually no tage of recently granted flexibility regarding
costs and then be used to fund schools that funding appropriated for reimbursements. pupil/teacher ratio requirements of the K–3
are eligible in 2010–11. Finally, Proposition 39, According to a February 2010 report by the Class Size Reduction (CSR) program, which
© Copyright 2011 by EdSource, Inc. January 2011 n School Finance Highlights n 5
EDSOURCE REPORT
provides incentive funding to have 20 stu-
dents per teacher in kindergarten through A related edSource publication discusses the local impact of state
grade 3. These districts have increased class
budget decisions
sizes in the early grades, foregoing a portion
of the funding they receive for CSR but also In December 2010, EdSource published a report documenting the extent to which California’s state
saving money by laying off or reassigning budget troubles, including this year’s record delay in passing the state budget, have strained districts’
their K–3 teachers. As a result, the amount set ability to manage their budgets responsibly and have created financial uncertainty for them. It also
aside in the state budget for the program has looks forward, discussing challenges that schools may face in the near future, such as the expiration
exceeded the state’s actual costs. The state of flexibility with K–3 Class Size Reduction in 2011–12 and categorical funding in 2012–13. Challenging
has thus been able to recapture some CSR Times: California Schools Cope with Adversity and the Imperative To Do More is available at:
funding. www.edsource.org/pub10-challenging-times.html
Due to uncertainties in the actual amount
needed for the program going forward, the
2010–11 budget breaks from tradition and does attempted to realize savings by altering the Bill 3632, enacted in 1984. Thus, the program
not have a line item for K–3 CSR with a fixed administration of some of the child care is often called the AB 3632 mandate.
dollar amount. This year, the superintendent programs. During its budget deliberations, the Leg-
of public instruction has been authorized to When the budget came back to the for- islature rejected Schwarzenegger’s proposal
certify the amount needed for the program, mer governor for his signature, he vetoed and provided $133 million to reimburse local
and the state controller is to then apportion $256 million for one component of subsidized mental health departments for the cost of
funding according to a specified schedule. child care—California Work Opportunity providing services in prior years. In addition,
and Responsibility to Kids (CalWORKs) California legislators channeled additional
Schwarzenegger’s line-item vetoes were Stage 3. CalWORKs provides temporary federal Special Education funding to local
controversial financial assistance plus help with training education agencies to pass through to mental
In signing the 2010–11 budget, the former and employment to low-income families health departments, increasing funding from
governor used his line-item veto authority with children under 18. Stage 3 child care $69 million to $76 million.
to reduce or eliminate funding for a few is for families who have completed the When the governor signed the budget,
education-related programs. Although these CalWORKs program and been off of cash he vetoed the $133 million in state funds,
vetoes may have only short-lived impacts, aid for two years. The California Depart- and he declared that the AB 3632 mandate
they can also be seen as another salvo in the ment of Education provides some of those was suspended. The governor’s action, plus
continuing battle between Republicans who child care services through contractors. the recently passed Proposition 1A, which
want to hold the line on tax increases and The governor maintained $129 million in requires the state to either fully reimburse
Democrats who believe that state programs federal funding to pay for Stage 3 child care counties for fulfilling mandates or suspend
should not be cut further. services through Oct. 31, 2010, but services them, prompted several county mental health
In two of the cases, the vetoes allowed were to cease on Nov. 1. This was going to agencies to stop accepting new students.
Schwarzenegger to achieve some state sav- affect about 55,000 children. Three lawsuits, each on a different aspect
ings that he had proposed in his May Revision In response, the Legislature allocated of the situation, have been filed in response
but that the majority-Democrat Legislature $40 million to sustain the programs tempo- to the veto.
did not approve. Those two vetoes illustrate rarily. And opponents of the veto challenged One suit maintains that mental health ser-
the extremity of the state’s financial situation it in court. In mid-November, a judge vices for students are an entitlement under the
as they affect the state’s most vulnerable pop- declared that funding must continue federal Individuals with Disabilities Education
ulations and edged close enough to legal con- through the end of 2010 and that providers Act (IDEA). Plaintiffs are seeking a temporary
straints that both evoked court challenges. must notify families of any eligibility for restraining order on the state and school agen-
other subsidized child care programs. cies to maintain the status quo. The CDE has
Temporary funding provides a cushion for families allocated the $76 million in federal funding,
affected by child care funding veto Courts will determine funding for mental health and four Los Angeles–area local agencies
In his May Revision, Schwarzenegger pro- services for disabled students named in the suit have agreed to provide ser-
posed eliminating all state funding for Also in May, the former governor proposed vices. But the funds will run out very soon.
subsidized child care to save $1.2 billion in suspending the mandate that county mental What other local agencies will do with
Proposition 98 funding and an additional health departments provide mental health their portion of the federal funds is unclear.
$500 million for the state general fund. The services to Special Education students. The However, more than 40 counties have banded
Legislature did not adopt this proposal but bill that required such services was Assembly together and filed suit in the Sacramento
6 n School Finance Highlights n January 2011 © Copyright 2011 by EdSource, Inc.
EDSOURCE REPORT
County Superior Court against several state Brown seems undaunted, however. At
officials, asking the court to affirm that the the December 2010 forum for educators re-
requirement to provide mental health ser- ferred to earlier, Brown said he would like to
vices to students has been suspended due to enact a budget “within 60 days” (presumably
the lack of funding. As this report was being from the release of his budget plan in early
completed, the matter had not been resolved. January 2011). That timeline has caused Trish Williams
EdSource Executive Director
The third lawsuit, brought by the Cali- some Capitol insiders to speculate that the
fornia School Boards Education Legal Alli- governor will try to get measures on a state- 2010–11 EdSource Board of Directors
ance in the Court of Appeal in the Second wide ballot in the spring or summer of 2011
Carl A. Cohn, President
Appellate District in Los Angeles County, to help with closing the deficit. Some believe Co-Director, Urban Leadership Program,
questions the legality of the former gover- that Brown will ask voters to approve an Claremont Graduate University
nor’s unilateral suspension of a mandate extension of recently raised tax rates on Lawrence O. Picus, Vice President
and asks that the state funding be restored. vehicles, sales, and income—as well as new Professor, Rossier School of Education,
University of Southern California
This suit was filed on Nov. 10, 2010, and oral taxing authority for local governments as
Kenneth F. Hall, Fiscal Officer
arguments have been set for Feb. 8, 2011. part of a plan to increase local control.
Executive in Residence,
Plaintiffs in this case asked the Sacramento However, the governor himself has made University of Southern California
County Superior Court to slow down the it clear that he does not intend to solve the
Susan K. Burr, Secretary
second case referred to above, but the judge deficit with new revenues alone. At the forum, Executive Director, California County
allowed the counties’ case to be heard on Brown heard from union leaders, school dis- Superintendents Educational Services Association
Jan. 7, 2011, as scheduled. trict superintendents, advocacy group repre- Davis Campbell, Immediate Past President
Senior Fellow, UC Davis School of Education
sentatives, and other education stakeholders.
The state may soon make mid-year changes Some asked the governor to continue—and Brice W. Harris
to the 2010–11 education budget even expand—funding flexibility granted for Chancellor, Los Rios Community College District
When policymakers in Sacramento enacted 2008–09 through 2012–13. Others urged the Reed Hastings
CEO, Netflix, Inc.
the 2010–11 budget, they knew it was based governor not to propose any further reduc-
on some questionable assumptions, such as tions in education spending. A sympathetic Gerald C. Hayward
Co-Director (Retired),
$4.1 billion in additional federal funding for Brown did not respond directly to these rec- Policy Analysis for California Education
health and welfare programs. Those federal ommendations and ultimately could not offer
Barbara Inatsugu
funds have not materialized, which has con- the audience encouragement. Program Director for Education,
tributed to the projected current year defi- He braced them for bad news by saying: League of Women Voters of California
cit of $6.1 billion. In addition, California’s “Please sit down if you’re reading the stories Santiago G. Jackson
slow economic growth continues to spur de- on the budget on Jan. 10. If you’re driving, President, Santiago G. Jackson, Inc.
Education Consulting
mand for governmental services and hinder fasten your seat belt because it’s going to be
Loren Kaye
growth in state revenues. The special legis- a rough ride.”
President, California Foundation
lative session that Schwarzenegger called in Thus, it appears that whatever relatively for Commerce and Education
early December failed to yield action on the good news the 2010–11 state budget held for
Carol Kocivar
current year gap. That leaves the new gover- K–12 education—primarily money for man- President-Elect, California State PTA
nor and Legislature needing to forge solu- date reimbursements and the slight increase
Kelvin K. Lee
tions to the current deficit at the same time in Proposition 98 funding over the prior Superintendent (Retired),
Dry Creek Joint Elementary School District
that they plan for 2011–12. year—may soon be a memory.
John B. Mockler
President, John Mockler & Associates, Inc.
Amado M. Padilla
Professor, School of Education, Stanford University
Acknowledgments
Don Shalvey
This report was researched With research support from: Edited by: Deputy Director, U.S. Program, Education,
and written by: Liz Terry Mary Perry Bill & Melinda Gates Foundation
Brian edwards Michael Stone
Teacher, Aliso Viejo Middle School

Gloria Taylor
Co-President, American Association
of University Women–California
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