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Copyright 2009 California Association of School Business Officials
2009-19

Analyst foresees worsening budget
March 13, 2009
By Dennis Meyers, CASBO Assistant Executive Director, Advocacy & Policy

Today the Legislative Analyst released a revenue forecast that shows the recently adopted state budget as falling short by billions of dollars in 2009-10 and beyond. The analyst also recommends that the state use federal economic stimulus money to backfill a sinking Proposition 98 guarantee.

In the report, the analyst shows that the revenues assumed in the state budget will be $8 billion short in 2009-10. And that is if all of the budget-related measures on the May 19 statewide ballot are approved by voters. Furthermore, the report estimates that without corrective action, the annual shortfall will grow to $12.6 billion in 2010-11 and to $26 billion in 2013-14.

With revenues possibly being down by $8 billion in 2009-10, the analyst estimates that the Proposition 98 minimum guarantee will fall $3.6 billion below the level enacted in the budget. To keep schools whole, the analyst suggests using the federal economic stimulus money to offset the loss; not only in 2009-10, but in the out years as well by having the state hold onto the federal money rather than getting it out the door to schools.

With regard to education, Proposition 98, and federal money, the analyst wrote in the report:

“As we laid out in our report on the federal economic stimulus funds, the state’s flexibility to use federal education dollars increases as the state’s Proposition 98 minimum guarantee falls. Under our current projections, the minimum guarantee in 2009-10 will fall $3.6 billion below the level in the enacted budget.

The state could reduce state spending by roughly this amount by swapping out currently budgeted General Fund dollars for federal funds. While the specific amounts will depend on revised estimates in May, we recommend that the Legislature take this general approach for the Proposition 98 budget.

While seeking to offset 2009-10 General Fund costs is the most immediate concern, the large budget shortfalls on the horizon require a strategic multiyear approach regarding the expenditure of federal funds. The Legislature should seek to preserve as many federal dollars as possible to help balance the budget in future years as opposed to committing them now for augmentations”

To read the report in its entirety, follow this link.

While these recommendations are only recommendations at this time, they are being taken very seriously by legislators who haven’t forgotten what just happened to get a budget in place. The thought of using federal money to backfill schools for state general fund savings is going to be very attractive to decision makers.

This represents the next battle for the education community over the next few months or longer.

We’ll keep you posted.


All CASBO NewsBreaks are posted on the CASBO website at www.casbo.org. The legislative status indicated for the bills in this report reflect the location of each of these measures as of the day the report was posted. To get up-to-the-minute status of bills including additional information on bills, bill text, analyses, legislative vote records, and veto messages, log on to the state’s Official Legislative Information website at www.leginfo.ca.gov. For other questions regarding topics covered, you may contact Dennis Meyers, CASBO Assistant Executive Director, Advocacy and Policy, at dmeyers@casbo.org.