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Copyright 2009 California Association of School Business Officials
2009-28

More May Revision detail
May 14, 2009
By Dennis Meyers, CASBO Assistant Executive Director, Advocacy & Policy

Administration officials made themselves available to the education community in Sacramento this afternoon to answer questions about the governor’s May Revision that was released earlier today. Waiting for the briefing to start was like waiting in an emergency room waiting area, seeing the doctor walking toward you, and just saying “give me the bad news doc.”

What follows is a Q & A to provide more detail to our earlier Newsbreak.

Q: Given the drop in General Fund revenue since the February budget, how much has the Proposition 98 guarantee slid since then?
A: Give or take a few million, the guarantee has slid an additional $1.6 billion in the current year and $3.7 billion in 2009-10.

Q: Why is there such a big difference in the size of the proposed cuts to schools if Propositions 1A-E fail? I thought there was no immediate impact to the Proposition 98 guarantee.
A: There is little additional immediate impact to the guarantee if Propositions 1A-E fail on Tuesday. However, the governor’s proposal is to capture all of the reduction in the guarantee in the current year and 2009-10 if they fail in order to give the state General Fund additional relief. If the ballot measures pass, the proposed reduction to school funding would leave the appropriation to schools above the guarantee in the current year and in 2009-10.

Q: The governor proposed to take $693.3 million in current year revenue limit money if the ballot measures pass, or $1.3 billion if they fail. Am I reading that right and how would that happen?
A: Yes, you are reading that right. According to administration officials, the state would take the amount out of the June apportionment (the one that was conveniently deferred to July).

Q: How are we supposed to deal with a hit to revenue limits in the final apportionment of between $118 and $223 per ADA? What are they thinking?
A: They are thinking about balancing the state budget. They are not really thinking about what LEAs will have to do. There are no additional plans to budget money for the obvious increase in emergency loans to LEAs that will result from a cut this late in the year. We believe that the administration is hoping that the federal stimulus money will get LEAs through this period.

Q: I read that K-12 was going to be protected from additional cuts because of the maintenance of effort requirements of the federal stimulus, yet here the governor is proposing cuts much larger than anyone anticipated. Are we protected or not?
A: Apparently not. When the state submitted its application to the federal government for the State Fiscal Stabilization Fund money, the maintenance of effort calculation would have allowed for only $500 million in additional cuts in the current year and $1.3 billion in cuts in 2009-10. However, the calculations have since been revisited and according to administration officials, prior year Proposition 98 settle up funds were counted incorrectly in the first estimation. The new calculation of the federal maintenance of effort provides for a current year reduction in school funding of $3.5 billion and while we do not know the exact number for 2009-10, it is probably in the $3-4 billion range. Currently, the administration is saying that the cuts being proposed in the May Revision do not violate the federal stimulus maintenance of effort requirement and that they have been working with federal education officials to get the calculation right.

Q: How convenient.
A: That wasn’t a question.

Q: I heard that there is still going to be a May Revision released on May 28. Is that the case and have we seen the last of our cuts?
A: We have been assured that the May 28 May Revision will address issues of additional flexibility for schools and that the proposed cuts to schools will not change. However, we will believe it when we see it. Between now and May 28, current and budget year revenues will have been updated and we will know the full impact of next week’s election by then as well.

Q: What additional flexibility proposals might be made?
A: Administration officials are not talking about the details of what they will propose later this month, except that they will take another look at K-3 CSR. We think it is safe to suggest that they may be looking at revisiting the proposal from January to give LEAs full flexibility on all categorical programs, including K-3 CSR. Don’t count on that yet, that is just our guess. However, the administration has said they will also look at contracting provisions; presumably that means they might be looking at a repeal or suspension of Education Code Section 45103.1 concerning personal services contracting.

Q: The governor proposed shortening the school year again, this time by five days if the ballot measures pass and seven days if they fail. How will that be done?
A: The administration understands that this is a negotiable issue locally and will seek to change statutes that limit LEAs from doing this now, such and repealing the longer day/year incentive penalties. We expect more details on this in the May 28 May Revision or even sooner. Either way, as it stands currently, the proposal is to allow LEAs to shorten the year, not require them to shorten the year.

Q: Is there time pressure on the Legislature by which they have to act on the governor’s proposals?
A: The administration wants the Legislature to act before June 30 at least on the current year issues. They know that without action by June 30 on current year issues, the Proposition 98 guarantee will be $1 billion higher in 2009-10 and they do not want that to happen.

Q: What’s next?
A: The legislative budget subcommittees will begin hearing these proposals next week. Legislators understand the urgency so there will be a movement to act quickly.

Q: What do you advise us to do?
A: Our advice is the same as before; budget conservatively, don’t spend all of your stimulus money at once pulling back your pink skips tomorrow and guard your cash.

Q: What about the August 15 layoff provision? Is it going to be repealed or suspended? Is it even useable?
A: At this time, we cannot see a scenario where the August 15 provision will be repealed or suspended given the tension between the Legislature and the governor. That does not mean it will not be attempted however. We are working on getting detail out on this issue next week because counter to what is commonly understood, the August 15 layoff provision has been used successful once before and it withstood a court challenge. More on that later.

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.