Gov. Brown’s 2017-18 May Revision


Today, Governor Jerry Brown released the May Revision to the 2017-18 State Budget. Despite recent reports indicating the state’s revenues were trailing projections, the May Revision reflects higher revenue estimates of $2.5 billion.

The governor continues to note the state’s economy is three years past the traditional recovery period following an economic recession and warns of the uncertainty created by the potential repeal of the federal Affordable Care Act. Gov. Brown also notes that the state continues to face ongoing liabilities such as state infrastructure and retiree health care benefits. Further, it was noted that the state has added considerable ongoing commitments since the passage of Proposition 30 and that the budget is projected to return to a deficit since a recession at some point is inevitable. Despite these cautionary warnings, the May Revision economic forecast reflects continued growth over the next four years.

Overview

Gov. Brown’s budget proposes a total budget plan of $124 billion, with special funds included the total state budget plan equates to $183.4 billion. This includes continued investments in public education. The governor budget proposes to fund the Proposition 98 minimum guarantee with $74.6 billion in 2017-18.

Other highlights from the May Revision include the following:

  • $6 billion supplemental payment to CalPERS with a loan from the Surplus Money Investment Fund that will reduce unfunded liabilities and stabilize state contribution rates.
  • Prevents a scheduled reduction in financial aid awards to low-income students at private colleges and universities.
  • A revised $8.5 billion total balance for the state’s Rainy Day Fund to reach 66 percent of the constitutional target.

Education Budget

Proposition 98 is significantly impacted by the volatility of the state revenues. The Proposition 98 guarantee funding is increased by $326 million in 2015‐16, decreased by $489 million in 2016‐17 and increased by $2.5 billion in 2017‐18. These changes revise the Proposition 98 guarantee levels at the May Revision as follows for 2015‐16 through 2017‐18 fiscal years: $69.1 billion (15-16), $71.4 billion (16-17), and $74.6 billion (17-18).

Other changes to the education budget include the following:

  • New resources in the May Revise are sufficient to eliminate the $859 million deferral proposed in January.
  • Increases funding for the Local Control Funding Formula by providing an additional $661 million more than the governor January Budget. In total, the more than $1.4 billion investment will bring the formula to 97 percent of full implementation.
  • An additional $750 million, providing a total of more than $1 billion in discretionary one-time funding to local educational agencies in 2017‐18 to further the implementation of the state‐adopted academic standards and support investments in other areas, such as professional development, deferred maintenance and technology needs.
  • The administration reinforces a prior position that Proposition 51 school facility bonds will be issued once the proposed front-end agreements and K-12 audit guide requirements are in place, yet there is no indication of the timing of the bond sale schedule or the amounts.
  • Proposes to leverage federal funds to attract and support professional development of teachers, principals and other school leaders.
  • Cost of Living Adjustment (COLA) is increased from 1.48 percent to 1.56 percent.
  • Maintains the governor’s proposed early childhood education alignment and program flexibilities proposed in January. These include exemptions to the Title 22 regulations for preschool programs operated by LEAs, as well as more flexible child to adult ratios.
  • As a result of the modest General Fund revenue increases since the January proposal, the May Revision proposes eliminating the pause on prior funding commitments to early childhood education, and instead includes funding to provide a 6 percent increase reimbursement rate for State Preschool and other direct-contracted child care and development providers and additional 2,959 State Preschool slots.
  • No changes to special education funding, but indicates the administration will continue these discussions in the coming months.

This is ACSA’s initial review of the governor’s May Revision proposal. A longer analysis will be provided in the coming days. For additional information or questions, please contact Martha Alvarez, ACSA Legislative Advocate, at malvarez@acsa.org.

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