Budget moves back to state Legislature

June 16, 2017

ACSA Legislative Advocate Martha Alvarez wrote the following analysis of the budget passed by the state Legislature. Her full analysis can be accessed at www.acsa.org/advocacy.

The Legislative Budget Conference Committee has completed its work to reconcile the differences between the houses on the 2017-18 state budget. The governor succeeded in holding the line with his more conservative revenue assumptions and contributing additional funding into the state’s Rainy Day Fund for a total balance of $8.5 billion. By the end of 2017-18, this amount will constitute 66 percent of the constitutional goal of having 10 percent of tax revenues in the state’s reserves.

The Conference Committee compromise reflects the Legislature’s top priorities, including restoring funding for schools and early childhood education, making college more accessible and affordable for California students, and improving the state’s transportation infrastructure through recently enacted gas tax increases. As for the overall education package, both houses agreed to distribute $866 million in one-time discretionary funding on a per Average Daily Attendance basis in 2017-18 instead of delaying the disbursement to May 2019, a big win for the education management community that lobbied against this action.

(It should be noted that as EdCal went to press the majority of budget trailer bill language was still unavailable. Even after that is passed the governor still wields his line item veto power.)

The K-12 education plan approved by the Conference Committee includes the following changes to Gov. Brown’s May Revision proposal:

Overall Proposition 98 spending

The Conference Committee adopted the governor’s May Revision General Fund (GF) revenue estimates, but also adopted the Legislative Analyst’s Office slightly higher local property tax estimates with the intent of generating approximately $150 million in additional non-Proposition 98 revenue for other non-education priorities in 2017-18.

Despite the persistent advocacy of ACSA and the Education Coalition, the conference committee approved Gov. Brown’s proposal to waive the Proposition 98 3B Supplemental Payment from 2016-17 through 2020-21, thus reducing the funding for Proposition 98 in the out-years by close to an estimated $1.2 billion. The Brown administration has indicated this amount would be repaid to schools through future maintenance factor payments, and this action appealed to the Legislature as a way of having greater flexibility to deal with the uncertainty of revenue forecasts.

The Conference Committee approved the governor’s proposed Proposition 98 (K-14) funding levels:

  • $69.1 billion for 2015-16
  • $71.4 billion for 2016-17
  • $74.5 billion for 2017-18

Local Control Funding Formula

The governor’s May Revision increased LCFF funding by $636 million from January to $1.387 billion for school districts and charters. While the final agreement was slightly lowered by $25 million for a total of $1.362 billion, the Legislature and governor continued to prioritize ongoing Proposition 98 funding to bring school districts and charter schools close to 97 percent of the implementation target levels. The Department of Finance estimates the state is $2.5 billion away from reaching the targets.

One-time allocations

The governor’s May Revision had increased one-time discretionary funding for school districts, charter schools, and county offices of education to $1.012 billion ($170 per ADA), which also pays down the K-12 education mandates back-log. However, this higher amount came with a controversial proposal to disburse this funding in May 2019, contingent upon the Proposition 98 minimum guarantee level in 2017-18 remaining at the level adopted in the 2017-18 Budget Act.

As a result of effective advocacy by ACSA and other members of the Education Coalition to reject the contingency language, the final agreement includes a necessary trade-off providing a reduced amount of $876.6 million (estimated $146 per ADA) that will be apportioned to Local Education Agencies in the 2017-18 fiscal year. As has been the case the past four years, the budget includes legislative intent language that these funds are to be used for invest-ing in the implementation of state-adopt-ed academic content standards, upgrading technology infrastructure, providing professional development, supporting beginning teacher induction, and addressing deferred maintenance projects.

Teacher workforce

In the May Revision, the administration proposed using $11.3 million in federal Title 2 funds for a one-year competitive grant program to assist LEAs with the recruitment and retention of effective teachers, principals and other school leaders. The conference committee approved the use of these funds for the Commission on Teacher Credentialing, in conjunction with the California Center on Teaching Careers, to develop the grant program to assist a minimum of 30 grant recipients statewide in amounts between $100,000 and $1.25 million each.

In addition to approving this proposal, the Legislature has introduced more than a dozen bills aimed at addressing the teacher shortage challenges school districts are facing statewide. Most of the proposals come with a price tag and have been set aside pending budget negotiations with the governor – but the sheer number of bills suggests legislative leaders are serious about improving teacher recruitment efforts and employment conditions. The budget deal expands upon Gov. Brown’s May Revision proposal to address the state’s growing teacher shortage and the need for additional professional development in particular subject areas.

The budget contains $25 million in one-time Proposition 98 funding to expand the Classified School Employee Teacher Credentialing Program to provide up to five-year grants to an additional 1,000 classified school employees to pursue their teaching credential – for program details, see previous California Commission on Teaching Credentialing Request for Proposal.

It also contains $10 million in one-time Proposition 98 funding to support the History/Social Science and Health Curriculum Frameworks. Activities may include regional trainings and professional development available for teachers, administrators and paraprofessionals and the development of an online repository of resources available to support instruction.

There is also $5 million in one-time Proposition 98 funding to establish a Bilingual Teacher Professional Development Program for teachers who provide instruction to English learners – for preliminary details, see AB 952 (Reyes).

Early childhood education

Since January, ACSA has been actively supporting the governor’s early childhood education proposals to provide administrative efficiencies for early education providers and to give LEAs the option to blend State Preschool and Transitional Kindergarten programs. Under earlier budget actions, both houses approved policies to allow for providers to use electronic applications for families applying for subsidized child care; align the state’s definition of homelessness with the federal McKinney-Vento Act for purposes of child care eligibility; allow children with exceptional needs whose families exceed income eligibility requirements to access part-day State Preschool, if all other eligible children have been served; and allow for LEAs to align program minutes for State Preschool and Transitional Kindergarten at the same or different school sites.

Unfortunately, two of the most favorable budget trailer bill language proposals were not adopted in the final budget: the authorization for State Preschool Programs to have a minimum of one adult for every 12 children (rather than the 1:8 ratio currently required) if the lead teacher has a multiple subject teaching credential; and the exemption of Title 22 requirements for State Preschool Programs operated in a Field-Act approved facility. As a result of opposition raised by private providers and early childhood education advocacy organizations, the conference committee took action to require the LAO to convene a stakeholder group to evaluate existing Title 22 requirements and come back with recommendations to the Department of Finance and California Department of Education by March 2018.

It also appears that while both houses had previously recommended providing $20 million in ongoing General Fund revenues to update the state’s outdated income eligibility requirements for subsidized childcare and preschool to 70 percent of the most recent State Median Income (SMI), the final budget agreement does not include funding for this work. This is not a surprise since the Brown administration has resisted updating the SMI as it is seen as a cost pressure to the General Fund.

Career technical education

The 2015-16 Budget Act established the Career Technical Education Incentive Grant by providing $900 million over a three-year period with $400 million committed in 2015-16 (1:1 local match), $300 million in 2016-17 (1.5:1 local match) and $200 million in 2017-18 (2:1 local match). While the Assembly suggested $300 million in ongoing Proposition 98 funding to establish the Career Technical Education Grant Program, as proposed by AB 445 (Cunningham), the final budget does not extend CTE funding beyond the 2017-18 fiscal year appropriation for existing grant recipients. Instead, Assembly member Kevin McCarty, chair of the Assembly Budget Subcommittee on School Finance, indicated during budget deliberations that the budget committees will be holding informational hearings this summer and fall to explore how school districts have been spending their LCFF funds to support CTE programs. To the extent these CTE programs are not being funded at the local level, Chairman McCarty stated that the Legislature would seek to remedy the issue in future budget negotiations.

Dropout and truancy prevention

Proposition 47, approved by California voters in 2014, intends to reduce the daily inmate population in California and pre-vent new admissions to the prison system, while saving money to be invested in K-12 truancy and drop-out prevention and mental health and drug treatment. The budget agreement includes a second-year appropriation of $10.7 million in one-time Proposition 98 funding for CDE to provide grants through the Learning Communities for School Success Program – for additional details on funding opportunities, see CDE’s website at www.cde.ca.gov.

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