February 26,
2013
GOVERNOR’S
BUDGET FOR 2013–14
On January 10, 2013, Governor Edmund G. Brown Jr. released his proposed
budget for the 2013–14 fiscal year. This letter, prepared by the California
Department of Education (CDE), provides information on the Governor’s proposals
that affect K–12 education and child development programs.
Copies of this document, as well as other budget-related documents, are available
through the CDE Education Budget Web page at http://www.cde.ca.gov/fg/fr/eb/.
Official state budget documents, including proposed trailer bill language, are
available through the Department of Finance Web site at http://www.dof.ca.gov.
The budget bills are Assembly Bill (AB) 73 and Senate Bill (SB) 65.
Overview
The 2013–14 Governor’s Budget reflects a significant improvement in the
state’s finances due to the economic recovery and voter approval in the
November 2012 election of temporary increases in sales and use tax and personal
income tax (Proposition 30) as well as increased corporate income taxes for
multistate businesses (Proposition 39). The Governor’s budget summary document
indicates that economic recovery has begun and provides a plan to reduce the
“wall of debt” the state has accumulated after years of deficits.
For the first time since 2008–09, the state does not face a
multi-billion-dollar deficit. The Governor’s budget projects General Fund (GF)
revenues and transfers of $98.5 billion and proposes $97.7 billion in GF
expenditures. These budget figures include an estimated $1 billion reserve and
would result in an $851 million operating surplus at the end of 2013–14.
Including all fund sources, the spending plan proposes $138.6 billion in GF and
special fund expenditures, up 4.5 percent from 2012–13.
Proposition 98 Changes
For 2012–13, the Governor’s Budget estimates the minimum funding level
for kindergarten through grade twelve (K–12) education and community colleges
under Proposition 98 to be $53.5 billion. Various changes in average daily
attendance (ADA) and other factors have resulted in an over-appropriation of
$162.8 million in 2012–13. To align the expenditures with the Proposition 98
amount, the budget proposes to reclassify $162.8 million in appropriations as
meeting the Quality Education Investment Act funding obligation.
For 2013–14, the Governor’s Budget proposes Proposition 98 funding at
$56.2 billion ($49.7 billion K–12), an increase of $2.7 billion ($2.1 billion
K–12), or 5 percent, over the 2012–13 revised funding level. An additional $2.1
billion is available for K–12 schools because funds for deferral paydowns in
2012–13 are freed up for ongoing expenditures. Major components of the
increased funding for K–12 schools in 2013–14 include:
•
Paydown of deferrals: $1.8 billion
•
Implementation of a new Local Control Funding Formula (LCFF): $1.6
billion
•
Implementation of Proposition 39, the California Clean Energy Jobs Act:
$400.5 million
•
Increase in funding for the mandates block grant to reflect the addition
of two programs: $100 million
Proposition 98 funding under the budget proposal would be $8,304 per
ADA, up from $7,967 in 2012–13. Including all funding sources, excluding bond
funds, the total proposed 2013–14 funding would be $11,742 per ADA, up from
$11,455 in 2012–13.
Proposition 30: Schools and Local Public
Safety Protection Act
With the passage of Proposition 30, schools were spared billions of
dollars of mid-year 2012–13 trigger cuts. The measure imposes a temporary
(four-year) 0.25 percent increase in the state sales tax and a temporary
(seven-year) increase on annual earnings over $250,000 and guarantees that
local governments will receive tax revenues for responsibilities transferred to
them in 2011.
Proposition 39: California Clean Energy Jobs
Act
The budget estimates that Proposition 39 will increase GF revenues by
$900 million in 2013–14 and that the Proposition 98 minimum funding level will
increase by $526 million. Under the measure, $450 million of the revenues
generated in 2013–14 will be transferred into a special fund for energy
efficient projects. All of these funds are proposed to be allocated to K–12
schools ($400.5 million) based on ADA and community colleges ($49.5 million)
based on full-time equivalent students.
Local Control Funding Formula
The Governor’s Budget proposes to replace the current K–12 finance system
with a new LCFF. For school districts and charter schools, the proposal creates
base, supplemental, and concentration grants in place of most existing K–12
funding streams, including revenue limits and most state categorical programs.
The base grant varies by grade span. According to the proposal, the
average base grant, when fully phased in, will be equal to the current average
undeficited school district revenue limit. The base grant funds may be used for
any local educational priority.
Supplemental grants, equal to 35 percent of the base rate, would be
generated based on the proportion of pupils who are English learners (ELs),
eligible for free or reduced-price meals (FRPM), and/or in foster care
(unduplicated count). Concentration grants, equal to 35 percent of the base
rate, would be provided for each eligible student above a 50 percent threshold.
Supplemental and concentration grants would be available for any educational
purpose that “substantially benefits” the students generating the funding.
Additional funding would be provided to the K–3 and 9–12 grade spans.
The K–3 adjustment would be provided to support K–3 class size reduction (CSR)
at a ratio of 24:1 unless a collectively bargained alternative is agreed to by
the school district. As a condition of the receipt of these funds, school
districts would be required to demonstrate progress toward maintaining a ratio
of 24:1 until the LCFF is fully implemented. The funding for this adjustment
would be equivalent to 11.23 percent of the K–3 base grant. A funding
adjustment would also be provided for grades 9–12, at an amount equal to 2.8
percent of the 9–12 base grant, for career technical education (CTE). The
proposed LCFF trailer bill contains language requiring school districts, as
part of new local control and accountability plans, to identify how LCFF funds
will be used to increase the percentage of students who have successfully
completed CTE programs.
What’s Next?
The Governor’s Budget proposal contains significant education reform
proposals –the local accountability proposal- that will undoubtedly be the
subject of debate and discussions throughout the spring. The deadline for final
legislative action on the budget is June 15. The budget takes effect on July 1,
2013.
If you have any questions regarding the 2013–14 Governor’s Budget,
please contact the Government Affairs Division by phone at 916-324-4728. You
may also contact Carol Bingham, Senior Fiscal Policy Advisor, Fiscal Policy
Office, by e-mail at cbingham@cde.ca.gov.
Sincerely,
Tom Torlakson
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