SLIDE 1
Western Placer Unified School District Board of Trustees - January 21, 2014
SLIDE 2
Governor Jerry Brown is proposing the greatest increase in per- student average funding since 2000-01
He takes a wrecking ball to the “wall of debt” by buying down the remaining K-14 deferrals
The increase in Proposition 98 creates a window of opportunity unlike any we have had before
To protect public education during the eventual downturns, the Governor proposes two rainy day funds: one for education and
- ne for the rest of the State Budget
The Governor is proposing a continuous appropriation for the Local Control Funding Formula (LCFF)
SLIDE 3
The slow economic recovery continues . . . UCLA Anderson Forecast
Unemployment rates are falling for both the nation and California
California’s housing market, which took the biggest fall among the states during the recession, is now recovering briskly
While it has been 4½ years since the recovery started, the nation has yet to recover the jobs lost since the start of the recession
The major bell weather of optimism is the stock market – new highs signify high hopes for the future
SLIDE 4
While the state still faces significant Budget pressures for the non-Proposition 98 part of the Budget, the Administration’s attitude toward education is dramatically different this year
While public education took more than its fair share of the cuts during the recent recession, public education under this Governor is recovering at a much faster rate
The Governor understands the message the public sent in the passage of Proposition 30 – and is responding to it
Local districts will control programs for the first time in 40 years!
And the education community is more together than it has been in recent years
These factors together gives us a tremendous opportunity – we cannot let it get away!
SLIDE 5
The U.S. economy continues to show positive growth, but most recent quarters are not only below recovery levels, they are also below normal growth rates
The latest reported quarter, Quarter 3 (Q3) 2013, is
encouraging; at 4.1% it eclipses what we would look for in a “normal” quarter, about 3.5%
The economy is growing more evenly than in the past
The stock market is hitting new highs, regularly indicating
- ptimism in the investment community
Housing markets are heating up in most areas of the country Capital investment by business is up Employment is improving Consumer spending is up
The economy seems to be consolidating its hard-fought gains
SLIDE 6
California’s economic outlook is also improving
Employment is still a problem; job growth lags the nation and California is among the five states with the highest unemployment
The unemployment rate is declining, but slower than the rest of the nation
Personal income is forecast to grow at an accelerated rate over the next couple of years, but actual performance has fallen short of past forecasts
Housing markets are heating up along the coastal areas, but inland and central valley areas are moving up more slowly
Prior to the “Great Recession,” our economy, without temporary taxes, produced General Fund revenues of just over $100 billion
For 2014-15, the Department of Finance (DOF) projects revenues of $106 billion, including $7 billion in temporary taxes from Proposition 30
The state has a Budget surplus because of past Budget reductions, economic growth, and the temporary taxes
SLIDE 7
In its 2013 November State Budget
Forecast, the Legislative Analyst’s Office (LAO) projected growing budget surpluses through 2019-20, reaching $9.6 billion in that year
Armed with this forecast, many
lawmakers are eager to spend this surplus by establishing new programs or restoring past program cuts
SLIDE 8
$- $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 $8.0 $9.0 $10.0 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 $3.2 $5.6 $8.3 $9.7 $9.6 $9.8 $2.1 $3.4 $4.9 $4.9 $3.5 $2.3 Forecast of Operating Surplus 2014-15 Through 2019-20
(In Billions)
Limited COLAs COLAs for all programs
Source: LAO, November 2013; School Services of California, Inc., January 2014
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- $50.0
- $40.0
- $30.0
- $20.0
- $10.0
$0.0 $10.0 (Dollars in Billions)
Source: Governor’s Budget Summary, page 5
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What the Budget proposes outside of education:
$670 million for expanded Medi-Cal benefits, including mental health, substance abuse disorder, adult dental, and specialized nutrition services
A 5% increase in California Work Opportunity and Responsibility to Kids (CalWORKs) grants
$815 million for deferred maintenance in state parks, highways and roads, K-12 schools and community colleges, state hospitals, and other facilities
$850 million in “Cap and Trade” auction proceeds for programs that will reduce greenhouse gases, including $250 million for high-speed rail
$1.6 billion to the “Rainy Day Fund” in addition to the $967 million reserve
$1.6 billion supplemental payment to retire the Economic Recovery Bonds
$142 million to UC and $177 million to CSU to avoid a fee increase
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What the Budget does not address:
No proposal for a statewide school facilities bond No new funding to address the unfunded liability
in the California State Teachers’ Retirement Systems (CalSTRS) fund
No new funding to address special education
shortfalls
No new funding for early childhood education No payments on the prior-year state mandate
credit card
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$56.6 $47.2 $58.3 $56.8 $61.6 $64.5 $67.0 $69.6 $40.0 $45.0 $50.0 $55.0 $60.0 $65.0 $70.0 $75.0 2007-08 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18
Budget Continues to Invest in Education
(Proposition 98 Dollars in Billions) Proposed Estimated Source: Governor’s Budget Summary, page 5
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0% 5% 10% 15%
Per-Average Daily Attendance Revenue Change
SLIDE 14
$61.6 billion in K-14 Proposition 98 funds are
available for 2014-15
This is a $6.3 billion increase – 11.4% over the
2013-14 budgeted level
On average, $751 per ADA ongoing is K-12 education’s
share
In addition, $3.3 billion more is provided in one-
time funding from prior years
$1.8 billion from 2012-13 $1.5 billion from 2013-14
SLIDE 15
Proposition 98 sets the minimum funding level for K-12 education and the community colleges, but . . . the Legislature and the Governor decide how to spend it
Constitutional Guarantee Statutory Programs
K-14 Spending
Deferrals QEIA/ASES* Child Nutrition
LCFF
Other Programs Community Colleges Special Education
* Quality Education Investment Act/After School Education and Safety Program
SLIDE 16
$5.5 billion of one-time and ongoing Proposition 98 to fully eliminate interyear K-12 apportionment deferrals in 2014-15
$4.472 billion in additional funding for school districts and charter schools to continue implementation of the LCFF
$25.9 million to complete the implementation of the COE LCFF
$316.5 million to support Proposition 39 energy efficiency projects
$33.3 million to fund a 0.86% statutory cost-of-living adjustment (COLA) for categorical programs that remain outside of the LCFF
$74.3 million to fund projected growth in charter school ADA
$46.5 million for assessment costs associated with implementation of CCSS
$188.1 million for the Emergency Repair Program (ERP) from one-time Proposition 98 funds
SLIDE 17
The Governor is proposing a constitutional amendment to make major changes to the state’s “Rainy Day Fund,” which was established in 2004 through Proposition 58
The amendments are intended to address revenue volatility stemming from the capital gains tax
The specific provisions include:
Establishing a Proposition 98 reserve in addition to the existing Rainy Day Fund
Requiring contributions to these reserves when capital gains revenues exceed 6.5% of General Fund tax revenues
Establishing a maximum size for the Rainy Day Fund of 10% of revenues, as opposed to the 5% maximum of Proposition 58
Allowing supplemental payments to existing debt in lieu of a deposit to the Rainy Day Fund
Limiting withdrawals to 50% of the balance in the first year of a recession
SLIDE 18
Budget proposes $4.5 billion for continued implementation of the Local Control Funding Formula (LCFF)
New funding is estimated to close the gap between 2013- 14 funding levels and LCFF full implementation targets by 28.05%
Combined with elimination of 11.78% of the gap in 2013- 14, the new formula would be over one-third of the way toward implementation in the first two years
2014-15 LCFF growth provides an average increase in per-pupil funding of 10.9%, or $751 per ADA
Individual LEA experiences will vary
SLIDE 19
2014-15 target entitlement calculation
Grade span per-pupil grants are increased
annually for the COLA
Factors K-3 4-6 7-8 9-12 2013-14 Base Grant per ADA $6,952 $7,056 $7,266 $8,419 COLA @ 0.86% $60 $61 $62 $72 Base grants – 2014-15 $7,012 $7,117 $7,328 $8,491
SLIDE 20 K-3 CSR and 9-12 Career-Technical
Education (CTE) Grade Span Adjustments are additions to the base grant
CTE is unrestricted; CSR requires progress
toward maximum site average of 24 students enrolled in each class
Factors K-3 4-6 7-8 9-12 Base grants – 2013-14 $7,012 $7,117 $7,328 $8,491 Adjustment percentage 10.4% CSR
Adjustment amount $729
Adjusted grant per ADA $7,741 $7,117 $7,328 $8,712
SLIDE 21
Supplemental and concentration grant increases are calculated based on the percentage of total enrollment accounted for by English learners, free and reduced-price meal (FRPM) program eligible students, and foster youth
Factors K-3 4-6 7-8 9-12 Adjusted grant per ADA $7,741 $7,117 $7,328 $8,712 20% supplemental grant $1,548 $1,423 $1,466 $1,742 50% concentration grant (for eligible students exceeding 55% of enrollment) $3,871 $3,559 $3,664 $4,356
SLIDE 22
For 2014-15, categorical programs outside of the LCFF will receive an estimated 0.86% COLA, an increase of $33.3 million
These programs include (for WPUSD):
Special Education Foster Youth Child Nutrition
No proposed increase to the money received by LEAs – $1.25 billion in one-time funds – provided in the 2013 Budget Act for implementation of the Common Core State Standards
SLIDE 23 Factor 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 Statutory COLA 1.565% 0.86% 2.20% 2.40% 2.60% 2.70% California Consumer Price Index 2.00% 2.20% 2.40% 2.70% 2.80% 2.60% Ten-year Treasuries 2.90% 3.20% 3.40% 3.50% 3.70% 3.50% Reserves State Reserve Requirement District ADA Range Reserve Plan The greater of 5% or $50,000 0 to 300 SSC recommends one year’s increment
The greater of 4% or $50,000 301 to 1,000 3% 1,001 to 30,000 2% 30,001 to 400,000 1% 400,001 and higher
SLIDE 24
The relatively flat spending level
agreement reached in the BBA will require lawmakers to choose which programs to fund
The major national education organizations
are advocating for the majority of the funds to go to the formula programs such as Title I and Special Education
SLIDE 25
Education wins big again this year due to an improving economy, the temporary taxes, and past program cuts
The average increase for K-12 school districts will be 10.9%, or approximately $751 per student (actual funding will vary by district)
This is the second year that the Governor proposes that the lion’s share of new revenues be committed to education, to the exclusion of other major segments of the State Budget
The Legislature will have a lot to say about the Governor’s priorities and whether or not they agree with him
The Governor’s Budget Proposals do not mark the end of the Budget cycle –they mark the beginning
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While the process is complicated and covers six months, here’s the summarized version
Governor introduces State Budget Proposal Budget Bill introduced in both houses shortly thereafter
January 10 February Early Spring
Budget Trailer Bills are released, providing critical details to the January proposal Budget Subcommittees examine specific details of the Proposal Some policy decisions made, most delayed until May Revision
SLIDE 27
Following the Governor’s May Revision the subcommittees independently finish their work
Subcommittees report to their respective Assembly or Senate Budget Committee, which approves their version of a State Budget
In “normal” years, a Budget Conference Committee is established to hash out the differences between the two houses
ASSEMBLY VERSION SENATE VERSION
CONFERENCE COMMITTEE COMPROMISE
