South Whittier School District Update on State Budget Act 2008- 2009 Febr uar y 24, 2009 Dr. Er ich Kwek, Super int endent David A. River a, Assist Supt – Business Ser vices 1
St at e Budget Crisis: I mpact t o Educat ion Funding Latest I nf ormation 2
Legislat ive Analyst ’s Revenue For ecast s Expected loss in revenues is approx LAO Nov 2007 $118 Billion General Fund Revenues LAO Nov 2008 (I n Billions) $140 $133 $125 $125 $117 $110 $109 $103 $103 $101 $95 $95 $99 $93 $90 $86 $80 2007- 08 2008- 09 2009- 10 2010- 11 2011- 12 2012- 13 3 Sources: Legislative Analyst’s Of f ice, Calif ornia’s Fiscal Outlook , November 2007 (p. 26) and November 2008 (p. 18)
St at e Budget Crisis: I mpact t o Educat ion Funding • Signif icant reduct ions in st at e revenues lead t o drast ic reduct ions in f unding f or educat ion (Prop 98 Minimum Guarant ee) 4
St at e Budget Crisis: I mpact t o Educat ion Funding •Target ed reduct ions t ally over $8 Billion •Erases past def iciencies owed t o Educat ion (Test 1) 5
2008- 09 & 2009- 10 State Budget: I nitial Analysis (February 20 version) In collaboration with Blattner & Associates 6
About this document • ACSA and t he K-adult consult ing f irm of Tot al School Solut ions (TSS), in collaborat ion wit h Bob Blat t ner and Associat es, have developed an init ial analysis of t he recent ly enact ed 2008-09 mid-year reduct ions and 2009-10 St at e Budget • ACSA members and ot her educat ion leaders are welcome and encouraged t o ut ilize t his inf ormat ion in t heir LEAs and communit ies 7
Overview and Caveats • Af t er a long delay, t he 2008-09 and 2009-10 st at e budget package f inally came t oget her amidst a whirlwind of deal making and polit ical drama • Budget bill language has only recent ly become available – our init ial analysis is derived f rom brief ings wit h legislat ive st af f , f loor analyses, and review of available budget language • I t is subj ect t o f urt her clarif icat ion as inf ormat ion becomes available • I t is int ended t o provide an init ial management and programmat ic perspect ive on maj or reduct ions and policy f lexibilit y wit hin Proposit ion 98 8
The St at e of Things: Fluid as Quick Sand • Even wit h a budget package f inally in place, t he st at e’s f inancial condit ion remains crit ical • Fact ors educat ion leaders should cont inue t o wat ch out f or: – The st at e’s credit rat ing is at j unk bond st at us – below t hat of Louisiana – St at e revenues are proj ect ed t o cont inue dropping t hrough 2009 and int o 2010 – The st at e will cont inue t o experience cash f low dif f icult ies – which will likely become our dif f icult ies • K-adult educat ion will experience hist oric mid-year and budget year reduct ions • I f revenues cont inue t o drop, addit ional 2009-10 reduct ions are possible – We’ll have a bet t er f eel f or t his as we get closer t o t he May Revision 9
Why This Budget Crisis is Dif f erent Six element s make t his budget crisis unlike any ot her – and mor e challenging: A chronic st ruct ural budget gap has exist ed most of t his decade The economics are dif f erent – t his economic downt urn is widespread and t he worst we have seen since t he Great Depression There are more budget “lock-ins” t han bef ore Our polit ics are deadlocked – gerrymandered legislat ive dist rict s, polit ical polarizat ion among Democrat s and Republicans, t erm limit s, et c. The st at e’s revenue syst em is highly volat ile Enormous social and demographic changes – our governance syst em has not kept pace wit h t he rapid changes occurring in Calif ornia All of these remain in place going into 2009- 10 10
A Growing State Def icit (in Billions) May July Nov Feb Jan Dec 2008 2007 2007 2008 2008 2008 ($6. 1) ($9. 8) ($14. 5) ($16. 0) ( $ 1 7 .2 ) The state’s structural def icit has ($24. 3) increased exponentially as state revenues have declined due to worsening economic conditions Source: Kern Count y Superint endent of Schools – Michael Hulsizer, 2009 ($41. 6) 11
A Tumultuous Decade: $13. 4 Billion in Lower Prop 98 Spending Sour ce: Ker n Count y Super int endent of Schools – Michael Hulsizer , 2009 2001-02 $2. 2 Billion Total $583 Million (Mid-Year Reduct ions) Febr uar y 2002 (High P r ior it y School Gr ant s, Teaching as A P r ior it y Block Gr ant s, Cer t if icat ed St af f P er f or mance Awards, Ener gy Gr ant s, 9 t h Gr ade CSR, Cal-Saf e) $503 Million (P r ior -Year Rever sions) J une 2002 Backf ill of Adult Educat ion Reduct ions $1.124 Billion (Cat egor ical Def er rals) J une 2002 2002-03 $2. 61 Billion Total $1.3 Billion (J une Appor t ionment Def er r al) Mar ch 2003 $460 Million (K-12 Funding Reduct ions) May 2003 $734 Million (K-12 P r ior -Year Rever sions t o Backf ill Cut s) J une 2003 2003-04 $1. 468 Billion $1.048 Billion (P r ior -Year Rever sions t o f und Def er r al) J une 2004 $341 Million (P r ior -Year Rever sions t o Fund TI G Gr ant s J une 2004 and Child Car e) $127 Million (New Feder al I DEA Funds t o backf ill J une 2004 r educed St at e Special Educat ion cont r ibut ion) 12
A Tumultuous Decade: $13. 4 Billion in Lower Prop 98 Spending Sour ce: Ker n Count y Super int endent of Schools – Michael Hulsizer , 2009 2007-08 $507 Million $ 211 Million in Cur rent -Year Reversions February 2008 $295.4 Million in Pr ior-Year Reversions February 2008 2008-09 $6. 572 Billion $2 Billion (RL and cat egorical reduct ion, no COLA) February 2009 $2.8 Billion (Februar y RL/ CSR/ CC Appor t ionment Def er ral) Februar y 2009 $1.1 Billion (Use of Pr ior-Year Prop. 98 “Set t le-Up”) February 2009 $619 million (Home-t o-School Funding Swap) February 2009 $153 million Prop. 98 Reversions February 2009 13
I mplications to K- Adult Funding • Pr oposit ion 98 f unding is dir ect ly linked t o t he over all healt h of st at e r evenues • All LEAs will f ace a pr olonged st at e of f iscal uncer t aint y t hr ough 2010-11 14
I mplications to K- Adult Funding • The f ollowing t hreat s remain a possibilit y during t his t imef rame: Addit ional revenue limit reduct ions Zero COLAs t hru 2010-11 Apport ionment def errals and subsequent cash f low dif f icult ies Furt her reduct ions t o cat egorical program f unding Proposals t o manipulat e Proposit ion 98 f unding Limit ed st at e school const ruct ion f unding 15
The Budget “Correction” Package: State Budget I I f or 2008- 2009 • This proposal is a t wo-year package: – 2008-09 mid-year K-adult r educt ions and f unding def er r als – 2009-10 budget pr oposal (w/ addit ional r educt ions and def er r als) • Lowers t he Proposit ion 98 f unding level in t he current and budget years 16
The Budget “Correction” Package: State Budget I I f or 2008- 2009 • Requires vot er approval of f ive special elect ion ballot proposals – All of t hem have t o pass in or der f or t he plan t o hold t oget her – One of t hem includes f ut ur e r est or at ion of t he Pr oposit ion 98 maint enance f act or – Pr op. 1C – Special elect ion scheduled f or May 19 17
The Budget “Correction” Package: State Budget I I f or 2008- 2009 • Reduces curr ent year Proposit ion 98 f unding by more t han $6 billion – via mix of program reduct ions, def errals, and re-designat ion of f unds * NOTE: Act ual RL r educt ion amount s will var y per LEA 18
The Budget “Correction” Package: State Budget I I f or 2008- 2009 Program reduct ions t ot al is $1.9 billion – Eliminat es t he 0.68% COLA (No COLA f or 2008-09) – Remaining reduct ion is split : • 50% (Revenue limit s) – ($944 million) overall or about $160 per ADA* • 50% (Across-t he-board Cut s) – 15% reduct ions t o specif ied cat egorical programs * NOTE: Act ual RL r educt ion amount s will var y per LEA 19
2008- 09: Categorical Cuts and Flexibility • Cat egorical programs are divided int o t hree t iers f or purposes of prot ect ing some and providing f lexibilit y t o ot hers • Changes are in ef f ect f or t his f iscal year and unt il 2012-13 20
2008- 09: Categorical Cuts and Flexibility Tier I : –No f unding reduct ion, no program f lexibilit y, no st at ut ory requirement s waived (w/ except ion of CSR penalt y provisions) 21
Tier I Programs • No reduct ion and no f lexibilit y: 1. Child Development 2. Child Nut rit ion 3. Economic I mpact Aid 4. K-3 Class Size Reduct ion 5. Proposit ion 49 Af t er School Programs 6. Special Educat ion 7. Qualit y Educat ion I nvest ment Act 8. Home-t o-School Transport at ion 22 NOTE: We are researching if AVI D is a “Tier one” program
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