School boards worry over state’s budget

The budget revision usually does not involve such large changes, because prior-year taxes usually are filed and revenue collected by April most years. However, when California experienced severe winter storms early last year, the state conformed to federal tax filing extensions and did not have a complete picture of 2022-23 tax collection until late 2023, after the fiscal year ended.

“The state was flying fiscally blind,” said CSBA Legislative Director Chris Reefe in a webinar held by the organization. 

The revenue tracked was 25% below what was estimated, and what was allotted, which is the current source of budget manipulation the governor is proposing. This is an unprecedented prior-year reduction to the minimum funding requirement for public schools and community colleges. 

For the 2022-23 fiscal year, the state gave schools $76 billion based on the estimated minimum requirement of Proposition 98. Since revenue collected was far lower than expected, the governor is looking to redesignate that “over-allotment” to non-Proposition 98 funds. 

Districts have already spent these funds, so the state can’t take the money back. Instead, the governor is spreading the maneuver across future school budgets. 

The governor said this maneuver helps avoid “thousands and thousands of pink slips” and program cuts for this fiscal year. H.D. Palmer, deputy director for the state Department of Finance, said the maneuver avoids having to find the money elsewhere in the budget to avoid the massive spending reductions. 

“Not only is the budget proposal legal and constitutional in our view — it’s designed to provide predictable and stable support for K-12 schools and community colleges in the wake of last year’s unprecedented disruption in revenue projections,” Palmer said in an email. “We’ll continue our discussion with the Legislature and interested organizations on this issue in the coming weeks.” 

However, California Teachers Association President David Goldberg said the maneuver ultimately protects public school funding. 

“It ensures that students, educators and families aren’t impacted by cuts to the classroom and includes protection against additional layoffs,” Goldberg said in a statement. “This agreement is also ‘fiscally neutral’ and will not negatively impact other areas of the budget including health care and social services. As we grapple with a massive deficit in our state, it’s vital for allies to work together to protect fundamental public services that our communities deserve.”  

Though districts get to keep the $8.8 billion in this year’s funds, the redesignation away from Proposition 98 funds changes the minimum amount in coming years. Proposition 98 funds are calculated through three tests and function to never be lower than the year prior, establishing a floor of funding.

However, Attorney William Tunick said in a CSBA webinar this proposed maneuver sets a problematic precedent if the “floor” can be pulled out from underneath schools.  

“The integrity of those tests are really fundamental to Prop. 98 itself,” Tunick said. “What the maneuver does or attempts to do is alter how those tests work by altering the inputs. If you artificially alter the amount of allocations in a prior year, that’s going to then artificially lower those tests and the amounts that those tests give you when you run the Prop. 98 calculations.” 

CSBA estimates an overall $15 billion loss to students over the coming three years, which works out to a loss of $2,569 per student over that time period with ongoing reductions after that. 

In addition to the financial detriment, the legality of the maneuver is a major concern of CSBA and other organizations such as the Legislative Analyst’s Office, which fervently opposes the manipulation. 

Alisa MacAvoy, trustee for Redwood City School District and regional director for CSBA, said the maneuver “undermines the spirit of Prop. 98” as willed by voters. 

Though many school districts in the county are community-funded through local property taxes and receive less financial support for the state, MacAvoy said many teeter the funding designation line and concern over the maneuver should be held from all public schools entities regardless of designation. 

Passed in 1998, Proposition 98 establishes a minimum funding guarantee for schools, and represents approximately 40% of the state budget. There are certain programs funded through Proposition 98 that are allocated to every school district regardless of funding status, such as universal transitional kindergarten, free breakfast and lunch for all students, and home to school transportation services. 

“It sets a troubling precedent that could be used by future governors and legislatures to avoid complying with the funding guarantee,” MacAvoy said. “If we let this slide, who knows what might come next?”

ana@smdailyjournal.com

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