LAO Says

January 12, 2012 by
Filed under: Finances 

With the early release of the Governor’s 2012/13 budget, school boards can begin the difficult task of planning their school year. Unfortunately, the structure of the Governor’s budget does not give school boards the real opportunity to restore programs according to this Los Angeles Times news story. In fact, the news story suggests, school boards should be planning on reductions to educational funding.

What the LAO Says

State Revenues

The LAO forecasts are significantly lower than the Governor’s projections. As a result, even if the November tax initiative passes, 2012/13 state revenues will be not known under mid year 2013.

Restructuring

The Governor’s plan contains major restructuring of the school finance system and education mandates. The LAO thinks the Governor’s restructuring proposals in all these areas would overcome most widely recognized shortcomings of these current systems and institute lasting improvements.

Trigger Cuts

Though the Governor’s tax initiative would improve the financial outlook of public education over the next several years, his trigger plan would create significant uncertainty for schools in 2012-13. This uncertainty is likely to be particularly problematic for schools, as most will feel compelled to build their 2012-13 budgets assuming the trigger cuts will be implemented. This means schools in 2012-13 likely will implement most, if not all, of the reductions that many hope to avoid. Given this possibility, the Legislature needs to be very deliberate in structuring a workable trigger package. In particular, the Legislature will need to be careful in setting the size of the trigger reduction; determining the specific education reductions to impose; and designing tools to help schools respond to the trigger cuts.

Prop 98

The Governor’s budget contains so many “assumptions/sleight of hand/redirection” it is hard to estimate Prop 98 funding levels for 2012/13. The LAO points even the tax initiative passes, the Governor plans to pay down $2.4 billion of the $10.4 outstanding deferral payments. While it helps schools with cash flow, it does not provide any monies for programmatic increases.

Weighted Student Formula

To assist with local budget constraints, the state has temporarily suspended requirements for about 40 categorical programs. The Governor proposes to suspend requirements for up to ten additional programs—essentially phasing out most existing categorical programs beginning in 2012-13. (A few categorical programs—including special education, child nutrition, and the After School Education and Safety program—would remain.)

In lieu of the current revenue limit and categorical program model, the Governor proposes that all districts and charter schools receive an equal base per-pupil amount, plus additional general purpose funding intended to serve their disadvantaged students. Specifically, for every dollar districts/charter schools receive for a student, they would get an additional 37 cents if the student were poor and/or an English Learner. Districts/charter schools with large proportions of these disadvantaged student populations also would receive supplemental “concentration” funding. Perhaps as soon as 2013-14, the administration plans to add a performance component to the weighted student formula, which would provide fiscal incentives for districts to improve or sustain high academic performance. Districts would have local discretion as to how to spend weighted student formula funding. The Governor proposes to transition to the new formula over a five-year period, with implementation beginning in 2012-13.

Mandates/Block Grants

The remaining 26 education mandates would be suspended. Though suspended, school districts still would need to undertake these activities if they wanted to access the block grant funding. The Governor proposes to create a new, discretionary “mandate block grant.” His budget provides $178 million for school districts for the block grant. School districts that choose to receive block grant funding would receive a per-student allocation.


 

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