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California Budget Crisis for 2006

December 2005 Developments

The education lobby meets with the Governor's staff to demand $5.5 billion in next year's budget.

January 2006 Developments

Prior to releasing the entire budget, the Governor's staff to presented an overview of a $4.3 billion increase in K-16 education budget.

The Governor's delivered his State of the State speech calling for a rebuilding of California including schools. The following week he proposed his 2006/07 State budget.

May 2006 Developments

Prior to the release of the May Revise the Governor announced a deal to settle the outstanding claim from the education community on past guarantees under Prop 98.

June 2006 Developments

In rare display of bipartsianship (the $5 billion in extra revenues do not hurt), the Legislature passed the budget before June 30th.

The California School Board Association recapped the impact of state budget K-12 education.

August 2006 Developments

On the last day of 2006 Legislative session, a bill settling the dispute over funding Prop 98 was passed. By February, 2007, signs that settlement was not popular everyone in the education community began to surface. This school district tries to pull out after finding the hidden costs.

$131 billion budget OK'd

Governor hails 'huge victory for the people'

By Clea Benson, Sacramento Bee, June 28, 2006

Lawmakers late Tuesday approved a $131 billion state budget that will use an unexpected spike in tax revenues to pay down debt, pump billions of new dollars into schools and increase funds for social programs such as welfare and foster care.

Due to a booming economy, the state has almost $8 billion more to spend next year than state fiscal experts originally projected. That helped make budget negotiations this year far less rancorous than during the fiscal crisis of recent years.

It appeared the governor will be able to sign the budget into law before the beginning of the new fiscal year, July 1, for the first time since 2000.

"This is a huge victory for both parties, for the Democrats and the Republicans, but especially this is a huge victory for the people of California," Gov. Arnold Schwarzenegger said during a public appearance Tuesday.

The spending plan passed on a bipartisan vote in both the Assembly and the Senate, though many Republicans declined to vote for it because they wanted to see more restraint in state spending. The Assembly voted for the budget 54-22, while the Senate passed it on a 30-10 vote.

Republican and Democratic leaders in both houses worked together to come up with the final plan.

"There's a lot to like in this budget, and there's a lot to dislike," said Assembly Republican leader George Plescia, R-La Jolla. "At the end of the day, it's a pretty darn good compromise."

Senate President Pro Tem Don Perata, D-Oakland, said the bipartisan budget negotiations paid off.

"This worked well this year because Republicans were included as full partners," he said. "We were like four college roommates. We were able to sit around, agree, disagree."

All sides wanted to use some of the windfall to pay off state debts, but they differed on how much to repay and which debts should be paid. In the end, Democrats, Republicans and the governor reached a compromise, using about $3 billion to pay back money the state had borrowed from special accounts earmarked for uses such as transportation and from local governments.

The spending plan also sets aside about $2 billion in a reserve account to pay for state employee raises and other contingencies.

Though the budget for the 2006-07 fiscal year includes a $3.4 billion operating deficit, Schwarzenegger and legislative leaders described it as a "responsible" budget, with limited increases in funding for ongoing programs that will add to the state's annual financial burden.

The deficit -- the amount by which the state's projected spending will exceed projected income -- will be covered by funds left over from previous years.

Expanded programs include social services that Democrats said deserved increases after years of retrenchment.

Foster care programs will receive an additional $75 million, and the state's welfare-to-work program, Cal-WORKS, is getting an additional $100 million to help recipients find and keep jobs. Disabled and elderly people who receive supplemental-security payments will get a raise in their monthly checks. The amount the state pays for child care subsidies to low-income parents will rise slightly.

Despite differences with both Democrats and his fellow Republicans throughout the budget negotiations, Schwarzenegger emerged with many of his spending priorities intact: Hundreds of millions of dollars will be earmarked for education programs the governor favors, such as physical fitness, arts and school counseling. Law enforcement will get an additional $150 million, and the state will set aside about $200 million to prepare for emergencies such as an outbreak of avian flu.

Legislative Republicans scored a victory when they threatened to withhold their votes unless both Democrats and Schwarzenegger agreed to drop funds for children's health insurance programs that cover undocumented immigrants. The governor and Democratic lawmakers said they were trying to find a way to expand the children's insurance programs outside of the budget, which requires some Republican votes for approval.

New details emerged Tuesday on the funds for education ranging from kindergarten through community college, which will get a $5 billion raise. That increase effectively settles the dispute between Schwarzenegger and education advocates who said the governor shortchanged schools in last year's budget.

In addition to the earmarked funds for special programs like arts and music, schools and school districts will get block grants that they can use as they please. In addition, the budget contains about $50 million to expand public preschools.

The spending plan also includes hundreds of millions of dollars to even out disparities in state funding among schools. And it adds new funds for schools based on the number of poor students who attend.

The budget also contains $145 million for drug-treatment programs that counties provide under the mandates of Proposition 36, the state law requiring treatment instead of prison for nonviolent drug offenders.

Some counties have had trouble covering the costs of the programs and have been putting some offenders on waiting lists for treatment. Counties said the $145 million was far too little to meet their needs.


The $131 billion state budget will take advantage of an unexpected rise in tax revenue. In addition:

  • Democrats, Republicans and the governor compromised, using about $3 billion to pay back money the state had borrowed from accounts earmarked for uses such as transportation and from local governments.
  • The plan sets aside about $2 billion to pay for state employee raises and other contingencies.
  • Though the budget for the 2006-07 fiscal year includes a $3.4 billion operating deficit, the governor and legislative leaders described it as a "responsible" budget.

Bill Pledging $3 Billion to Boost Low-Performing Schools Goes to Schwarzenegger

The funds, to be spent over seven years, would go toward reducing class sizes, improving teacher training and adding counselors at 1,600 schools. The plan settles a dispute between the governor and Ca

By Carla Rivera, Los Angeles Times, September 1, 2006

A plan to spend nearly $3 billion over the next seven years to reduce class sizes, improve teacher training and add counselors at California's lowest-performing schools was sent to Gov. Arnold Schwarzenegger's desk for approval Thursday, marking the end of a bitter dispute between the governor and the state's largest teachers union.

The legislation settles a lawsuit filed against Schwarzenegger in 2005 by the California Teachers Assn. and state Supt. of Public Instruction Jack O'Connell accusing the governor of reneging on a promise to repay schools money owed under Proposition 98, the school financing law.

Schwarzenegger worked with lawmakers and the union to craft the details and is likely to sign the measure, his office said.

The legislation, SB 1133 by state Sen. Tom Torlakson (D-Antioch), creates the Quality Education Investment Act and will target nearly 1 million students at 1,600 public schools in the lowest two ranks of the state's Academic Performance Index.

It is uncertain how much money will flow to schools in the Los Angeles Unified School District, the state's largest.

"This can go very nicely with some of the innovations that" Los Angeles Mayor Antonio Villaraigosa envisions, Torlakson said, referring to legislation approved this week, supported by the mayor and opposed by the school district, that gives Villaraigosa partial control of city schools. "I've sat down with the mayor and also with [Board of Education President] Marlene Cantor, and I believe that, when the dust settles, a cooperative way to move forward will occur to help the lowest-achieving schools."

Research conducted by the teachers union found that 80% of students in the lowest-ranked schools qualify for the federal free or reduced-priced lunch program; that 43% of parents with students in the lowest-ranked schools did not graduate from high school; and that 88% of teachers are credentialed in the lowest ranked schools, compared with 95% at other schools.

The plan will:

  • Maintain class size maximums at 20 in kindergarten to grade 3.
  • Reduce class sizes to an average of 25 in grades 4 to 12.
  • Provide a credentialed counselor for every 300 students in high school.
  • Require schools to have highly qualified teachers in all core academic subjects by the end of the program's third year.
  • Establish a state teacher quality index to ensure that average teaching experience at the schools equals or exceeds the district average.
  • And provide training for staff and administrators.

Under the measure, O'Connell and the governor's secretary of education would jointly oversee its implementation.

"This important legislation is not a quick fix, which teachers know is not the answer," California Teachers Assn. President Barbara Kerr said in a statement. "It's really about creating a framework for lasting change for generations of students."

Reducing class size sparking infighting

Some think money could be used better

By Ed Mendel, San Diego Union Tribune, February 13, 2007

SACRAMENTO – A plan to spend a $2.9 billion lawsuit settlement on 500 low-performing schools over the next seven years, mainly to reduce class sizes, is creating controversy.

California Teachers Association President Barbara Kerr and Superintendent of Public Instruction Jack O'Connell held a news conference yesterday to urge eligible schools to apply for the new funds by March 30. “Those schools are going to get, frankly, what I believe every school should get,” Kerr said. “They are going to be the experiment to show how well it works if you have smaller class sizes and put the resources into the schools we need.”

But the powerful union's successful push to spend the settlement on programs that it has long favored is drawing criticism from some educators, who wanted more flexibility in spending the money.

“I think people are pretty upset because it is all being driven by the California Teachers Association,” said Scott Plotkin, executive director of the California School Boards Association.

Some of the bluntest criticism came from David Takofsky, a board member of the giant Los Angeles Unified School District, whose schools are expected to get much of the new money.

“Class-size reduction produces more teachers and more union dues,” said Takofsky. “I hate to be cynical.”

Takofsky said the spending plan takes money “from every district in the state and targeted it for some schools.”

The California Teachers Association filed a lawsuit against Gov. Arnold Schwarzenegger for underfunding the Proposition 98 minimum school-funding guarantee two years ago to help balance the state budget.

Schwarzenegger's decision last year to settle the lawsuit helped keep the teachers union, which spent more than $50 million to defeat his “Year of Reform” initiatives in 2005, on the sideline as he ran for re-election last year.

Takofsky said the plan to spend the settlement was negotiated in the “back room” by the teachers association, the governor and O'Connell. The plan, called the Quality Education Investment Act, was passed by the Legislature last year under Senate Bill 1133.

The 500 schools receiving funding will be selected from 1,455 eligible schools with scores in the lower fifth on state tests. At least one qualified school in each county will be selected.

Schools chosen for the program will receive an additional $500 per pupil for kindergarten through third grade, $900 per pupil for fourth through eighth grade, and $1,000 per pupil for ninth through 12th grade.

In the the current fiscal year, K-12 spending is $8,288 per pupil under Proposition 98 from the state general fund and local property taxes, and $11,284 per pupil from all sources, including the federal government.

Schools selected for the new program must meet certain goals for class size, counselors, teacher training and improved student test scores. An “intervention team” will assist schools if they fall behind.

Schools that get the money will have to have average class sizes of no more than 20 students per teacher in kindergarten through third grade and no more than 25 to 27 per teacher through 12th grade.

Kerr said that spending the settlement money through the usual formulas would water down the impact and “never would have been noticed.” She said the new plan targets schools that need the most help.

California has more than 6 million students in 9,372 public schools operated by 1,053 local school districts. Total school funding from all sources is $67.1 billion, up $2.9 billion from last fiscal year.

“We're putting our money where our heart is,” Kerr said. “The program uses proven reforms like smaller class sizes and quality teacher training to improve student learning.”

Whether class-size reduction is the best way to improve student performance is an old debate in education circles. Plotkin, of the school board association, said some school officials would like to spend the new money in other ways.

“Plenty of districts in the state, on the ground and in the classroom, have great ideas about what they would do if they have additional money,” he said.

The plan allows funding for up to 15 percent of the students to be spent on alternative programs from the settlement plan, if the applicants can demonstrate that their methods would provide higher levels of student achievement.

Plotkin said a suggestion that low-performing schools be allowed to apply for both regular funding and alternative funding was rejected, leaving applicants with no fallback if their alternative proposal is not accepted.

“We are not recommending a boycott of the money,” Plotkin said. “But we have been advising school districts to look pretty carefully at those requirements because they are pretty onerous.”

Kerr said her impression is that most of the education community is in agreement with the plan.

“There is always nervousness because some of the past programs have been so onerous and so bad,” she said. “This is not one of them.”

A business-backed group, California Business for Education Excellence, issued a news release contending that studies show that two similar attempts to improve low-performing schools spent $1.25 billion and achieved little.

Some local school officials expressed concern with the plan.

The largest kindergarten-through-sixth-grade school district in the state, the 26,000-student Chula Vista elementary district, has nine schools that may be eligible for the new program.

“Reform by lottery is not the most thoughtful approach,” said Dennis Doyle, Chula Vista assistant superintendent, referring to the process for selecting the 500 schools that will receive the new funding.

“Mandating particular solutions, such as class-size reduction rather than resources and accountability for stakeholders, presupposes there is a single solution, rather than many research-based possibilities,” said Doyle.

A story in the Santa Cruz Sentinel Feb. 3 suggested that the plan might have opened a rift between the California Teachers Association and a smaller union, the California Federation of Teachers.

“They're putting all the schools in a hat and whoever gets it, gets it, and whoever doesn't, doesn't,” Carolyn Savino, president of the Pajaro Valley Federation of Teachers was quoted as saying. “To play games like this with money (Schwarzenegger) owes us is despicable.”

Savino could not be reached for comment yesterday. Mary Bergan, state president of the California Federation of Teachers, said yesterday she is urging all of the union locals to participate in the new plan.

“There are concerns that have been raised in a lot of quarters, actually,” Bergan said. “They were raised in the Education Coalition.”

The Education Coalition represents teacher, administrator and school board groups that lobby in Sacramento for more school funding. Bergan and others said criticism of the new plan is not likely to create a split in the coalition.

Firm: Schools must take funds

Money from state cannot be rejected, civil rights group says

By Kristofer Noceda, Hayward Daily Review, December 26, 2007

HAYWARD — If district officials decide to turn down a state program that would help two elementary schools, they would be violating state and federal laws, according to civil rights firm Public Advocates.

Superintendent Dale Vigil said he has considered rejecting state aid designed to raise test scores at Burbank and Faith Ringgold (formerly Charquin) elementary schools because hidden costs to run the program would encroach upon the district's general fund.

The schools are scheduled to receive funding under the Quality Education Investment Act. The estimated $3.3 million windfall, collectively over seven years, would go toward class size reduction and intervention programs at the two schools.

Attorneys from the San Francisco-based firm have sent a letter to the district outlining the possible violations if it were to reject the state program.

"We're urging the district to accept the program," said Michelle Rodriguez, an attorney with the advocacy firm.

Although a decision on whether to take on the program has not been made — staff are studying alternative ways to find funding — the letter from Public Advocates assumes the district has rejected state support.

Because of this, the firm said the district is in violation of the Brown Act, a state statute requiring all public agencies to openly disclose actions.

"A decision was never an agenda item, and that is not accurate," Vigil said, referring to the firm's claim.

"Hayward Unified has not returned funds to the state."

Still, the letter warns the district of two possible violations if it were to give back state funding.

"Once a school applies and is selected for participation in QEIA funding, it can only be withdrawn from participation if the county superintendent determines that the school has not met the requirements of QEIA or the school has engaged in fiscal wrongdoing," the letter states, citing the Cali-fornia Department of Education. "The schools here ... have not failed the requirements. Thus, the board does not have the authority to withdraw the schools from the QEIA program."

In addition, attorneys say such a decision would also violate state and federal mandates regarding parent involvement in children's education.

The California Education Code says the district first must consult with school site councils before making a decision regarding such funds.

Administrators have met with staffs at both schools to discuss and find ways to run the program without encroaching on the budget.

"We want to look at all our options, but I'm very encouraged from the discussions we've had," Vigil said.

District officials said they plan to further study the issue with staff within the next month.

The two schools are scheduled to receive a total of about $328,000 to jump-start the program next school year. Hidden costs, according to Vigil, would force the district to pick up a near $240,000 tab.

QEIA, sponsored by the California Teachers Association, will allocate about $2.9 billion over a seven-year period to struggling schools.

Funding was made available after the CTA settled a lawsuit with the governor in 2005 that repays schools money they are owed under Proposition 98, a voter-approved amendment ensuring that schools receive shares of any increase in state revenue.

In order to qualify, schools must score in the bottom two deciles of the Academic Performance Index, or API — the state's way of measuring the academic performance and growth of schools through standardized tests.

The Hayward schools are two out of 488 selected by the state to receive funding.

Other Web Resources

Legislative Analyst Office - Budget Analysis

Prior Year References

2003 State Budget Crisis
2004 State Budget Crisis
2005 State Budget Crisis
2003 AUSD Budget Issues
2004 AUSD Budget Issues
2005 AUSD Budget Issues

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Last modified: December 5, 2005

Disclaimer: This website is the sole responsibility of Mike McMahon. It does not represent any official opinions, statement of facts or positions of the Alameda Unified School District. Its sole purpose is to disseminate information to interested individuals in the Alameda community.