CA Budget About HOW We Spend … Not Just How Much

Jerry Brown Legislature BudgetGov. Brown’s opening general fund budget gambit of $122.6 billion – total spending including bond and special funds is $170.7 billion – sets a new record for state government spending.  That the big increases are coming from the man many regard as one of the more sane of Sacramento’s top politicians does not bode well for taxpayers. After all, this is just a starting point.  Now the real fun begins with those less well grounded in economic reality starting the annual ritual of “making it rain” for their favorite projects and special interest employers.

To the governor’s credit, he is paying attention to paying down debt and strengthening the state’s rainy day reserve, a wise move considering that state revenue is highly dependent on top earners and is thus very vulnerable to an economic contraction.

Still, leading Democratic lawmakers want more – a lot more.  They are already complaining that that the budget does not spend enough on early childcare programs, grants to families on welfare, or provide more money for affordable housing.

Let’s concede at the outset that Californians have widely divergent views about how much money should go to all the various things government does. For example, there is a legitimate debate about how much money we, the taxpayers, should be paying to deal with the water crisis. Or how much for K-12 education? Prisons?  The list is fairly extensive.

But too often we neglect a very important topic when it comes to spending. That is, are we actually getting value for our tax dollars?  Per pupil education spending is important, but a poor indicator of educational outcomes. Total spending on prisons is irrelevant if we are releasing dangerous criminals back out on the street. Californians are angry at traffic congestion, but what good is more transportation spending if it doesn’t actually help people get to where they want to go? Californians are sympathetic to the needs of the poor, but are justifiably outraged when needed assistance fails to get to the truly needed and, instead, is used to buy luxury goods or pay for expensive vacations.

We know that Governor Brown is capable of recognizing waste, fraud and abuse. Just a few years ago he put forth a very credible 12 point pension reform plan that would have corrected most of the pension abuses in California. Regrettably, except for dealing with the most obvious of abuses, the reforms were shelved due to intense pushback from public sector unions. This means that the ever increasing percentage of the general fund budget going to address pension obligations is more than it needs to be.

Taxpayer advocates are constantly told that the amount of tax dollars lost to waste, fraud and abuse is but a tiny fraction of government spending. To be blunt, we don’t believe it – and mounds of evidence supports our disbelief. Even the Los Angeles Times several years ago pegged Medi-Cal fraud in the hundreds of millions of dollars.

To understand why more focus in the budget process should be on oversight, the observations of Nobel Prize winning economist Milton Friedman are instructive. He noted that there are four ways people can spend money:

  1. You can spend your own money for yourself. (Being careful both about how much you spend and on what you buy);
  2. You can spend your own money for somebody else. (Being careful about how much you spend but less careful about what you buy);
  3. You can spend somebody else’s money for yourself. (Being careful about what you buy but less careful about how much you spend); and
  4. You can spend somebody else’s money for somebody else. (Where you care less both about how much you spend and what you buy).

Friedman’s thesis is that what government does is spend money in the fourth way. And that is why any discussion about the California state budget needs to include the question of whether taxpayers are getting value for the hard-earned dollars they send to Sacramento.

Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.

Originally published by at HTJA.org

Brown Cautious in 2016/17 Budget Proposal

brown prop 30 california budgetChanneling philosopher George Santayana (“Those who cannot remember the past are condemned to repeat it”), Gov. Jerry Brown presented his budget yesterday looking to the future by considering the past. Warning that budget writers “put out of their minds” thoughts of recessions that could cripple state budgets, he vowed not to repeat past mistakes of building budgets that cannot be sustained in difficult economic times.

Brown offered a chart that showed the rollercoaster budgets over the last decade-and-a-half with big budget hits from the dot-com bust and the mortgage crisis. Brown said using the budget history as a template, his team predicted the effects of another budget shortfall, which could happen soon. The average economic recovery period is five years, the governor said, and California is well beyond that point now.

Presenting a chart that showed recent deficits in the red, to prevent future large deficits Brown said, “If you do what I want” there would be less red on a chart during the next recession.

Warning legislators against creating new programs that will continually require state funding—even if the ideas behind the programs are noble — Brown said, “Too many goods, too quickly, become bad.”

Will Brown’s warnings be heard by legislators?

Maybe. With the change in the term limit law, legislators will have more time to serve in the capitol. Actions they take now they would have to live with in the coming years (as long as they are re-elected).

Still, majority Democrats and interest groups plan to test the governor over budget priorities. Brown seemed prepared to confront new demands. “This is not a candy store that you can pick out what you want.”

Some groups would not bother with debating issues in the legislature but are planning to take their proposals to the voters via the initiative process.

Governor Brown was asked about a number of proposed initiatives. While he said he did not want to comment on initiatives, he did, dropping boulder-sized hints of what he was thinking on some prominent potential ballot measures.

On the Proposition 30 income tax extensions, Brown cited a “fatal flaw” in the measure by stipulating that none of the tax revenue collected by the tax extension would end up in the rainy day fund. (Brown’s budget is adding $2 billion to the fund bringing it up to 65% of its constitutional mandate.)

The governor in response to a reporter’s question said that Prop 30 could make a future budget deficit worse because the tax measure relies so heavily on high-end income taxpayers, who see great drops in their capital gains during recession.

On the minimum wage, the governor pointed out that because the state increased the minimum wage a dollar on the first of the month, the budget had to set aside an additional quarter-of-a-billion dollars from the General Fund to cover state workers. Should the $15 dollar-an-hour minimum wage ballot proposal become law that would cost the state an additional $4 billion. The money has to come from somewhere, Brown said.

Addressing the $9 billion statewide school bond already qualified for the General Election, Brown said much of the money would end up with affluent school districts. It is not well targeted, he said, arguing that the legislature can do a better job than the “developers” who put this together.

Originally published by Fox and Hounds Daily

Gov. Brown budget plan boosts spending but Democrats seek more

As reported by the Associated Press:

SACRAMENTO, Calif. (AP) — On its face, Gov. Jerry Brown’s proposed $122.6 billion California budget plan would seem to please Democratic interests by pumping billions of new dollars into public schools, health care for the poor and public infrastructure, even as it bolsters the state’s rainy day fund.

Brown touted his income tax credit for the poor, a cost-of-living increase for the elderly, blind and disabled and more funding for universities and colleges when he laid out his general fund plan Thursday. He also urged fiscal prudence, calling for the state to put $2 billion more than legally required into its rainy day fund, bringing it to $8 billion by the end of fiscal 2016.

“You’ve got to plan for the down and level that out,” Brown said at a news conference, pointing to a chart showing the state’s boom-and-bust revenue history. “That’s what I’m trying to do in the budget.”

The Democratic governor’s general fund proposal marks the first step …

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Despite California’s budget surplus, unions eye tax hikes

As reported by the Los Angeles Times:

Here is one thing for California to be thankful for: The state treasury is overflowing with tax money.

Long gone are the dark years of multibillion-dollar deficits — $42 billion in 2008 — and sharp cuts in state services, especially healthcare for the poor and education.

Credit the recovering national economy. Gov. Jerry Brown also gets a high-five for holding big spenders in check. But the governor’s 2012 voter-approved, soak-the-rich tax hike was a crucial budget healer.

The nonpartisan legislative analyst’s office reported last week that the state’s tax take for the current fiscal year is expected to exceed earlier estimates by $3.6 billion. And by the end of the next fiscal year, the state is on track to have …

Click here to read the full article

“Myths vs. Facts” Propaganda Will Not Change Pension Reality

California’s largest state/local government employee pension system, CalPERS, has posted a page on their website called “Myths vs. Facts.” Included among their many rather debatable “facts” is the following assertion, “Pension costs represent about 3.4 percent of total state spending.”

This depends, of course, on what year you’re considering, and what you consider to be direct cost overhead for the state as opposed to pass-throughs from the state to cities and counties. But CalPERS overlooks the fact that most of California’s government workers who collect pensions do not work for the state, they work for cities and counties and school districts. As can be seen on the “view CalPERS employers” page on Transparent California, there are 3,329 distinct employer retirement pension plans administered by CalPERS, and the vast majority of these are not state agencies paid from the state budget, but local agencies.

In a study earlier this year, “California City Pension Burdens,” the California Policy Center calculated 2015 employer pension contributions as a percent of total revenue for California’s cities to be 6.85%, more than double the amount CalPERS implies is the average pension burden. But this hardly tells the whole story, because CalPERS is systematically increasing the amounts that their clients will have to contribute as a percent of payroll, and hence, as a percent of total revenue.

UnionWatch has obtained budget documents from Costa Mesa showing how the pension contributions as a percent of payroll will grow between their 2014/15 fiscal year and 2020/21. Over the next six years, as the chart below shows, Costa Mesa’s total payroll is projected to grow from $50.1 million to $54.6 million. Their pension contribution, on the other hand, will grow from $23.2 million to $33.0 million. That is, their pension contribution as a percent of total payroll will increase from 46.3% of payroll today, to 60.4% of payroll in 2020.

Pension chartCosta Mesa’s pension burden as a percent of payroll is a bit higher than average, but not much. And in terms of the percentage increases to pension contributions announced by CalPERS, they are typical. California’s cities, based on CalPERS announced pension increases, can expect to add another 15% of payroll to whatever amount they are already sending to CalPERS each year.

For every dollar they pay their employees in salary, should California’s cities be sending, year after year, $.50 cents or more to CalPERS? That’s the best case. It assumes that CalPERS will continue to be able to realize annual returns on investment of 7.5%, on average over the next several decades. It also assumes they’ve got the demographic projections correct this time, and won’t have to contend with the otherwise happy eventuality of people living longer than their current projection of approximately 80 years. These are big assumptions.

And how much of this fifty cents (or more) on the dollar do the employees themselves pay as a percent of withholding? In many cases, up until recently, they paid nothing. Or if they did pay via withholding, at the same time as they became subject to that requirement, they received a raise to their overall salary of an equivalent amount. But under California’s 2012 Public Employee Pension Reform Act, employees will gradually be required to pay more for their pensions – with a ceiling of 8% for regular employees, and 12% for public safety employees.

If they paid the maximum via withholding, for a miscellaneous employee in Costa Mesa, that 8% equates to a 4-to-1 employer match today, rising to a 5-to-1 matching in 2020. Similar employer matching ratios will apply for public safety employees. How many companies, anywhere, provide 1-to-1 matching, much less 2-to-1, or more? 5-to-1 matching? It is unheard of. For good reason – it is absolutely impossible for a private company to afford this in a competitive economy.

Returning to the Myths vs. Facts page posted by CalPERS, they also assert that “The average CalPERS pension is about $31,500 per year.” This is profoundly misleading. It is based on the assumption that every CalPERS retiree worked a full career in government. Returning to the CalPERS Employers page on Transparent California, one can see a more accurate estimate of the “average pension,” because it is limited to the average for retirees who put in at least 30 years of work. Take a look. For Costa Mesa, the average 2014 pension for a full career retiree was $91,805.

If our cities could afford this, nobody would care, but they cannot. If Social Security, which withholds benefits until a participant, typically, has worked 45 years, could afford to be equally generous, nobody would care. But the average Social Security benefit is around $15,000 per year and even at that pittance, without major restructuring it will go broke.

One can debate forever regarding how much of a premium public employees should receive over private sector workers because they’re, on average, more educated, or take more risks in their jobs. But as it is, taxes are going up to pay pensions and benefits to government workers that are by any objective standard many times greater than what private citizens can ever hope to achieve. No premium, however much deserved on principle, should be this big.

The insatiable demand by CalPERS and other government pension systems for more money to keep these pensions intact does more than create financial stress to our cities and counties. It exempts public employees from the economic challenges that face everyone else. It takes away the sense of shared fate between private citizens and public servants. It undermines the social contract. It exposes a self-dealing, hidden agenda behind all new regulations. It erodes the credibility of laws, ordinances, codes, because perhaps they are merely there to generate revenue.

CalPERS and California’s other government pension systems have the financial wherewithal to lobby and run PR campaigns that dwarf that of reformers. But myths and facts are not defined in press releases. They are defined by reality. The reality is that California’s pension funds have increased their required contributions as a percent of municipal budgets by an order of magnitude in just the last 15-20 years, and there is no end in sight. If and when they can no longer seize public assets to force payment, bully compliant judges to overturn reforms, or find enough money from new taxes to save their financially shattered systems, they are going to have a lot of explaining to do – not only to the beleaguered taxpayers, but to their own members.

*   *   *

Ed Ring is the executive director of the California Policy Center.

Gov’t Shutdown Could Mean No Food Stamps For Millions

The Obama Administration warned Tuesday a government shutdown would mean 46 million people losing their food stamps. This despite a similar claim in 2011 being proven false.

According to the United States Department of Agriculture, the problem is a lack of reserve money. The USDA runs the food stamp program. It is officially known as the Supplemental Nutrition Assistance Program. If the government shuts down, the USDA claims, it will have to end benefits within the first several days of October.

“If Congress does not act to avert a lapse in appropriations, then USDA will not have the funding necessary for SNAP benefits in October,” Catherine Cochran, a spokeswoman for USDA, told The Associated Press. “Once that occurs, families won’t be able to use these benefits at grocery stores to buy the food their families need.”

Cochran refused to give details on how exactly the automatic food stamp payments would stop, or why it continued unabated during the 2013 shut down. The dangling of benefits in front of a shut down is not a new occurrence under the Obama administration. According to Politifact, in 2011 President Barack Obama lied when he warned Social Security checks would not be sent out if the government shut down.

A dispute on whether to defund Planned Parenthood is the main issue which threatens to shutdown the government. Lawmakers have till the first of October to pass a budget. If they don’t, the federal government will run out of funds and have to shutdown.

House Republicans passed a budget proposal Sept. 18 which would cutoff funds to Planned Parenthood for a year. The proposal looks unlikely to pass the Senate and even less likely to be signed by President Barack Obama. If the House proposal or an alternative doesn’t pass, the government shuts down.

The move to defund Planned Parenthood comes with renewed criticism over how the group handles abortions. The debate centers around a video The Center for Medical Progress, a right-of-center medical ethics group, published that shows a Planned Parenthood employee casually discussing, over a salad, how the organization harvest fetus organs after an abortion. The video was just the first in a series of footage that prompted a national backlash. This included renewed calls to end federal funding for Planned Parenthood.

The footage was part of a 3-year investigative effort. Dr. Deborah Nucatola talked to undercover actors she thought were buyers from a human biologics company.

Supporters of Planned Parenthood claim the videos were misleading and politically motivated. They also argue the organization offers too many critical services for women and families to be defunded.

Originally published by the Daily Caller News Foundation

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On Bullet Train, Voters Finally May Get to Apply the Brakes

high speed rail trainPencils have erasers. Computers have the undo command and the escape key.

If you had it to do over again, would you vote for the bullet train?

It was called the “Safe, Reliable High-Speed Passenger Train Bond Act” on the 2008 ballot, and it authorized $9 billion in bonds — borrowed money — to “partially fund” a high-speed train system in California.

The ballot measure required that there would be “private and public matching funds,” “accountability and oversight” and a focus on completing “Phase I” from Los Angeles to San Francisco to Anaheim. Bond funds could not be spent on the other corridors, like Fresno to Bakersfield, unless there was “no negative impact on the construction of Phase I.”

Today the estimated cost is over $68 billion, private and federal funds are not in sight, and accountability has been cut back — instead of two spending reports to the Legislature every year, only one report every two years will be required. And “Phase I” broke ground in Fresno.

Place your finger on the escape key and stand by. State Sen. Andy Vidak, R-Fresno, has introduced a bill, co-authored by Assemblyman Rudy Salas, D-Bakersfield, to put the bullet train before the voters again. If Senate Bill 3 (SBX1-3) can muster a two-thirds vote in the state Senate and Assembly, it will be on the June 2016 ballot.

The measure would freeze spending on the bullet train and direct unspent funds to the Department of Transportation to be used for roads, which would come in handy because California needs $59 billion just to maintain the freeways for the next 10 years. Gov. Jerry Brown has called a special session of the Legislature to look for revenue to fill the state’s transportation budget pothole after signing a “balanced” budget that left that item out.

The non-partisan Legislative Analyst’s Office offered some suggestions that illustrate the difference between what tax increases can raise and what the bullet train costs.

• Raising the tax on a gallon of gasoline brings in $150 million per 1 cent increase.

• Raising the tax on a gallon of diesel fuel collects $30 million per 1 cent increase.

• Raising the vehicle registration fee nets $33 million per $1 increase.

• Doubling the vehicle weight fees raises about $1 billion.

• Raising the vehicle license fee hauls in roughly $3 billion per 1 percent increase.

There are other options. The LAO says lawmakers could prioritize the budget to use money from the general fund to maintain and construct roads. Billions in cap-and-trade revenue, collected from fees now levied on gasoline and diesel fuel, could be used for highway projects that reduce traffic and improve mileage.

Additionally, $900 million that was loaned from state transportation accounts to the general fund could be repaid and used for roads. “Efficiency and effectiveness” could be improved by prioritizing cost-effective maintenance projects, increasing accountability and oversight, and examining Caltrans’ “capital outlay support” program to see if it is “operating efficiently.” Hint, hint.

The scrimping, saving and tax hikes needed to maintain the freeways can’t begin to address all the other transportation infrastructure needs, and we still have to pay for the rising costs of Medi-Cal, unfunded pensions and health benefits for state employees, and desperately needed water projects.

In 2008, the ballot argument for the bullet train promised high-speed rail “without raising taxes,” but it’s a shell game if tax revenue is spent on the train while taxes are raised for the roads.

Sen. Vidak’s bipartisan bill ought to have the support of every lawmaker. Voters deserve a chance to undo the bullet train and escape from this mess.

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Reach the author at Susan@SusanShelley.com or follow Susan on Twitter: @Susan_Shelley.

CA GOP Can Wield Power During Special Legislative Sessions

Photo courtesy of DonkeyHotey, flickr

Photo courtesy of DonkeyHotey, flickr

Jerry Brown made the Republican legislators relevant again. Brown’s call for special sessions for transportation and Medi-Cal funding invariably brings talk about possible tax increases. With a two-thirds vote needed to raise taxes, and the Democratic majority shy of the super two-thirds mark, Republicans must be part of the conversation.

Despite their best efforts offering innovative approaches to some of California’s difficult problems during the legislative session, the Democrats on major bills and the budget that needed simple majority approval mostly have sidelined Republicans. But that will not be the case when revenue solutions are sought and debated during the special sessions.

According to the governor, the special sessions are about permanent revenue sources to bolster transportation infrastructure and Medi-Cal. While Republicans put forward plans to use current revenues to satisfy funding concerns for the roads, much of the talk will focus on tax and fee increases. Republicans have said no to the need for new taxes since the state is awash in new money. Even post budget signing, the Legislative Analyst’s Office reported the state brought in a half-a-billion dollars more that the budget anticipated.

(As an aside, Republicans may have already supported a tax in their road funding proposal depending on how a court rules. One Republican suggestion is to use cap-and-trade funds recently put on gasoline production to fund transportation. The California Chamber of Commerce has gone to court claiming cap-and-trade amounts to a tax. If the Chamber suit is successful part of the Republican transportation package is a tax.)

Republicans position on taxes will also be tested in any Medi-Cal fix. One of the leading proposals to fund Medi-Cal is to increase the tobacco tax. If the governor is searching for a permanent revenue source to fund Medi-Cal, tobacco tax seems a poor choice. The tobacco tax is a diminishing resource as fewer people choose to smoke. Increasing the tax on smoking is supposed to discourage the practice thus limiting future revenues. Relying on the tobacco tax to rescue the Medi-Cal program would seem short sighted given the governor’s stated goal.

Given the need for Republican votes for tax plans, Republicans are in the middle of the debate and can offer savings ideas and plans re-directing current revenues that cannot easily be dismissed by the majority. If the GOP simply gave in to raising taxes then the issue of Democrats needing a supermajority is moot. Republicans will use their leverage to be deeply engaged in any solutions.

Originally published by Fox and Hounds Daily

Gov. Brown Walks the Budget Tightrope

jerry-brownGov. Jerry Brown has unveiled the highly-anticipated revision to his annual state budget, teeing up final spending negotiations in Sacramento — largely with his fellow Democrats.

Despite a resurgence in California’s fiscal fortunes, including tax receipts some $2 billion in excess of estimates, “analysts are warning that California could be headed for more fiscal headaches as soon as next year,” the Wall Street Journal observed. “The state is constitutionally required to spend more on public education as revenue increases. This year’s revenue will establish a spending base for next year, meaning it could be harder for the state to balance its budget if the state’s income declines.”

Brown has made his reputation as governor holding the line on spending against steady pressure from his left. But Brown’s own favorite projects, including California’s high-speed rail plan, received his unwavering support, even drawing money away from expenditures favored by activists.

A selective windfall

Now, Brown has chosen to walk the budget tightrope in a way that will encourage his more profligate allies. Beneficiaries of Brown’s revised budget were set to include poorer Californians, unlawful immigrants and college students, as the San Jose Mercury News reported:

“With billions in better-than-expected revenue, Brown unveiled a $115.3 billion general fund spending plan that creates the state’s first-ever ‘earned income tax credit’ and would pay for Medi-Cal for some immigrants living in the state illegally.”

Brown’s revision also slipped in the results of a long-belabored deal with UC President Janet Napolitano, “who had demanded tens of millions of dollars more for her system to stave off 5 percent tuition hikes in each of the next five years,” as the Mercury News recalled.

But the revised budget plan went well beyond those measures, touching policy areas that have bedeviled Brown throughout much of his time in office.

Prison reform

Brown, for instance, used the revision to forge ahead with reforms to California’s prison system, which has been a virtual albatross around his neck since the Supreme Court ordered the state to reduce its crowded incarcerated population.

As the Los Angeles Times reported, the new budget revision “calls for shrinking the number of inmates housed outside California in the next year by 4,000 — reducing related state spending by $73 million. As of this week, the state had a little more than 8,000 inmates in private prisons in Arizona, Mississippi and Oklahoma, and another 6,250 prisoners in contracted lockups within the state.”

According to the Times, the cuts became possible because of the impact of Proposition 47, which thinned prisons’ ranks largely by slashing penalties and jail time for drug-related offenses. As CalWatchdog previously reported, although relatively few donors fueled the measure, Prop. 47 won the support of a substantial majority of voters in November.

Mixed reactions

In what has become a hallmark of his tenure in office, reactions to Brown’s adjusted numbers mixed praise with criticism. “We applaud the governor for putting money back into the pockets of those who work hard every day and pay their taxes – it’s the right move,” remarked Assembly Republican Leader Kristin Olsen, R-Riverbank, according to the Sacramento Bee. But, she added, Brown’s tax credit “will not end widespread poverty. That’s why Assembly Republicans have offered straightforward solutions to reform education and support the modern economy so every Californian can boost their earnings and quality of life.”

From the other side of the aisle, some Democrats registered disappointment with the limitations of Brown’s agreement on school funding. “We are pleased UC students and their families will avoid paying higher tuition next year,” said Senate President Pro Tem Kevin de León, D-Los Angeles. “But CSU, the workhorse of our higher education system, has been shortchanged. We have to support both of our public institutions of higher learning to make sure college is accessible to as many Californians as possible.”

Originally published by CalWatchdog.com

Revised Estimate for K-12 Spending: $6 Billion More Next Year

Vidak_Andy_School_8x12_0164Spending for K-12 schools in the coming year will be $6 billion more than Gov. Jerry Brown proposed just five months ago, raising per-student spending $3,000 – 45 percent – from what it was four years ago, according to the revised state budget that the governor released on Thursday.

State revenues have surged this year, and K-12 schools and community colleges will haul in nearly every penny because of Proposition 98, the constitutional amendment that puts schools first in line for restoring funding when the economy rebounds after a recession.

The new level of Prop. 98 spending for K-12 schools and community colleges will be $68.4 billion in 2015-16. That is $7.5 billion more than the Legislature appropriated last June for the current year. Surging revenues, which are projected to continue into next year, will bring the total increase for schools next year to nearly $14 billion in Prop. 98 spending (see pages 13-22 of state budget summary).

But warning that “the reality is another recession is coming,” Brown is splitting the increase between ongoing spending, one-time expenditures and paying off debts.

Local Control Funding: The Local Control Funding Formula, which provides general spending to schools, will remain his top priority. It will get $6.1 billion more next year, or about $1,000 more per student on average, with districts with higher proportions of English language learners and low-income children receiving more.

Paying off mandates: About $3.5 billion ($2.4 billion more than in the January budget) will pay for unreimbursed mandated expenses. Districts and county offices of education can use this money however they want, although the governor is encouraging them to spend it on implementing the new Common Core and science standards.

“I think there’s an expectation and hope that it will be put into Common Core implementation,” said David Plank, executive director of Policy Analysis for California Education, or PACE, a research center based at Stanford University, “Common Core is hard work and the money, I think, will be greatly received and put to good use.”

But Education Trust-West, an advocacy group for low-income and minority students, criticized Brown for not requiring districts to use the money for Common Core. “Districts will be pressured to use these funds for many other competing priorities,” it said in a statement. “We missed an opportunity to ensure our state standards will truly make a difference for all of our students.”

Special education: The Statewide Special Education Task Force, a group convened in 2013 to propose improvements to special education in California, received recognition in the revised budget – and $60 million for some of the actions it recommended. This includes  $50 million in ongoing funding and $10 million in one-time funding to expand interventions for special-needs children under two years old, add 2,500 additional preschool slots prioritized for special-needs children and expand data-driven schoolwide behavioral supports.

End of deferrals: About $1 billion will pay off the final late payments to districts, known as deferrals, which forced districts to borrow money, sometimes at high interest rates, while waiting for state funding.

Advocates for young children and the Legislative Women’s Caucus had called on Brown to provide $600 million more for child care for low-income families by shifting that expense into Prop. 98. The Legislative Analyst’s Office had suggested freeing up money for non-Prop. 98 spending by adjusting property taxes that go toward education funding.

But Michael Cohen, director of the Department of Finance, said he was “not interested in manipulating the Prop. 98 guarantee” and “plopping things into 98” to spend additional money. The department, he said, distinguished programs that qualify for education funding.

Assemblywoman Shirley Weber, D-San Diego, who chairs the Assembly Budget Committee’s education subcommittee, said that she shares the “strong sentiment” to include more money for child care in Prop. 98, where that funding was included until it was shifted in 2010-11. The issue will be negotiated with the administration, she said.

PRAISE FROM EDUCATION GROUPS

Education groups generally had high praise for the revised budget. Plank called it a “spectacularly good budget for K-12.” Kevin Gordon, president of Capitol Advisors, a lobbying firm representing school districts and county offices of education, said it was “one of the best budgets for K-12 I have ever seen. It has fully discretionary money with no strings attached. That normally doesn’t happen.”

The Legislative Analyst’s Office estimates that extra revenue in the May budget revision will raise K-12 Proposition 98 funding to $9,978 per student –$656 per student higher than the inflation-adjusted, pre-recession spending level  in 2007-08. The LAO’s  estimate for 2014-15 includes one-time spending of $700 per student more than districts anticipated when they built their 2014-15 budgets; that money, totaling $4.3 billion, will be spent in 2015-16 and subsequent years. (click to enlarge.)

SOURCE: LEGISLATIVE ANALYST’S OFFICE

The Legislative Analyst’s Office estimates that extra revenue in the May budget revision will raise K-12 Proposition 98 funding to $9,978 per student –$656 per student higher than the inflation-adjusted, pre-recession spending level in 2007-08. The LAO’s estimate for 2014-15 includes one-time spending of $700 per student more than districts anticipated when they built their 2014-15 budgets; that money, totaling $4.3 billion, will be spent in 2015-16 and subsequent years. (click to enlarge.)

Adonai Mack, legislative advocate for the Association of California School Administrators, said his organization agrees with Brown’s priorities and appreciates that the governor didn’t permit other programs to encroach on Prop. 98 spending. “It’s a very good budget for public education,” he said.

Joshua Pechthalt, president of the California Federation of Teachers, said the budget reflected the right priorities in funding education and creating a new tax credit for low-income workers. But he added, “we have a long way to go before we restore the programs in education and social services we lost to a decade of budget cuts,” and called for making temporary taxes under Proposition 30 permanent.

Double-digit spending increases for schools is not expected to continue past next year. State revenues are expected to flatten with the expiration of temporary increases in the state sales tax and the income tax on the wealthiest 1 percent. And the portion of the revenue going to K-12 schools and community colleges will decline after next year to about the standard 40 percent of the general budget after past obligations to Prop. 98 are fully paid off. Called the maintenance factor, it was as high as $11 billion as a result of cuts made during the recession, but will be under $800 million after next year.

The new Prop. 98 numbers will ease anxiety in Los Angeles Unified, whose board approved a 10 percent pay increase for teachers without knowing how the district would cover the expense. District officials said Thursday that the $300 million to $400 million in additional state money next year – half for ongoing costs and half in one-time funds – would cover the costs of teacher raises. But they said they were unsure if they can avoid teacher layoffs next school year or how they will pay for promised future raises.

The Legislative Analyst’s Office estimates that extra revenue in the May budget revision will raise K-12 Prop. 98 funding to $9,978 per student –$656 per student higher than the inflation-adjusted, pre-recession spending level in 2007-08. However, under the new funding formula, some districts with fewer English learners and low-income students are still well below that figure. And all districts will face substantial increases in pension costs for teachers, which will rise an additional $3.7 billion collectively over the next four years.

Reporters Jane Meredith Adams, Susan Frey, Michelle Maitre and Sarah Tully contributed to the coverage of the state budget.