The Deepest Cut of All — Public Schools

By far, the largest spending cut in California’s seven-day old budget falls on the state’s 6.3 million public school students and the more than 9,900 schools at which they matriculate. 

Between now and the end of next fiscal year on June 30, 2010, state support for public schools will drop by $11.6 billion, according to several analyses by educators and education lobbyists. 

Assembly and Senate budget tallies show reductions to schools of $8.6 billion, which, as shown below, appears to understate the level of cuts.  Even so, $8.6 billion is 57 percent of the budget’s $15.1 billion total spending cuts. 

 “All the politicians say they love education but it’s the biggest cut by far,” said one education consultant. “Like the country song, ‘You always hurt the one you love.’” 

Because of how the public school reductions are structured, larger urban districts, such as Los Angeles, San Diego and San Francisco will receive a disproportionate share of the cuts because of their large populations of minority pupils, an ironic twist as California celebrates Black History Month.  

On July 1, 2008, the beginning of the current fiscal year, state law said public schools should receive $14.4 billion more than they are getting under the budget signed February 20 by Gov. Schwarzenegger. 

However, lawmakers and the GOP governor eliminated a $2.8 billion cost-of-living increase in the record-late budget, which was finally approved in September. Using the September budget as a starting point yields the $11.6 billion funding loss. 

Proposition 98, approved by voters in November 1988, dictates the level of public school funding. Its formulas, which are more generous in times of economic growth and less generous during economic downturns, set the minimum level for state support for California’s 1,353 school districts as well as a higher spending target. 

As California’s economy tanked, the minimum amount due schools also fell by nearly 15 percent. So lawmakers and the governor reduced public school spending in the current fiscal year the following way: 

A .68 percent cost-of-living increase was eliminated, saving $244 million. Another $3.2 billion in payments to schools scheduled for February were pushed over into the following fiscal year. 

Public schools were owed $1.1 billion from the state in what’s known as “settle up” money. These are payments the state makes to schools when attendance or state revenues cause the Proposition 98 minimum guarantee to rise above what it was pegged at in the budget. 

The state owed a total of $1.1 billion from previous years and used existing current year money to pay that obligation rather than increasing school spending by a like amount. 

The two main pots of money for public schools, revenue limits and categoricals were each reduced by $945 million this year and will be reduced even more next year. 

Revenue limits are a dollar amount districts receive per student. The cost-of-living increase lawmakers and the governor eliminated in the September budget – and in the most recent budget – is for this pot of money, which carries no restrictions on how a district spends it. 

That means a revenue limit reduction applies equally to all students. In this case, it amounts to about $160 less per pupil on average. The statewide average on revenue limits is roughly $6,000. 

The second pot of money pays for 61 different programs. Among them are: special education, class-size reduction, textbooks, maintenance, arts and music, teacher professional development and the high school exit exam. 

Funding for nine categorical programs was not cut: Special Education, Child Development, Kindergarten through Grade 3 Class Size Reduction, Economic Impact Aid, After School programs, Home-to-School Transportation, Child Nutrition, Quality Education Investment Act and Advancement Via individual Determination. 

Most of the programs are aimed at assisting minority, low-income and special needs students. 

The remainder of the categorical programs are reduced by 15.4 percent this year although over the remainder of this fiscal year and the next, cumulative reductions are higher. 

For example, between now and June 30, 2010, the arts and music block grants fall from $110 million to $88 million, nearly a 20 percent reduction. 

Because different districts have different demographics these cuts hit some districts harder than others. 

The largest categorical program affected by the cuts is the $1.1 billion Targeted Instructional Improvement Block Grant, which pays for district desegregation efforts.  

Because of its high minority student population, Los Angeles Unified, by far the largest school district in the state, currently receives 53 percent of this program’s funds. Under the budget, the district will lose $205 million for its desegregation programs over this and the next fiscal year. 

That is more than $300 per student, according to a February 25, 2009 memo from Santiago Jackson, the district’s chief Sacramento lobbyist. 

Smaller districts with higher minority student populations also take a significant hit. San Jose Unified loses $13.4 million over the two fiscal years. San Diego is shorted $28 million. San Francisco Unified, $17 million. 

The affected districts are trying to convince lawmakers to use federal stimulus money earmarked for education to reduce the revenue limits and categorical program cuts. 

Over the two budget years, the average reduction for each affected categorical is just over 20 percent. 

However, the $37 million Charter School Facility Grant program, favored by the governor, is reduced by 15.4 percent this year, but the cut is restored next year and funding increased to $45.5 million, a 22 percent increase. 

Similarly, the Charter School Categorical Block Grant is reduced from $190 million to $161 million this year but built back up to $186 million the following year, only a 2 percent overall reduction. 

In an attempt to ease the fiscal pain, the budget gives districts more spending flexibility on categoricals – other than the nine protected ones — allowing them to, potentially, take money earmarked for maintenance and use it to backfill cuts to arts and music. 

In the fiscal year that begins July 1, 2009 no revenue limits cost-of-living increase is provided for a savings of $2.8 billion. And the revenue limits and categorical reductions are each increased from $945 to $1.2 billion. 

Total reductions during the current fiscal year are $6.4 billion. Lawmakers and the governor claim only $2.1 billion of the total will be felt in the classroom – the elimination of the .68 cost-of-living increase and the reductions in revenue limits and categorical spending. 

The following year, reductions total $5.2 billion, lower because, under the terms of Proposition 98, the additional revenue coming to the state from the tax increases imposed by the budget is split with public schools. 

A key requirement of Proposition 98 is that, at some point, the state must make up for not funding schools at the target set by Proposition 98, which can be significantly higher than the minimum funding level.

In healthier economic times, the state would accelerate payments to schools to more quickly return to that spending target.

That repayment amount is called the maintenance factor.

To help close the budget deal – and keep education groups from opposing a constitutional amendment on the May 19 Special Election ballot that ratchets down state spending – a portion of the revenues the ballot measure would require be placed in a “rainy day” fund would instead go to schools, over time, to erase what is a $9.3 billion maintenance factor debt.

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