Robbing Peter to Pay Paul on State School Funding

 Among the 240 bills vetoed by Gov. Arnold Schwarzenegger in 2009 was a measure passed in the closing hours of the legislative session to prevent $400 million in cuts to districts containing the state’s lowest performing schools.

Democrats initially backed cutting schools — already the recipient of deepest cuts this year — as a way to lower the size of the GOP governor’s proposed reductions in health and welfare programs. Democrats agreed to ratchet down school funding based on assurances by the Schwarzenegger administration that federal funds would cover the cuts.

When Democrats later discovered that it might be illegal to backfill the cuts using federal money, they hurriedly passed a bill, SB 84, that prevented the cuts from occurring until sufficient funding was identified to repay the schools.

“This bill is unnecessary,” said Schwarzenegger in his veto message. “My Administration has identified $355 million in federal Fiscal Stabilization Funds that have been provided to the State for the purpose of restoring reductions in the 2008-09 fiscal year.”

Senate President Pro Tempore Darrell Steinberg, a Sacramento Democrat who carried the bill, said in a statement he remains “committed to ensuring these school districts, which serve many of California’s poorest children, receive the education funds needed to become whole again.”

The cuts involve the Quality Education Investment Act, which was created as part of a legal settlement between the state and the California Teachers Association and aimed at improving academic achievement in the state’s worst schools.

Under the eight-year, $3 billion program, California’s lowest performing schools receive $900 per student if teacher staffing is increased and class size is reduced by five students in Grade 4 through Grade 8. High schools get $1,000 per-pupil from the program for five-student reductions in math, English, social studies and science courses.

Nearly 500 schools – 139 districts — receive funding from the program.

To create a $400 million savings in the budget was complicated because under the terms of the settlement with the teachers association, the quality education program needed to continue to operate. So schools getting money from the program continued to do so.

To offset that $400 million in quality education funds, the revenue limits for the 139 districts that receive money from the program were reduced by a like amount. Revenue limits is the name given to a school district’s general fund.

Santa Ana Unified, for example, receives $11 million from the Quality Education Investment Act. Under current law, its revenue limits will be reduced $11 million – district wide, not just for schools receiving quality education funds – a loss of $201 per pupil.

Schwarzenegger insists that now there will no be no lost revenue to the affected districts. 

“With this plan, it avoids the need for county offices of education to require school districts to submit revised budgets detailing the assumed revenue limit reduction that was previously anticipated.”

In the budget enacted in February and the additional spending reductions approved in late July, state support for public schools was reduced by $14.5 billion, nearly half of the $32.5 billion in spending cuts embraced by lawmakers and the governor. The state cuts are partially offset by $6 billion in federal economic stimulus funds.

The GOP governor’s $355 million in federal money now will go only to districts participating in the quality education program. That will anger the districts who don’t because otherwise they would have received a portion of the $355 million.

Efforts are being made to try to use federal Title 1 funds to cover as much as $165 million of the cuts. That should free up $190 million of the federal stimulus dollars the governor identified, allowing it to be divided amongst all districts.

-30-