School Spending Reduced $2.4 Billion in Governor’s Budget

Despite claims by Gov. Arnold Schwarzenegger that education is a top spending priority, his proposed budget reduces state support for public schools by $2.4 billion, the state Legislative Analyst said on January 12.

In its Overview of the Governor’s Budget, the analyst says the governor’s education proposal may not be constitutional, may not receive a necessary federal waiver and violates a budget deal struck in July 2009 setting a minimum funding level for schools $2.3 billion higher than that used by the GOP governor in the spending plan he proposed on January 8.

“Because our future economic well-being is so dependent upon education, I will protect education funding in this budget,” Schwarzenegger said in his sixth and final State-of-the-State speech on January 6. ?

Schwarzenegger says he is giving public schools the minimum level of support required by the state constitution. But critics – and the analyst — say he is ignoring a deal he struck in July 2009 to help close out budget negotiations. 

“The administration acknowledges it is veering away from the July 2009 budget agreement,” the analyst says.

Last July, a fight over the state’s long-term obligations to public schools held up passage of the budget for the current fiscal year. A deal was cut and Schwarzenegger signed a bill certifying the minimum guarantee for public school funding was $49.1 billion.

But in his budget for the fiscal year that begins July 1, the governor sets the minimum at $46.8 billion.

The legislation signed by Schwarzenegger six months ago also committed the state to repaying $11.2 billion shorted schools in previous budgets.

In his January budget plan, the governor agrees to repay $1.3 billion of that amount but postpones additional payments until the fiscal year that begins July 1, 2012.

An elimination of the sales tax on gasoline in his budget proposal also reduces the money that would otherwise be owed schools by $800 million because public schools receive approximately 40 cents of each dollar flowing into the state’s general.

The level of state financial support for public schools is set by Proposition 98, a 1988 ballot measure whose formulas dictate what percentage of state spending is earmarked for schools and community colleges.

For the fiscal year that begins July 1, the GOP governor proposes reducing public school general-purpose money – known as “revenue limits” – by $1.5 billion.

The cut comes on the heels of the $11.2 billion in previous reductions that the Schwarzenegger administration agreed to repay last year.

“A mixed review,” is how the analyst begins its assessment of the governor’s education plan.

Schwarzenegger’s plan meets constitutional spending obligations based on his interpretation of the state constitution, the analyst says.

“Based upon other interpretations of the constitution, however, the state’s Proposition 98 obligations could be significantly higher than asserted under the governor’s January plan,” the analyst writes.

In order to receive federal economic stimulus funds, which temporarily offset some of the state’s cuts to schools, a minimum level of education spending is required.

Schwarzenegger’s proposed budget is $600 million below the required spending level.

However, states can get a waiver from the federal government if they show schools are receiving the same or more money than in the prior budget year.

The analyst says that appears to be the case but notes the federal Secretary of Education has discretion over waiver approval.

Despite the risks, the analyst says that what the governor is proposing might be the maximum the state can afford and that education is treated “relatively favorably” compared to other areas in the budget plan.

Even so, the analyst says that the loss of one-time federal stimulus dollars and the use of other one-time budget solutions by the state means school districts will face more reductions.

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