This information is current as of September 28, 2012. Up-to-date information on the state and federal education budgets is available on the California Department of Education (CDE) budget page.
On June 27, 2012, Governor Jerry Brown signed Assembly Bill 1464 (Chapter 21, Statutes of 2012), the Budget Act of 2012. In addition to the Budget Act, the Governor signed various “trailer bills” that amend the California Education Code and other California codes to reflect technical changes necessary to implement the budget. In enacting the 2012 Budget Act, the Governor and the Legislature were obligated to take drastic measures for the fifth year in a row to bring the state budget into balance.
The proposed Governor’s Budget for 2012–13, released by the Governor on January 5, 2012, identified a $9.2 billion deficit for a two-year period, 2011–12 and 2012–13. By the May revision, released on May 14, 2012, the state’s deficit had increased to $15.7 billion over the two-year period. The increase was mainly due to lower revenues, an increase in Proposition 98 obligations and court rulings.
The budget actions close the $15.7 billion deficit for the 2011–12 and 2012–13 fiscal years through a combination of program reductions and reforms ($8.1 billion), revenue increases ($6 billion), and other measures. The budget proposal assumes voter approval in November 2012 of the Governor’s proposed tax initiative. The tax measure would:
- Impose a temporary (four-year) 0.25 percent increase in the state sales tax. The sales tax increase would go into effect on January 1, 2013.
- Impose a temporary (seven-year) increase on annual earnings over $250,000. The income tax hike would be retroactive to January 1, 2012.
The 2012–13 budget package includes trigger cuts that would go into effect January 1, 2013, if voters do not approve the tax initiative. The trigger cuts include funding cuts of $5.4 billion to programs funded under Proposition 98. The funding cuts are the result of (1) a reduction of $2.9 billion in the guarantee due to revenue reductions and (2) a reduction of $2.5 billion to accommodate inclusion of two additional programs under Proposition 98.
The $5.4 billion reduction would be achieved by reversing an action to pay down $2.3 billion of deferrals ($2.1 billion for K–12 and $210 million for community colleges) in 2012–13, by reducing general-purpose funding for schools by $2.7 billion, and by reducing community college funding by $340 million.
If the trigger cuts go into effect, schools will have the flexibility to reduce the school year to 160 days in 2012–13 and 2013–14. This reflects a reduction of an additional 15 days in each school year.
Kindergarten through Grade Twelve Education Highlights
Table 1 and Chart 1 summarize the total funding from all sources for kindergarten through grade twelve (K–12) education from all sources in 2012–13. The table shows that the budget projects total funding of $68.4 billion. Including all fund sources, the budget provides funds of $11,412 per pupil in average daily attendance (ADA) for 2012–13.
Table 1: Funding for K–12 Education (in millions)
Sources of Funding |
All Sources |
Proposition 98 |
|---|---|---|
State General Fund |
$37,932 |
$33,309 |
State lottery |
931 |
0 |
Other state funds |
122 |
0 |
Federal funds |
7,297 |
0 |
Local debt service |
3,278 |
0 |
Local property taxes |
14,981 |
14,342 |
Other local funds |
3,822 |
0 |
Total |
$68,363 |
$47,651 |
Note: Includes funds for CDE state operations, state special schools, state school facilities bond repayments, state contributions to the State Teachers Retirement System, the State Library, and the Commission on Teacher Credentialing.
Chart 1: Sources of Funding for California Schools
Focusing on Proposition 98 funding for education, the budget package proposes a funding level of $53.5 billion for K–14 in 2012–13. This is $6.6 billion above the revised 2011–12 budget level. The $6.6 billion increase in Proposition 98 spending includes $6.1 billion for K–12 programs.
Chart 2 shows the trend in Proposition 98 funding per pupil in K–12 schools from 2002–03 through 2012–13. The chart shows that, under the Budget Act of 2012, schools will receive Proposition 98 funds averaging $7,955 per pupil in ADA for 2012–13. This is a $959, or 13.7 percent, increase from the revised 2011–12 level of $6,996 per pupil.
Chart 2: Proposition 98 Per-Pupil Funding: 2002–03 through 2012–13
Major Changes
Major components of the $6.1 billion funding increase for K–12 education as a result of the 2012–13 Proposition 98 increase include $3.1 billion to backfill for one-time solutions in the 2011–12 budget package and $2.1 billion to reduce inter-year deferrals. The deferral reduction would be reversed if the Governor’s tax initiative does not pass in November.
The budget package also includes additional intra-year deferrals related to the assumption that $6.9 billion in revenue limit funding will come from the Education Protection Account (EPA), which would be established by the initiative. Revenue limit payments would be reduced throughout the year, with the full amount of the EPA payments made in June 2013.
Redevelopment Agencies
The budget package assumes General Fund savings of $1.5 billion (K–14) in 2012–13 due to the distribution of redevelopment agencies’ cash assets and $1.8 billion (K–14) over two years due to the distribution of redevelopment agencies’ tax increment funding.
Cost-of-Living and Growth Adjustments
The budget package does not provide a statutory cost-of-living adjustment (COLA) for K–12 education and instead establishes deficit factors of 22.272 percent for school districts and 22.549 percent for county offices of education (COEs) to reflect the lack of a COLA. The statutory COLA is 3.24 percent.
The budget package provides growth funding for revenue limits, charter school block grants, and charter school categorical block grants.
Child Care and Development
The final budget package reduces child care by $130 million. The specific actions in the budget package include:
- Transfer funding from general child care to the part-day state preschool program to acknowledge the part of the day that is curriculum-based. Funding for the remainder of the day continues to be provided through general child care funds.
- Align preschool age eligibility with the new kindergarten start date.
- Require families to pay fees for the part-day preschool program.
- Impose an 8.7 percent across-the-board cut ($80 million) to direct service programs, except Stage 2. This cut affects general child care, migrant, alternative payment, and Stage 3 programs.
- Reduce alternative payment programs (non-CalWORKs vouchers) by $20 million and state preschool by $30 million.
Charter Schools
The budget package authorizes COEs and county treasurers, with approval of the county board of education, to make loan funds available to charter schools in the same manner as for school districts.
The budget also allows a COE to issue Tax Revenue Anticipation Notes (TRANs) on behalf of all charter schools over which it has supervisory authority and authorizes charter schools to issue independent TRANs.
The budget authorizes a charter school to directly seek an exemption from intra-year deferrals and requires the charter authorizer be notified of the request.
Further, the budget requires the governing board of any school district that is seeking to sell or lease any real property designed to provide direct instruction or instructional support it deems to be surplus property to first offer that property for sale or lease to any charter school that has submitted a written request to the school district to be notified of any surplus property offered for sale or lease by the district.
Mandates
The budget package establishes a mandates block grant of $167 million (K–12) with funds to be distributed based on ADA. Rates will be:
- School districts, $28 per ADA
- Charter schools, $14 per ADA
- County offices of education, $28 per ADA plus $1 “extra” per revenue limit ADA generated by local educational agencies within that county
Other Actions
The budget eliminates funding for:
- Early Mental Health Initiative
- Advancement Via Individual Determination (AVID)
- State supplemental funding for child nutrition programs provided by child care agencies and public agencies other than school districts
- Vocational education student associations
The budget moves a portion of American Indian Education Center funding previously funded from non-Proposition 98 funds into Proposition 98.
The budget funds the Quality Education Investment Act at a funding level of $313 million (K–12) within Proposition 98.
The budget suspends through December 31, 2014, current law that imposes Level 3 developer fees if funding is not available for new construction.
Budget and Trailer Bills
The Budget Act and trailer bills are as follows:
- Budget Bill: AB 1464, Chapter 21, signed June 27, 2012
- Amendments to Budget Bill: AB 1497, Chapter 29, signed June 27, 2012
- Education trailer bill: SB 1016, Chapter 38, signed June 27, 2012
- Education trailer bill cleanup: SB 1028, Chapter 575, signed September 26, 2012