CCEA Newsletter September 2003, Page 10

Text Box: During a ceremony held on Saturday, August 2, Governor Davis signed the 2003-04 State Budget, bringing to a close what was considered to be one of the most difficult and contentious budget deliberations in the State’s history. Overall, the budget totals just over $99 billion with a reduction in General Fund spending of only $7 billion as compared to the previous year. Tax increases were notably absent. However, it is predicated on the recent triggering of the Vehicle License Fee increase, which is expected to generate an additional $4 billion annually. This budget also relies heavily upon the issuance of pension and tobacco securitization bonds, anticipates $680 million annually from tribal gaming revenue, and includes $2.2 billion in federal funds to cover state expenses. The budget also utilizes a $10.7 billion bond to finance the prior year (2002-03) deficit. The state is expected to begin the 2004-05 fiscal year with roughly an $8 billion deficit. While education comprises roughly 41% of the state’s General Fund spending, it remained relatively unscathed from any substantial vetoes. The Governor made only two relatively minor education line item vetoes in signing the final budget, although neither have a direct impact on statewide programs. Following are the more noteworthy education items. ü The Proposition 98 minimum guarantee is fully funded at $45.7 billion,

Text Box: ü $1.8 billion in targeted cuts and suspensions to specified categorical programs, ü 1.2% reduction to revenue limit funding, ü No cost-of-living adjustment (COLA) for either revenue limit funding or categorical programs, ü 1.34% attendance growth for revenue limits and special education, ü $333 million increase in federal NCLB funding for local use, ü Established a “deficit factor” on revenue limit apportionments, which formally recognizes lost COLA funding and the 1.2% revenue limit reduction, with intent to restore the deficit beginning in the 2005-06. In an attempt to provide LEA’s with additional flexibility to offset reductions to education funding, the Legislature adopted and the Governor approved access to reserves as follows: Reduced the required reserve for economic uncertainties (AB 1200 reserve) by 50% for two years in 2003-04 and 2004-05 fiscal years; Reduced the required restricted reserve for routine maintenance from 3% to 2% for the budget year; Authorized school districts to

Text Box: Following Tense Session, Governor Signs State Budget, Funds Proposition 98 Minimum Guarantee

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