January 11, 2002

To: CCEA Executive Committee

From: Peter Birdsall & Theresa Inslee

Subject: Governor’s Proposed Budget for 2002-03

Yesterday, Governor Davis released his proposed 2002-03 Budget. Overall, the budget has received praise from statewide education groups for honoring the Proposition 98 funding guarantee and for providing funding for enrollment growth and a cost-of-living adjustment (COLA) for all major K-12 education programs.

Of particular concern to K-12 education are the Governor’s proposals to use new federal special education dollars as an offset to pay for special education COLA and growth, his proposal to eliminate PERS reduction and equalization funding in the current and budget years, and a new proposal to cut funding for district and county office independent study programs by 10%.

Of particular interest to CCEA is the Governor’s proposal to provide an across the board COLA and growth funding, including continuation high schools and all major categorical programs that received a COLA in 2001-02. However, the COLA has been revised downward to 2.15% from earlier estimates. The statutory COLA would increase K-12 district revenue limits by $96 per ADA for elementary districts, $116 per ADA for high school districts, and $100 per ADA for unified districts. The proposed budget provides funding for K-12 education growth of 1.07%.

The Governor’s proposed budget would restore only a few programs proposed for reduction or elimination in the current year. As you are aware, the Administration proposed to suspend funding for 18 education programs in mid-November, in an effort to provide potential savings to address the state’s budget shortfall. While the Legislature has yet to act on his proposed mid-year cuts for 2001-02, the Governor’s proposed 2002-03 Budget assumes that all the cuts will be approved, and further proposes to continue those cuts into the budget year with the exception of three key programs he hopes to restore.

Specifically, the proposed 2002-03 Budget would restore the High Priority/Low Performing Schools Block Grant Program ($197 million), Before/After School Program Expansion funding ($29.7 million), and the proposed mid-year cuts to the Teaching as a Priority (TAP) Block Grant Program ($20 million).

The Governor’s 2002-03 Budget proposal would continue all of the other reductions and eliminations proposed last November, including the elimination of four programs of particular concern to the school community: PERS Reduction funding ($35 million), equalization funding ($40 million), K-12 Per Pupil Categorical Block Grant Program ($67.8 million), and the Energy Relief Block Grant Program ($250 million).

With regard to independent study, the Governor’s budget summary states, "Chapter 892, Statutes of 2001, reduced funding for non-classroom based charter schools by up to 20 percent in 2002-03. Recognizing that non-classroom instruction (independent study) is less expensive than instruction provided in a classroom setting whether provided by a charter or by a traditional public school, the Budget proposes a 10 percent, non-waivable reduction in funding for all other independent study instruction. This reduction applies to all public non-charter K-12 schools, and will save an estimated $43 million in the 2002-03 fiscal year."

Although the Governor's proposed budget provides COLA and growth for special education, they are provided from the increased federal dollars, not from state Proposition 98 funding. This means the Governor is proposing to use new federal special education dollars in large part to fund COLA and growth. However, the Governor stated his hope that this use of the federal increases as an offset to state funding would be a one time occurrence, noting it was necessary due to the severity of the state’s current fiscal condition.

The following excerpts from the Governor’s press materials provide more details on other key components of the Governor’s K-12 Education Budget:

"$250 million for schools to purchase standards-aligned instructional textbooks in core curriculum areas for students in grades K-12. Once schools provide standards-aligned textbooks to each pupil, the funds can be used for a variety of instructional materials purposes, including school library and classroom library materials. This block grant replaces the existing Instructional Materials K-8, Instructional Materials 9-12, School Library Materials, and K-4 Classroom Library programs. The Administration also intends to propose additional increased funding for future years consisting of $100 million in 2003-04, $200 million in 2004-05, $300 million in 2005-06, and $350 million in 2006-07.

"$200 million in onetime Proposition 98 Reversion Account funding for instructional materials for school districts that certify they will provide each pupil with a standards-aligned Reading/Language Arts textbook by the beginning of the 2002 school year.

"$100 million in onetime Proposition 98 Reversion Account for school districts to purchase school library materials or K-4 classroom library materials.

"$75 million in onetime Proposition 98 Reversion Account for school districts to purchase science lab equipment and materials to provide standards-based science instruction in grades 7-12. These funds will build upon efforts such as the adoption of standards-aligned instructional materials and curriculum frameworks, already begun by the Administration to develop high standards for science learning.

"The 2002-03 Budget continues the Administration's commitment to provide K-12 instructional staff with quality professional development by increasing second-year funding for the Mathematics and Reading Professional Development Program by $30 million to $110 million. Chapter 737, Statutes of 2001, enacted the Mathematics and Reading Professional Development Program, which is modeled after the successful University of California-operated Professional Development Institutes and serves both teachers and instructional aides. The goal of this program is to ensure that all reading and mathematics teachers receive standards-aligned training as quickly as possible.

"$7.5 million for the Principal Training Program established by Chapter 697, Statutes of 2001. The goal of this program is to provide 15,000 principals and vice-principals with training in instructional standards and effective school management techniques. Over the three-year period of this program, the State will spend $45 million to provide $3,000 per person trained, with school districts providing a local match of $1,000 per individual. However, the Administration has secured a grant from the Gates Foundation which will provide the local match of $1,000 for each principal and $500 for each vice-principal.

"$88.3 million for the Beginning Teacher Support and Assessment Program, which will be sufficient to serve over 24,600 teachers. While this funding amount maintains the proposed $20 million decrease in base funding proposed for 2001-02, it also includes $3.6 million for program growth and COLA.

"$87 million for the Peer Assistance and Review (PAR) program, which includes a continuation of the $50 million base funding decrease proposed for 2001-02. The Administration's proposal would reduce the funding rate for this program by 50 percent and specify that any funding captured in excess of the $50 million in proposed savings would be provided to school districts that certify they have been using PAR funds for specified activities. The PAR program funds are used to provide mentoring services to veteran teachers or to supplement other staff development programs, such as the Beginning Teacher Support and Assessment Program and the Alternative Certification Program.

"Elimination of this $21.6 million program…this program provided funding for the participation of teachers in development and implementation of curricula, instruction, and student assessment.

"$118.7 million for the Teaching As A Priority Block Grant, thereby restoring the $20 million funding reduction proposed for 2001-02. This program provides low-performing schools funding to offer recruitment and retention bonuses to credentialed teachers.

"$197 million for the High Priority Schools Grant Program (HPSGP), which was delayed until July 1, 2002, due to current year budget constraints, will provide grants to the State's lowest performing schools to improve academic performance. Priority in funding will be provided to schools with the lowest API scores. While in the program, participating schools will receive annual grants of up to $400 per pupil to implement an action plan focusing on the following essential components:

"The Governor's Budget includes a $75 million augmentation to expand the before and After School Learning and Safe Neighborhoods Partnerships Program, providing a total of $162.8 million for the program. This program provides homework assistance, other academic support, and access to safe before and after school care for children with working parents. This increased amount includes $29.7 million for expansion of grants that were suspended in the current year and $45.3 million for additional expansion, $30 million of which reflects a shift from savings in other programs due to the child care reform proposal. This expansion will provide services to at least 79,000 additional school-age children.

"A reduction of $36 million to reflect the deletion of funds allocated for services to CalWORKs recipients. These funds were primarily used to allow Adult Education and Regional Occupational Center and Programs (ROC/Ps) to claim funds above their average daily attendance cap if they used the additional funds to provide instruction to CalWORKs participants. Due to recent program augmentations, these CalWORKs funds are no longer necessary to ensure that the State meets its maintenance-of-effort requirement for the federal Temporary Aid for Needy Families grant. CalWORKs recipients can still be served in adult education and ROC/P programs or through other CalWORKs employment services and training funds provided by the counties."

If you have any questions about this memo, please give us a call at 916.441.3302.