February 7, 2003
 

memorandum
 

To:           CCEA Executive Committee
 

From:      Peter Birdsall & Theresa Inslee
 

Subject:        Legislative Update

Mid-Year Reduction Legislation Awaiting Governor’s Action

On Monday, February 3^rd, the Senate amended legislation to include the compromise between Assembly and Senate leadership on current year reductions to K-12 education.  These provisions are contained in ABX1 8, (Oropeza) and total approximately $2.2 billion in reductions.  The measure was approved as amended by the full Senate on a partisan vote of 25-15 and returned to the Assembly for concurrence in the amendments.  The Assembly approved ABX1 8 by a vote of 45-33 on Tuesday. 

The Legislature, in a bold move, double-joined ABX1 8 to ABX1 4, which contains the Vehicle License Fee (VLF) increase otherwise known as the “car tax”.  This means that ABX1 8 would only become operative if ABX1 4 is also enacted.  Governor Davis has threatened to veto ABX1 4, which leaves ABX1 8 in a precarious position.  In a press release on Tuesday the Governor stated, “…the ultimate task before us is to pass a balanced, timely and responsible budget that can command votes from both Democrats and Republicans…  So I will veto the measure that the legislature is sending me and ask them, difficult though I know it is, to go back to the drawing board and send me a package of cuts as soon as humanly possible."  This issue is also a sticking point for Republicans of each house who all voted “nay” on the measures.

Even if Davis does make good on his intention to veto the VLF increase, it appears that most of the unresolved issues remain outside of K-12 education and therefore it is useful to update the Executive Committee on ABX1 8. 

The Legislature, rather than approving the Governor’s across-the board and categorical program reduction proposals, adopted the following targeted cuts, shifts, and flexibility language.

ü      The permanent shift of $1.087 billion in P2 apportionment payments from June (current year) to July (budget year).

ü      Language allowing districts to use up to 50% of restricted and unrestricted reserves as of July 1, 2002 to offset economic uncertainties.  This excludes reserves for capital outlay, bond funds, and federal funds.

ü      Language allowing districts to waive their local deferred maintenance match for 2002-03.

ü      A reduction in current year instructional materials funding of $103 million (approximately 25%), including language allowing districts to utilize materials adopted pursuant to AB 2519 in order to meet the state requirements in 2002-03 and 2003-04 for use of state-adopted instructional materials.

ü      The deferral of $122 million in state mandate claims.

ü      Mid-year budget reductions of: 1) $21.8 million (25%) from the Peer Assistance and Review program (PAR), 2) suspension of the Golden State Exam program ($7.2 million), and 3) reducing school library funding by $11.6 million (50% from the level contained in the 2002-03 budget).

Perhaps of greatest interest to the education community is what was not included in the measure.  Some of the more controversial reductions proposed by the Governor that were not adopted by the Legislature include:

ü      The 3.66% across-the-board reduction to revenue limits and categorical programs.

ü      The additional 7.46% reduction to categorical programs.

ü      The “Mega Item” transfer authority language which would have allowed districts to transfer up to 20% of categorical funds to offset costs for supplemental instruction, special education, K-3 Class Size Reduction, and child nutrition.

ü      The proposed reductions to Regional Occupational Centers and Programs, related to property taxes.

At this point, we are waiting the Governor to either sign or veto ABX1 4.  If Davis chooses to veto the VLF legislation, the Legislature will once again attempt to tackle mid-year reductions and tax increases beginning next week.  Options include sending ABX1 8 to the Governor as is in a separate measure or attempt to package all the reductions and tax increases in a more palatable way so the Governor would be inclined to sign the measures. 

Once action is taken on the mid-year reductions, the Legislature and education community can begin tackling the 2003-04 budget year.  It is important to note that while continuation high schools have apparently dodged the 3.66% across-the-board reduction for the current year, this proposal is also being considered for the 2003-04 budget year, as is the additional 7.46% and 1.28% reductions to categorical programs.