December 6, 2002
 

Memorandum

To:           CCEA Executive Committee
                Council of District Representatives

From:       Peter Birdsall & Theresa Inslee

Subject:    2002-03 Mid-Year Budget Reductions

During a press conference held earlier today, Governor Davis announced his proposed mid-year spending reduction proposals, which would impact both the 2002-03 and 2003-04 fiscal years.  The administration is proposing state reductions and adjustments totaling $10.2 billion over an 18-month period.  If the Governor’s proposal is approved by the Legislature, K-12 education spending would be cut by $3.1 billion, reducing education spending to the Proposition 98 minimum guarantee.  This substantial reduction represents almost one-third of the $10.2 billion dollars in total state reductions proposed by the Administration.  The most significant proposal to K-12 education is a 3.66% across the board cut of the general fund for revenue limits and all programs totaling approximately $1 billion. 

In an effort to help alleviate this fiscal burden to districts and county offices of education, the Administration is proposing to suspend the 3% district reserve requirement for two years, as well as allow flexibility in categorical programs spending.

For your information, we have provided the following excerpts from Mid-Year Spending Reduction Proposals, which outlines a number of potential reductions to K-12 education programs.

“Across-the-Board Reductions: The Administration proposes that K-14 local assistance programs items be reduced across the board by 3.66 percent for a total of $1.078 billion. The across-the-board reduction, combined with the specific reductions proposed below, reduces total Proposition 98 appropriations to the current estimate of the required minimum Proposition 98 spending level. The Administration proposes separate legislation to help districts manage these reductions by easing the three percent reserve requirement through June 2004 and expanding the number of categorical programs among which funds can be shifted.

“The spending required by Proposition 98 has been reduced due to the significant decline in 2002-03 estimated General Fund revenues and has also been adjusted to reflect revised population figures and daily attendance. The total 2002-03 Proposition 98 funding requirement is currently estimated to be $44.645 billion. Proposition 98 appropriations are proposed to be reduced by a total of $1.734 billion, which is 3.7 percent of total Proposition 98 revenues including property taxes. K-12 appropriations are reduced by $1.51 billion, a 3.6 percent reduction of total K-12 revenues, and California Community College programs are reduced by $135 million, a 2.8 percent reduction of total revenues. Additionally, $143 million set-aside for Proposition 98 cost increases at the time of Budget enactment is no longer proposed to be appropriated.

“Principal Training Program: The Administration proposes to reduce $5 million in Proposition 98 General Fund for the Principal Training Program, which provides incentive funding to local education agencies for professional development for principals and vice principals. The remaining $2.5 million in 2002-03 funding coupled with the $15 million provided in 2001-02 is sufficient to meet the projected utilization and honors the State’s match commitment.

“California School Information Services: The Administration proposes to reduce $1.6 million in Proposition 98 General Fund for the expansion of the California School Information Services Program (CSIS) to a new cohort of districts. Delaying the start up of a new cohort will allow CSIS to focus on implementing the statewide student identifier required by Chapter 1002, Statutes of 2002, and to meet requirements of the federal No Child Left Behind Act. In addition, CSIS is working with the Los Angeles Unified School District to implement a CSIS compatible student information system, and is ensuring that the existing consortia of districts are fully implemented.

“Healthy Start Grants: The Administration proposes to reduce $2 million in Proposition 98

General Fund appropriated for a new cohort of Healthy Start sites, which will not affect existing operational programs. A related $667,000 reduction in Department of Education State operations is associated with this reduction.

“College Preparation Partnership Program: The Administration proposes to revert $5 million in Proposition 98 General Fund appropriated for allocation to public high schools to operate preparation courses for college admissions tests. This action will create one-time savings by aligning the year of appropriation with the year of expenditure.

 “Mandates: The Administration proposes to defer payment of $870 million of claims for state mandates for K-14 education agencies in 2003-04. The Controller has identified $614 million in prior year deficiencies for mandates. This includes $259.9 million for the School Bus Safety II mandate that was recently shown by a Bureau of State Audits review to reflect large amounts of non-reimbursable costs. The Administration proposes to review the Commission’s processes for determining reimbursable activities, defining what can be claimed and how claims are to be documented with the intent to reform these processes.

“Reversion of Prior-Years Savings: The Administration proposes additional reversions of Proposition 98 savings from prior years into the Proposition 98 Reversion Account to capture a variety of existing savings, which would not otherwise revert until a future date. The reversions total $241.4 million from Department of Education K-12 programs. Programs with savings include:

• Tenth Grade Counseling: $97,000 in 2001-02 program savings.
• Pupil Dropout Prevention Program: $210,000 in 2001-02 program savings.
• College Preparation Partnership Program: $4.1 million in 2000-01 program savings, $6.2 million in 2001-02 program savings, and $6.2 million in savings from Chapter 795, Statutes of 1998.
• Education Technology: $3.8 million in 2000-01 program savings and $23,000 in 2001-02 program savings.
• Mandates: $20 million in 2001-02 program savings for mandates where claims were less than budgeted.
• Mathematics and Reading Professional Development Program: $31.7 million in 2001-02 program savings. These funds were proposed for reversion during the 2002-03 budget process but were inadvertently deleted from Chapter 99, Statutes of 2002. The 2002 Budget Act will continue to provide $62.2 million for this program.
• Charter School Facilities Block Grant: $5 million in 2001-02 program savings, which are available as a result of a delay in program implementation.

“California Mathematics Initiative for Teaching: The Administration proposes to eliminate

$500,000 remaining Proposition 98 General Fund for the California Mathematics Initiative for Teaching, which provides incentives for individuals to meet State preparation standards and credentials to teach mathematics in elementary and secondary schools.

“Support for Paraprofessional Program: The Administration proposes to revert $51,000 General Fund that is used to fund a position to support the Paraprofessional Program. This position will be funded with available funds from the Teacher Credentials Fund. With this reversion, the Commission on Teacher Credentialing has no non-Proposition 98 General Fund remaining.”