Tuesday, June 11, 2013


Budget compromise calls for LCFF next year, raises base grant for all schools

By Tom Chorneau – News & Resources  |  http://bit.ly/12DMoPK

Tuesday, June 11, 2013  ::  Gov. Jerry Brown and legislative leaders reached agreement on a budget plan Monday that will usher in sweeping changes to school funding that give local officials far more control over spending decisions.

While Brown got most of what he wanted in the education spending plan, legislative leaders won several key concessions as part of the Local Control Funding Formula including a larger base grant that all districts will receive of about $537 per student more than what the governor proposed in his revised May budget.

As part of that plan, the governor agreed to reduce somewhat the ‘supplemental’ grant aimed at districts with high numbers of low-income, English learners and foster care students while increasing the ‘concentration’ grant that would go to districts with 55 percent of their students identified as disadvantaged.

Under the plan, the supplemental grant would be 20 percent of the base grant and the concentration grant would be 50 percent of the base.

Brown also won on when the new funding formula would take effect – in the coming fiscal year, 2013-14, but the phase-in period would be extended to eight years.

Even with the early start date, the California Department of Education will still take seven months to recalibrate the system.

The administration said Monday that under the compromise funding formula no district would receive less money than last year and virtually all districts would be able to return to the pre-recession levels of 2007-08.

In a related development, the governor and lawmakers also reached agreement on how to spend $1 billion from a corporate tax measure approved by voters in November.

According to state Sen. Kevin De Leon, D-Los Angeles, the Proposition 39 money would be distributed to school districts and community colleges on a “poverty-weighted” formula based on their average daily attendance.

The districts would be responsible for submitting applications for energy saving projects based on criteria established by the California Energy Commission and to have those applications approved before receiving funds, according to a release from De Leon.

The proposed budget deal would provide $250 million in one-time money for the career tech programs.

Adult education programs will be maintained as currently structured for two years, but the agreement provides for grants to help districts and community colleges plan for new governance.

As for common core implementation, the two sides have already agreed to provide $1 billion next year to help schools buy instructional materials, train teachers and make technology improvements.

There is a commitment to add another $250 million in 2014-15.

Legislative leaders gave ground to Brown on a large amount of spending on social services that had been badly cut during the last five years. Speaking for many, state Sen. Mark Leno, D-San Francisco, said that if the governor’s revenue projections turn out to be too conservative – the Legislature will return to the spending question in January to make mid-year adjustments.

The proposed agreement will now need to be put into legislative language and brought before both houses for review. The deadline for adopting a new budget is this Saturday, June 15.


Jump in May revenue collections argues against Brown’s austerity budget

By Tom Chorneau | SI&A Cabinet Report – News & Resources http://bit.ly/192FxOv

Tuesday, June 11, 2013  ::  For the first time in many years, the monthly revenue report from the state Controller’s office, released Monday, showed collections outpaced budget estimates for all of the state’s major indicators.

Total revenues exceeded projections made just a few weeks ago by more than 12 percent, or nearly $800 million, led by income tax collections, which came in almost $600 million, or 20 percent, higher than estimates the Brown administration made as part of its revised May budget.

While the report is clearly an important milestone in the resurgence of the California economy, the state’s top fiscal officer also warned that May accounts for only 7 percent of the California’s annual revenue. This month, June, which brings in closer to 12 percent of the total, will provide a much clearer picture of the where the economy is heading.

“California continues to show strong signs of recovery. May’s higher revenues reflect growing employment, increased consumer spending, and a resurgent housing market,” said Controller John Chiang in a statement. “However, this good news should be tempered by nagging questions regarding its sustainability and by the need to repay years of accumulated debt.”

While the numbers would have tended to support legislative leaders in this argument that next year’s budget should include a higher amount of spending than what had been proposed by Gov. Jerry Brown.

The argument appears to have been won by the governor, after announcement of an agreement on the budget ahead of Saturday’s June 15 deadline (see related story today).

Brown’s administration has warned that much of the upswing in the economy is likely to be temporary and that the revenues from personal income taxes in the next fiscal year are likely to be less than half of those forecast by the Department of Finance at the beginning of the year.

The controller’s report explained that the Brown administration had revised downward the amount of personal income taxes expected in May under the assumption that higher payroll taxes and higher tax refunds would drive down total wages.

Instead, it appears the opposite occurred – with upticks coming in estimated taxes, payments on final returns and with-holdings; meanwhile, tax refunds turned out to be much smaller than expected.

In addition to higher income tax collections, the state’s other two major revenue sources also beat estimates during the month of May: corporate taxes were $22.6 million higher and sales tax receipts came in $17.8 million above estimates.

The controller’s report includes a number of other year-over-year economic indicators that suggest recovery is taking hold: Total civilian employment has increase from 16.5 million in April 2012 to almost 17 million this spring.

The state’s median price home has gone from $264,000 last April to $324,000 today, while the number of new single- and multi-family housing permits has gone from 3,314 last spring to 7,589 today.

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