Saturday, June 11, 2011

SEPTEMBER TAX VOTE NO HELP TO SCHOOLS: All-cuts budget risks Prop 98 suspension

By John Fensterwald - Educated Guess |

6/09/11 •With a June 15 deadline looming, Gov. Jerry Brown remain at odds with Republican legislators over continuing temporary state taxes for a few months and then letting voters decide in September or November whether to extend them for four or five more years. But for K-12 schools and community colleges, it’s a frustrating distinction without a difference. Neither option works.

Districts must build their budgets on July 1 based on definite revenues for the year. They hire and lay off staff and set their schedules this summer based on what they know, not what Brown would like to happen. That’s why the California Teachers Association and other education groups, with the support of Democratic leaders of the Legislature, have been campaigning hard for months for the Legislature to extend $5.6 billion in state taxes through at least next June so that districts could count on the money for a whole school year.

Although education groups have explained the dilemma to Brown, he has not publicly supported a June 2012 ballot on tax extensions. And in calls to reporters this week, he talked only about getting the issue before voters as soon as possible: September. Doing so would enable him to keep his campaign pledge not to pass taxes without voters’ consent. And it reflects political reality: There appears to be no Republican support for a tax extension for a few months, not to mention a year.

Too late to reinstate teachers

So where does that leave schools?

They must build their budgets assuming the Legislature would pass an all-cuts budget, taking away at least another $1.6 billion from the schools (more on that amount in a minute). If voters are given the opportunity and eventually do pass the tax extensions after the school year has started,  the money will have “very limited value in the current year,” said Rick Pratt, assistant executive director of the California School Boards Association. “Districts might find it relatively easy to add back after-school tutoring programs, counselors, and bus drivers, but rehiring teachers and moving kids to different classes mid-year create substantial problems.”

Brown started the year facing a $26 billion budget deficit. Between cuts that the Legislature passed in March and a projected $6.6 billion in unexpected higher revenues, Brown reduced the gap to about $9 billion in his revised May budget.

The Legislative Analyst Office analysis of the May revise budget explains how, if Brown's budger were passed, K-12 schools and community colleges would get $3 billion more in Prop 98 money next year.

The Legislative Analyst Office analysis of the May revise budget explains how, if Brown's budger were passed, K-12 schools and community colleges would get $3 billion more in Prop 98 money next year.

If temporary taxes are extended and the Legislature backs other fixes, Brown is proposing to give K-12 schools and community colleges $52.4 billion next year under Proposition 98 funding – $3 billion more than they got this year. Nearly all of that would go toward removing a chunk of what Brown calls the state’s “wall of debt,” starting with deferrals, including the new $2.1 billion deferral that Brown had called for in his January budget. In terms of real dollars in hand to run their schools, districts and charter schools would basically get what they received this year, about $49.7 billion.

If temporary taxes aren’t extended, districts will face a dilemma. Brown’s May revise implies that K-12 schools would have to take their lumps, along with other programs. Since schools consume 40 percent of the general fund, a proportional hit would cut schools about $3.6 billion, or about $600 per student, resulting in a shortened school year and theoretically more layoffs.

But, pointing to the increased revenues, Republicans are saying they would not vote to suspend Prop 98 under any condition. Without higher taxes, schools would lose $1. 6 billion, but Brown can reinstate the deferral he had proposed in January, and schools would get about the same as last year, they argue.

There are faulty assumptions behind the Republicans’ education budget, but Ron Bennett, president and CEO of the consulting and advocacy firm School Services of California, Inc., says that Democrats too will be pressured not to suspend Prop 98 funding.

Nor should they vote to suspend, if, after $9 billion in past cuts and $1.6 billion next year, they truly consider K-12 education a high priority, Bennett said.

In January, when Brown called for cutting K-12 schools, Schools Services recommended that districts cut $349 per student in revenue. Despite the uncertain future, School Services is now recommending that districts build their budgets assuming the same spending level as last year and that they set aside $349 per student in reserves, not to be spent until the Legislature finally passes a budget.

There is no need to go beyond that, even under an all-cuts budget, Bennett said. “If you go to doomsday sequences, it would be like having amputation in anticipation that you might get gangrene.”

It would take only a majority vote of the Legislature to pass an all-cuts budget. But suspending Proposition 98 would require a two-thirds vote. Even if Brown and all Democrats agreed, they’d still need some Republicans to join them to suspend – adding more intrigue to an already messy process.

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