Capitol Update 6/16/14

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June 16, 2014

Lawmakers Pass On Time Budget

With a few hours left to meet their constitutional obligation on Sunday evening, the California State Legislature passed the budget for the 2014-15 fiscal year which begins on July 1. The adopted budget largely reflects an agreement between Governor Brown and legislative leadership that was adopted by the budget conference committee last Wednesday. The Governor still needs to sign the budget bill, the implementing trailer bills, and has the authority to veto any spending that he does not support. However, given the general agreement with the package, we do not expect any significant vetoes. The budget is contained in Senate Bill 852 and Senate Bill 858 is the Education Trailer Bill.

The budget reflects the Governor’s May Revision projections for total Proposition 98 spending, rather than the much higher revenue estimates proposed by the Legislative Analyst’s Office. However, the final budget makes several changes to the spending plan to reflect some of the Legislature’s top priorities for education.

Here is our current understanding of budget highlights related to education: 

● Deferral Plan Revised: The most significant change from the Governor’s proposal is a reduction in the deferral buy-back plan to provide resources for other legislative priorities. Under the adopted plan, approximately $1 billion in deferrals would remain for 2014-15. However, the plan also includes an automatic “trigger” that would buy-back more deferrals if additional revenues become available before next May.

● Mandate Reimbursement/Common Core Implementation (approximately $287 million, $50 per ADA): Provides a per-ADA block grant for any educational purpose, based on 2013-14 ADA. To the extent an LEA has outstanding mandate claims, the dollars would be designated as an offset to that obligation, and there is intent language that the funds be used for Common Core implementation.

● Local Control Funding Formula (LCFF) implementation (approximately $250 million): Additional funding beyond the Governor’s May Revision to further accelerate implementation of the LCFF.

● California Career Pathways Trust (approximately $250 million): Augments one-time funds from last year for a competitive career technical education linked learning grant program. Charter schools are eligible to apply, and some charter schools received a grant this year.

● Preschool/child-care (approximately $155 million P-98, $101 million non-98 GF). Provides for a range of increased caseloads, training and facilities for early childhood education programs. This is a much pared down version of the early childhood education proposal released earlier this year. Charter schools offering these programs could access the resources, but it does not mandate charters to offer these programs.

● STRS Contributions: In a compromise to the Governor’s May Revision proposal, employer contributions will increase by 0.63% in 2014-15, 1.56% in 2015-16, and 3.56% in 2016-17. There will also be increases to state and employee contributions. This is less of an increase than the Governor had proposed, but still a significant increased cost to LEAs, including charters that participate in STRS. 

● Independent Study (IS) Streamlining: The Legislature enacted a revised version of the Governor’s proposal to streamline Independent Study and offer a “course-based” IS option for K-12 starting in 2015-16. The proposal also streamlines several provisions of traditional IS to allow the terms of IS agreements to last a full academic year and to allow electronic records.

● Adults in Charters: A May Revision proposal to prohibit charter schools serving adults in specified programs and in correctional facilities was amended to only apply for one year to charter schools approved after July 1, 2014. CCSA had requested this change to protect schools that were approved to operate in 2014-15.

● District Reserves: A highly controversial provision that would cap district reserves was adopted, however, as with standard district reserve requirements, these provisions do not apply to charter schools.

At this time, many of the details of the budget are still unclear. CCSA will continue to analyze the details of the adopted budget in the coming days and will prepare a complete Budget Brief once the Governor has taken final action and signs the budget bills.