The 2015-16 Budget: Major Features of the Adopted Plan (Proposition 98)

The 2015-16 Budget: Major Features of the Adopted Plan (Proposition 98) Translate Our Website This Google ™ translation feature provided on the Legislative Analyst's Office (LAO) website is for informational purposes only. The LAO is unable to guarantee the accuracy of this translation and is therefore not liable for any inaccurate information resulting from the translation application tool. Choose your language: × Skip to main content Home --> Policy Areas Capital Outlay, Infrastructure Criminal Justice Economy and Taxes Education Environment and Natural Resources Health and Human Services Local Government State Budget Condition Transportation Other Government Areas Publications The Budget Propositions and Initiatives Staff Careers About Us Search Overview Education Proposition 98 Higher Education Child Care and Preschool Health and Human Services Other Issues Water-Related Issues Cap-and-Trade Trial Courts Employee Compensation See More Publications Like This Back to the Top --> Tweet June 19, 2015 Proposition 98 Substantial Upward Revisions to Estimates of Proposition 98 Minimum Guarantee. State budgeting for preschool, elementary and secondary schools, and the California Community Colleges (CCC) is based primarily on Proposition 98, approved by voters in 1988. Proposition 98 established a minimum funding requirement commonly called the minimum guarantee. Figure 1 shows estimates of the minimum guarantee for 2013-14, 2014-15, and 2015-16. As shown in the figure, the estimate of the 2013-14 and 2014-15 minimum guarantees have increased $612 million and $5.4 billion, respectively from the June 2014 estimates. The estimate of the 2015-16 minimum guarantee is $7.6 billion (12 percent) higher than the 2014-15 Budget Act level. These increases in the guarantee are due primarily to state revenues being higher than assumed in last year’s budget package. The budget package funds at these latest estimates of the minimum guarantees. Figure 1 Tracking Changes in Estimates of Proposition 98 Minimum Guarantee (Dollars in Millions) June 2014 June 2015 Increase From June 2014 Amount Percent 2013-14 $58,302 $58,914 $612 1.0% 2014-15 60,859 66,303 5,444 8.9 2015-16 — 68,409 7,550 a 12.4 a Reflects increase from June 2014 estimate of 2014-15 minimum guarantee. Large Upward 2014-15 Adjustments Result in Relatively Modest Year-Over-Year Growth. Figure 2 shows approved Proposition 98 funding levels for each of the three years by segment and fund source. As shown in the figure, growth from the revised 2014-15 level to 2015-16 is $2.1 billion (3 percent). This relatively modest growth is due to the large upward revision to 2014-15 noted above. In 2015-16, total Proposition 98 funding is $68.4 billion. Of this amount, $49.4 billion is General Fund and $19 billion is local property tax revenue. The notable increase in local property tax revenue from 2014-15 to 2015-16 ($2.3 billion, 14 percent) is due in large part to the end of the triple flip and the shift of associated local property tax revenue back from cities, counties, and special districts to school and community college districts. Growth in local property tax revenue is slightly greater than growth in the Proposition 98 minimum guarantee, resulting in a slight reduction in Proposition 98 General Fund from 2014-15 to 2015-16. Figure 2 Proposition 98 Funding (Dollars in Millions) 2013-14 Revised 2014-15 Revised 2015-16 Budget Act Change From 2014-15 Amount Percent Preschool $507 $664 $885 a $220 a 33% K-12 Education General Fund $38,162 $43,888 $43,151 -$737 -2% Local property tax revenue 13,736 14,432 16,380 1,947 13 Subtotals ($51,898) ($58,321) ($59,530) ($1,210) (2%) California Community Colleges General Fund $4,248 $4,975 $5,301 $325 7% Local property tax revenue 2,182 2,263 2,613 350 15 Subtotals ($6,431) ($7,238) ($7,914) ($676) (9%) Other Agencies $78 $80 $80 — — Totals $58,914 $66,303 $68,409 $2,106 3% General Fund $42,996 $49,608 $49,416 -$192 — Local property tax revenue 15,918 16,695 18,993 2,298 14 a Includes $145 million for existing wraparound care formerly funded with non-Proposition 98 General Fund. Excluding this accounting shift, growth is $75 million (11 percent). Per-Student Funding Increases Significantly. Under the budget package, K-12 per-student funding increases from the 2014-15 Budget Act level of $8,931 to $9,942 in 2015-16—an increase of $1,011 (11 percent). Community college per-student funding also increases significantly, from the 2014-15 Budget Act level of $5,753 per full-time equivalent (FTE) student to $6,379 per FTE student in 2015-16—an increase of $626 (11 percent). (None of these numbers include the $500 million the budget provides for adult education consortia or the $885 million the budget provides for preschool.) Budget Package Contains Many Spending Changes. For 2013-14, the budget accounts for higher Local Control Funding Formula (LCFF) costs and uses the remaining funding increase for paying down the K-14 mandate backlog. Figure 3 and Figure 4 show Proposition 98 spending changes for 2014-15 and 2015-16, respectively. In addition to these changes, the budget package includes a $256 million settle-up payment related to meeting the Proposition 98 minimum guarantee for 2006-07 and 2009-10 and $207 million in unspent prior-year Proposition 98 funds that have been repurposed. We discuss major spending increases for K-12 education, adult education, and community colleges below, beginning with actions affecting both schools and colleges. We discuss major spending increases for preschool in our companion “Child Care and Preschool” document . Figure 3 2014-15 Proposition 98 Changes a (In Millions) Technical Adjustments $455 K-12 Education Pay down mandate backlog $2,748 Eliminate deferrals 897 Fund teacher training and support block grant 490 Fund career technical education (CTE) grants 150 Provide students better learning and behavioral supports 10 Fund internet technology management, training, and technical assistance 10 Finish developing evaluation rubrics b — Subtotal ($4,306) California Community Colleges Pay down mandate backlog $393 Eliminate deferrals 94 Provide funding for basic skills initiatives 70 Provide CCC CTE funding 48 Fund physical plant and instructional equipment 48 Fund CCC Innovation Awards 23 Support implementation of baccalaureate degree pilot program 6 Subtotal ($683) Total 2014-15 Changes $5,444 a All actions shown, except for technical adjustments, reflect one-time spending. b Provides $350,000 for the State Board of Education. Figure 4 2015-16 Proposition 98 Changes (In Millions) Technical Adjustments -$6,201 a K-12 Education Fund LCFF increase for school districts 5,994 Fund career technical education grants (one time) 250 Increase preschool funding 220 b Fund Internet infrastructure grants (one time) 50 Provide 1.02 percent COLA for select categorical programs 40 Fund various special education activities 32 Pay down mandate backlog (one time) 31 Increase funding for the Charter School Facility Grant Program 20 Increase funding for Foster Youth Services 10 Other -3 Subtotal ($6,645) California Community Colleges Fund adult education consortia $500 Increase apportionment funding (above growth and COLA) 267 Fund 3 percent enrollment growth 157 Pay down mandate backlog (one time) 117 Augment Student Success and Support Program 100 Fund physical plant and instructional equipment (one time) 100 Fund implementation of local student equity plans 85 Hire additional full-time faculty 62 Provide 1.02 percent COLA for apportionments 61 Fund certain CCC noncredit courses at credit rate 50 Provide funds to restore enrollment earned back by districts 42 Increase Cal Grant B awards for full-time CCC students 39 Augment Extended Opportunity Programs and Services 34 Fund new apprenticeships in high-demand occupations 15 Increase funding for established apprenticeships 14 Fund dissemination of effective institutional practices 12 Expand technical assistance to improve district operations and outcomes 3 Fund administration of higher Cal Grant B awards (one time) 3 Provide 1.02 percent COLA for select categorical programs 2 Subtotal ($1,663) Total 2015-16 Changes $2,106 a Backs out prior-year one-time funding, including one-time funds for retiring deferrals, paying down the K-14 mandate backlog, and supporting various other one-time activities. b Includes $145 million for existing wraparound care, formerly funded with non-Proposition 98 General Fund. Also includes technical adjustments, COLA, and special education-related preschool changes. LCFF = Local Control Funding Formula and COLA = cost-of-living adjustment. Package Notably Reduces Outstanding K-14 Obligations. The budget package includes the following K-14 actions, all of which reduce the state’s outstanding K-14 obligations. Pays Down Mandate Backlog. As shown in Figure 5, the budget package includes $3.8 billion to pay down the K-14 mandate backlog ($3.2 billion is for the K-12 backlog and $632 million for the CCC backlog). After accounting for these payments, we estimate the outstanding K-14 mandate backlog to be $1.5 billion ($1.2 billion for schools and about $300 million for community colleges). Retires All K-14 Payment Deferrals. As required by trailer legislation enacted last year, the budget package provides $992 million to eliminate all remaining K-14 payment deferrals. The budget year will be the first fiscal year since 2000-01 that the state is set to make all K-14 payments on time. Pays Off Emergency Repair Program (ERP) Obligation. The budget includes $273 million for the final ERP payment. Statute requires the state to provide a total of $800 million to school districts for emergency facility repairs, and the state has provided $527 million to date. (Of the $273 million, $145 million comes from a settle-up payment and $128 million comes from unspent prior-year Proposition 98 funds.) Figure 5 Budget Pays Down $3.8 Billion of K-14 Mandate Backlog (In Millions) K-12 Education California Community Colleges Totals Pay down scored to: 2013-14 $319 $94 $413 2014-15 2,748 393 3,142 2015-16 31 117 148 Settle-up payment 82 28 110 Prior-year reappropriation 24 — 24 Totals $3,205 $632 $3,837 K-12 Education Large Increase for Local Control Funding Formula (LCFF). The largest single augmentation in the state budget is $6.0 billion for implementing the LCFF for school districts and charter schools—bringing total LCFF funding to $52 billion. This reflects a 13 percent year-over-year increase in LCFF funding. The administration estimates this funding will close 52 percent of the remaining gap to LCFF target rates. As shown in Figure 6, the budget funds 90 percent of the estimated statewide full LCFF implementation cost. School districts and charter schools may use LCFF monies for any educational purpose, including implementation of their Local Control and Accountability Plans. New Secondary School Career Technical Education (CTE) Competitive Grant Program. The budget package includes $900 million in one-time funding for a three-year competitive grant program to promote high-quality CTE. Of this amount, $400 million is provided in 2015-16, $300 million in 2016-17, and $200 million in 2017-18. School districts, county offices of education (COEs), charter schools, and Regional Occupational Centers and Programs operated by joint powers agencies (JPAs) may apply for grants, individually or in consortia. The program provides separate pools of funding for large, medium-sized, and small applicants, based on applicants’ average daily attendance (ADA) in grades 7-12. Specifically, 88 percent of the funding is reserved for applicants with ADA greater than 550, 8 percent is reserved for applicants with ADA between 140 and 550, and 4 percent is reserved for applicants with less than 140 ADA. The Superintendent of Public Instruction (SPI), in collaboration with the executive director of the State Board of Education (SBE), will determine the number of grants to be awarded and specific grant amounts. Package of Special Education Actions. The budget includes $67 million for a package of special education-related activities, as summarized in Figure 7. Of the $67 million, $52 million is ongoing and $15 million is one time. The largest ongoing augmentation in this package is for expanding services for infants, toddlers, and preschoolers with disabilities as well as requiring preschool staff training and parent education relating to identifying and meeting preschoolers’ special needs. The largest one-time augmentation is for one or two COEs to develop statewide resources and training opportunities for addressing students’ diverse instructional and behavioral needs. Figure 7 Package of Special Education Actions 2015–16 (In Millions) Program Area Action Amount Proposition 98 Funds Infant and toddler services Increase funding for districts to serve children with disabilities ages birth to three (brings total funding to $119 million). $30.0 Preschool slots Fund 2,500 additional part–day State Preschool slots, with priority given to students with disabilities. 12.1 Learning and behavioral supports Provide funding for one or two county offices of education to develop statewide resources, provide trainings, and allocate subgrants to improve how districts meet students’ learning and behavioral needs. 10.0 a Preschool, training, parent information, and rate increase Specify that State Preschool contractors must provide staff training and parent education on how to identify and meet students’ special needs. Increase part–day reimbursement rate by 1 percent to cover associated costs. 6.0 State Special Schools Provide one–time increase for instructional activities at the state’s schools for deaf and blind students. b 3.0 a Fund swap Redirect federal funds from local assistance to state–level activities, then backfill with Proposition 98 funds. 2.0 Subtotal ($63.1) Federal Funds c Office of Administrative Hearings Increase funding for state–level hearings regarding special education disputes (brings total funding to $12.8 million). $1.9 a Alternative dispute resolution Increase funding for local grants to help districts and families resolve disputes without a trial (brings total funding to $1.95 million). 1.7 State–level improvement activities Fund CDE to develop resources and provide technical assistance to districts implementing the new federally required statewide plan for improving services for students with disabilities. 0.5 Subtotal ($4.0) Total $67.1 a One–time allocation. b The budget also requires that these schools spend at least $4.8 million from their non–Proposition 98 funds in 2015–16 to address critical facility maintenance needs. c New state–level activities funded in part by an increase in the state’s federal grant and in part by redirecting $2 million from local assistance. CDE=California Department of Education Second Round of Internet Infrastructure Grants. The budget includes $50 million in one-time funding for the second round of Broadband Internet Infrastructure Grants. The K-12 High Speed Network is to award grants to schools that cannot administer online tests or can only administer the tests by shutting down other essential online activities such as email. Grants may be used to purchase Internet infrastructure. The Department of Finance (DOF) must approve projects resulting in costs exceeding $1,000 per test-taking pupil. Adult Education Package Provides $500 Million for Adult Education Consortia. The CCC budget includes $500 million for the Adult Education Block Grant. This funding follows a two-year planning period in which school districts, community college districts, and other adult education providers established 70 consortia to coordinate services regionally. The consortia may use block grant funds for adult education in seven priority areas: (1) elementary and secondary basic skills, (2) citizenship and English as a second language, (3) workforce programs for older adults, (4) programs to help older adults assist children in school, (5) programs for adults with disabilities, (6) career technical education, and (7) pre-apprenticeship programs. While various entities offering adult education and workforce training may participate in consortia, only consortia members—school districts, COEs, community college districts, and JPAs—may receive funding directly. Existing Adult Schools Guaranteed Continued Funding. For 2015-16, up to $375 million of the $500 million is earmarked for existing school district, COE, and JPA adult education programs. These providers had been operating under an LCFF maintenance-of-effort provision that required them to keep spending at least as much on adult education as they did in 2012-13. This provision expires in July 2015. In 2015-16, these providers will receive block grant funding based on their 2012-13 expenditure levels for adult education. If CDE determines these providers’ total expenditures exceed $375 million, their allocations will be prorated. New Funds to Implement Regional Plans. The CCC Chancellor and SPI will distribute the remainder of the $500 million to the regional consortia based on each region’s need for adult education, as determined by measures related to adult population, employment, immigration, educational attainment, and adult literacy. The consortia, in turn, will allocate funds to member agencies based on regional consortia plans. $25 Million One Time to Develop Consistent Data Policies and Collect Data. The budget also provides $12.5 million to the CCC Chancellor’s Office and $12.5 million to CDE for data collection and reporting. The Chancellor’s Office and CDE must provide 85 percent of the combined $25 million to regional consortia to develop or update data systems and collect specified data. The remaining 15 percent is for state-level activities to develop consistent data policies and data collection procedures, including measures of effectiveness, common assessment and placement policies, and shared data agreements between agencies. The Chancellor and SPI must submit to the DOF, SBE, and the Legislature a report on their progress toward these goals by November 1, 2015. Community Colleges Large Apportionment Increases Above Growth and COLA. The budget provides a $267 million apportionment increase that districts may use for any educational or operational purpose, including retirement costs, professional development, and facility maintenance. This augmentation is in addition to $157 million provided for 3 percent enrollment growth (funding about 30,000 additional full-time equivalent students) and $61 million provided for a 1.02 percent COLA to apportionments. The budget also provides $62 million for community college districts to hire additional full-time faculty. Large Expansion of Student Support Services. The budget augments the Student Success and Support Program (SSSP) by $200 million. Of this amount, $100 million is to enhance assessment, placement, orientation, and counseling services; $85 million is to further improve access and outcomes for disadvantaged groups; and $15 million is to expand professional development and technical assistance programs to help districts improve their operations and outcomes. (These augmentations follow an SSSP increase of $220 million over the last two years.) In addition, the budget provides $39 million to increase Cal Grant B awards specifically for eligible, full-time, low-income CCC students and $34 million to augment Extended Opportunity Programs and Services, which provide a range of support services for disadvantaged students. One-Time Funds for Facility Maintenance, Basic Skills Improvement, and CTE. The budget includes a one-time funding increase of $148 million for maintenance and instructional equipment. It also funds a one-time $60 million grant program to help campuses improve their basic skills assessment, placement, instruction, and student support practices. Complementing this initiative is a one-time $10 million Basic Skills Partnership Program to develop better models of collaboration in this area. In addition, the budget provides $48 million to extend the CTE Pathways Initiative for one more year. 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