The 2018-19 Budget: 2018-19 Cola for K-14 Education Programs

The 2018-19 Budget: 2018-19 COLA for K-14 Education Programs 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 LAO Contact Kenneth Kapphahn See More Publications Like This Back to the Top --> Tweet April 30, 2018 The 2018-19 Budget 2018 19 COLA for K-14 Education Programs The federal government recently released updated information that affects the cost-of-living adjustment (COLA) that the state provides to certain school and community college programs. Below, we explain how the state calculates the COLA, share the recent data, and examine its budget effects. Background Annual COLA Determined by Price Index for State and Local Governments. The state budget typically provides a COLA for certain school and community college programs. State law links this COLA to a national price index developed by the Bureau of Economic Analysis (a division of the U.S. Department of Commerce). This index is designed to reflect the cost of goods and services purchased by state and local governments across the country. The largest component of the index is employee wages and salaries. Other components include fuel, utilities, office supplies, and equipment. State law bases the rate on the average value of this index over the 12 month period ending in March of the prior year with the 12 month period ending in March of the current year. For 2018 19, the two periods being compared are the April 2016 through March 2017 period and the April 2017 through March 2018 period. The Bureau of Economic Analysis typically releases the data the state needs to finalize the COLA for the upcoming year in late April. Recent Data New Data Show Statutory COLA Is Higher Than January Estimate. On April 27, 2018, the Bureau of Economic Analysis released its updated data for the index. The data show that the K-14 COLA for 2018 19 is 2.71 percent. This compares with the 2.51 percent COLA assumed in the January budget. The new rate is above the COLA for the past few years (1.02 percent in 2015 16, 0.0 percent in 2016 17, and 1.56 percent in 2017 18) but closely tracks the 20-year historical average of 2.7 percent per year. New COLA Affects Costs for Local Control Funding Formula (LCFF). The Governor s budget includes a $2.9 billion increase for LCFF. Of the proposed increase, $1.7 billion is for closing the gap to the LCFF target funding rates and $1.2 billion is for providing a 2.51 percent COLA to those rates. The new COLA rate increases the cost of providing COLA for the LCFF by $96 million. New COLA Affects Costs for Other School and Community College Programs. As the figure shows, the Governor s budget includes a COLA for several other school and community college programs. For schools, the largest program after LCFF is special education. For colleges, the largest allocation is for apportionments. The Governor s budget also provides a COLA for the California State Preschool Program. In January, the administration estimated that the total cost of providing a 2.51 percent COLA for all programs shown in the figure would be $1.5 billion $1.2 billion for LCFF and $327 million for other programs. Based on the new COLA rate of 2.71 percent, we now estimate the cost of COLA has increased to $1.7 billion $1.3 billion for LCFF and $373 million for other programs. Holding other factors constant (including estimates of the Proposition 98 minimum guarantee), the higher cost of COLA reduces the funding available for the state s other Proposition 98 priorities by $122 million. Cost of Providing COLA for K 14 Education Programs (In Millions) Governor’s Budget (2.51 Percent) Revised Data (2.71 Percent) Change K 12 Programs LCFF for school districts and charter schools $1,206.5 $1,302.7 $96.1 Special education 95.0 102.6 7.6 County offices of education 6.2 6.7 0.5 K 12 mandates block grant 5.8 6.2 0.5 Other programs a 5.0 5.4 0.4 Subtotals ($1,318.5) ($1,423.6) ($105.1) Community College Programs Apportionments $161.2 $174.1 $12.8 Adult Education Block Grant b 20.5 21.6 1.0 Apprenticeship 17.8 17.9 0.1 Extended Opportunity Programs and Services 3.1 3.4 0.3 Disabled Students Programs and Services 2.9 3.2 0.2 Other programs c 2.0 2.2 0.2 Subtotals ($207.7) ($222.3) ($14.6) State Preschool $27.7 $29.9 $2.2 Totals, K 14 Education $1,553.9 $1,675.8 $121.9 a Consists of child nutrition, foster youth services, adults in correctional facilities, and American Indian education. b Costs shown also include a 1.6 percent COLA associated with 2017 18. c Consists of CalWORKs Student Services, campus child care center support, and the community college mandates block grant. COLA = cost of living adjustment and LCFF = Local Control Funding Formula. Subscribe | California State Legislature | Online Voter Registration | Privacy Policy | Accessibility Legislative Analyst's Office | The California Legislature's Nonpartisan Fiscal and Policy Advisor 925 L Street, Suite 1000 Sacramento, CA 95814 | (916) 445-4656