LAO Releases Prop. 98 Education Analysis for '18-'19 Budget

February 10, 2018

(Editor’s note: on February 7, the California Legislative Analyst’s Office (LAO) released a detailed analysis of Prop. 98 funding for education. The reports executive summary is below, click on the link at the end to read the complete report.)


In this report, we analyze the Governor’s overall Proposition 98 budget package as well as his specific spending proposals for K-12 education and early education.

Overall Proposition 98 Budget
Governor’s Budget Contains $6.3 Billion in Proposition 98 Spending Proposals. Of the new spending, almost $5 billion (78 percent) is for K-12 education, $1.2 billion (19 percent) is for the California Community Colleges (CCC), and $193 million (3 percent)...

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Analysts Weigh In on Governor’s January Budget Proposal

January 29, 2018

Various analysts are sizing up the impact of the Governor’s January Budget Proposal on K-12 education. Here are some highlights:

The California Legislative Analyst’s Office (LAO) offered the following executive summary on January 12:

Governor Prioritizes Reserves. The Governor’s 2018-19 proposed budget places a high priority on building reserves. To that end, the Governor proposes a total reserve balance of nearly $16 billion, including an optional $3.5 billion deposit into the state’s rainy day fund. We believe the Governor’s continued focus on building more reserves is prudent in light of economic and federal budget uncertainty. In considering the Governor’s proposal, we advise the Legislature to first set its own optimal level of reserves in preparation for a future recession...

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Brown’s January Budget Proposal Draws Some Praise, Some Criticism from Legislators, Educators

January 15, 2018

State Superintendent of Public Instruction Tom Torlakson said:

Governor Brown’s budget proposal provides a big boost to our public school students. The proposal shows how far we have come as a state in the past seven years in increasing investments in education so our students can continue to succeed in college and the 21st Century economy.

The proposal adds $3.8 billion to the annual Proposition 98 guarantee for public education, which will raise per-pupil spending 66 percent above 2011-12 levels and bring total Proposition 98 funding from $47.3 billion in 2011-12 to $78.3 billion. The proposed budget will provide $11,614 per pupil in the next fiscal year, compared with $7,008 in 2011-12...

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December Report Shows State Revenues Surpassing Estimates

January 15, 2018

As the governor’s Department of Finance released its proposed 2018-19 budget on January 10, State Controller Betty T. Yee reported California’s total revenues of $16.25 billion for December were $2.79 billion above June’s budget expectations.

“I can sum up the governor’s budget in one word: smart. The federal tax measure did not just stick it to California’s individual taxpayers–it also likely will have a devastating impact on our state budget, which may mean less money for essential social services such as Medi-Cal, Medicare, and the children’s health insurance program,” said Controller Yee, the state’s chief fiscal officer. “We are not going to know for months just how deep the wounds will be from the president’s massive giveaway, so until we do, Governor Brown is once again wise in exercising caution with responsible short-term spending, boosting rainy day fund reserves, and paying down debt.”...

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State Income Tax Revenues Top Projections for December

January 15, 2018

On January 3, the California Legislative Analyst’s Office (LAO) issued a statement reporting that California income tax revenues ran much higher than projections ’ presumably due to taxpayers making early payments due to pending changes under the new federal tax law that was approved by the U.S. Congress and signed by President Trump last month. The LAO’s statement said:

December is a major revenue month for the state General Fund. As shown in the table below, the state’s two income taxes (the personal and corporate income taxes) combined were nearly $4 billion (32%) above the monthly target reflected in last June’s state budget plan. The positive December personal income tax results could be partially offset by softer January and April collections, as some taxpayers may have made final 2017 tax payments a few months early in order to maximize deductions under the recently passed federal tax plan...

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CDE Announces Help is Available for Schools Impacted by Southern California Wildfires

December 18, 2017

State Superintendent of Public Instruction Tom Torlakson announced on December 2nd that assistance for schools is ready as wind-driven wildfires continue to spread destruction, damage, and school closures in Southern California.

Nearly 135,000 total students were displaced as schools shut down and evacuations spread. As of mid-December, the Thomas Fire in Ventura County and Santa Barbara County burned more than 200,000 acres and closed schools in multiple school districts, while three separate fires in Los Angeles County shut down schools in the Santa Monica-Malibu Unified and Los Angeles Unified School districts.

Assistance details are available on the CDE Wildfires Web page. School fire recovery resources are listed on this Web page...

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Controller Reports November Revenues Exceed Expectations as Retail Sales Remain Strong

December 18, 2017

State Controller Betty T. Yee reported on December 11 that California’s total revenues of $8.31 billion for November were $449.8 million above expectations, powered by strong retail sales. Personal income tax (PIT), the largest state revenue source, fell short by nearly $200 million.

For the first five months of the 2017-18 fiscal year, total revenues of $40.96 billion are outpacing budget projections by 2.5 percent, with retail sales and use taxes and corporation tax beating expectations.

Sales tax receipts of $3.30 billion for November were $538.1 million higher than anticipated in the budget. For the fiscal year, sales tax receipts of $10.16 billion are $733.4 million above budget estimates...

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LAO Forecasts “Substantial Funding” for Schools, Community Colleges in 2018-19 Budget Cycle

December 4, 2017

On November 15, the California Legislative Analyst’s Office (LAO) released an optimistic forecast for education funding in the state for the 2018-19 budget cycle.

According to the executive summary of the LAO’s report:

Substantial Funding Available for Schools and Community Colleges in Coming Budget Cycle. Each year, the state calculates a “minimum guarantee” for school and community college funding based upon a set of formulas established by Proposition 98 (1988). Under our near‑term outlook, we estimate that the 2017‑18 guarantee is up $651 million (0.9 percent) from the level assumed in the June budget plan and the 2018-19 guarantee is up $2.6 billion (3.4 percent) over the revised 2017-18 level. After accounting for growth in the minimum guarantee and backing out prior-year one-time spending, among other adjustments, we estimate the Legislature would have $5.3 billion in uncommitted Proposition 98 funds to allocate in 2018-19...

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California Would be One of the States to Lose the Most

Cities, Counties, Schools and Realtors Urge Congress to Reject Proposed Cut to Property Tax Deduction

November 13, 2017

The associations representing California’s local governments, economic development leaders, schools and realtors urged the California congressional delegation on November 9 to protect the State and Local Tax (SALT) deduction and a key economic development tool at risk under the Tax Cuts and Jobs Act in its current form.

The SALT deduction makes the cost of living more affordable in states like California. Eliminating the deduction for state and local income taxes and capping the local property tax deduction at $10,000 would hurt hard-working California families and only add to the housing affordability crisis in the state by eliminating a key incentive for homeownership. In 2015, 6.1 million California taxpayers claimed the SALT deduction with the average deduction at around $18,000.

The SALT deduction has been an integral component of the federal tax code since its creation in 1913 and was one of the six deductions allowed under the original tax code...

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NEA President Says Republican Tax Cut is Giveaway to Wealthiest, Would Jeopardize Students’ Education

November 13, 2017

On November 2, Republican leaders in the U.S. House of Representatives unveiled a massive, $5 trillion tax plan that the National Education Association describes as giving huge tax breaks for the wealthiest and corporations, while putting middle-class families at risk of higher taxes. The NEA also criticizes the plan for expanding an education tax loophole that would further benefit the wealthy and allow them to set aside money for private school expenses, while cutting tax deductions for the middle class; and eliminate the educator tax deduction that allows educators to deduct eligible unreimbursed classroom spending up to $250. Congress made this deduction permanent in 2015. According to a recent report, 99.5 percent of educators dip into their own pocketbooks to provide supplies and instructional materials for their students. This tax plan rollout is the first step in a rushed effort to rewrite the tax code and ultimately pave the way for devastating cuts to working families, students and communities...

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