Leg erases Gov’s ed reforms

John Fensterwald co-authored this article.

The Legislature’s budget package is missing many of Gov. Brown’s controversial education initiatives. A joint Senate and Assembly plan outlined yesterday protects transitional kindergarten, the science mandate, and the AVID program, rejects the weighted student funding formula, and offers districts a choice in how they’re paid for state mandates.

“This budget protects and invests in public education this year, and increases Proposition 98 funding by $17 billion over the next four years,” said Assembly Speaker John A. Pérez during a press conference Wednesday morning with Senate President pro Tem Darrell Steinberg.

The overall budget plan that lawmakers will vote on this Friday would erase California’s $20 billion structural deficit, balance the budget for each of the next three years, and create a $2 billion reserve by fiscal year 2015-16, according to Pérez and Steinberg.

Spending for K-12 education would be $53.6 billion for the 2012-13 fiscal year. That’s about $1 billion more than the governor had anticipated. Because the budget assumes more revenue for education through the passage of Brown’s tax initiative in November, the state is obligated under Proposition 98 to start paying off the “maintenance factor,” the IOUs given to schools during bad times. But if the tax increase fails, the Legislature and governor are in accord on the need for cuts of $5.5 billion for K-12 schools and community colleges. That would translate to a K-12 cut of $450 per student.

About $2.9 billion of that would come from lowering the Prop 98 guarantee due to a drop in state revenues. The rest would be made up through shifting two expenses into Prop 98 that are currently funded outside the guarantee. Those are repayment of general obligation bonds for school construction and the Early Start early education program. (Go here to read more about that in an earlier TOPed article.)

In addition, the legislative package would include trailer bill language allowing K-12 schools to cut 15 additional days from the next two school years.

Weighty issue

The governor’s biggest loss, for now, is the weighted student funding formula. Lawmakers’ refusal to include it in the budget isn’t an outright rejection of the concept of a simpler, fairer finance system that sends more money to districts with high proportions of English learners and indigent students. And Brown is expected to bring up the issue again this summer. But many lawmakers felt that the governor was jamming them to accept sweeping changes without justifying the basis for his formula, while legislators from suburban districts called for restoring all of the money lost to cuts over the past four years before redistributing new money.

Rick Simpson, the deputy chief of staff for Speaker Pérez, said that lawmakers wanted more assurances that the money under a weighted formula would actually reach targeted students. As part of his reform,  Brown proposed giving districts total flexibility in deciding how the dollars would be spent. “If you’re going to deregulate the entire school finance system,” Simpson said, “and if you’re not going to regulate inputs, you ought to have an accountability system to make sure you get those positive outcomes. We have lots of disparate pieces that we refer to as accountability, but it’s not a system.”

High school science intact

Brown had proposed eliminating the mandate for more than two dozen K-12 programs, including (the most expensive) requiring schools to offer a second year of high school science. Dropping a mandate would mean that districts could continue offering a program by finding money in their existing budgets. Brown also proposed reimbursing districts a flat $28 per student for the remaining mandated programs.

Science teachers and the business community protested that the state shouldn’t retreat from its commitment to science education (see commentary on this page), and the Legislature agreed, keeping it and all of the current mandates intact. However, lawmakers didn’t increase the reimbursement rate either, so districts can expect to continue accumulating a big IOU for meeting the science mandate. The state has also gone to court, arguing that the $250 million cost on the books for offering a second year of science is way too high, based on a false assumption that high schools had to add a period to the day to accommodate it, according to Paul Golaszewski, an analyst with the Legislative Analyst’s Office.

Applying for a straight $28 per student would be the easiest, quickest way for districts to be reimbursed for mandated costs. However, the Legislature also would continue to allow districts to submit bills detailing the cost of complying with mandates – and hope that the state accepts the claims.

Starting early

The joint budget proposal allowed the early childhood education community to exhale a bit, by denying a number of significant cuts that the governor was seeking. He wanted to cut the reimbursement to preschool providers by 10 percent, raise the financial eligibility requirement, place a two-year cap on families receiving childcare services while attending a school or a job-training program, and eliminate full-day preschool starting next year.

“The Legislature has really stood up for young children,” said Scott Moore, Senior Policy Advisor at Preschool California. No one got away unscathed, however, and childcare will be taking a $50 million cut and losing 6,000 spaces for children in full-day state preschool, the childcare voucher program, and the infant-toddler child development program.  That’s on top of a billion dollar reduction and 100,000 spaces lost since 2008. Still, said Moore, “it’s significantly less that we were fearing would be cut.”

Board of Ed draws QEIA line in sand

Administrators from Stockton Unified School District went home about $3 million poorer yesterday. They had traveled to Sacramento to appeal to the State Board of Education for waivers from the academic requirements of the Quality Education Investment Act (QEIA). All five of the district’s K-8 schools receiving QEIA funds had failed to meet their Academic Performance Index targets, and that meant being expelled from the program at the end of this school year.

The principals argued their cases, some more compelling than others. Monroe had undergone an entire change in leadership, Grunsky had two special day classes added after becoming a QEIA school, Roosevelt and Van Buren experienced high teacher turnover, and Nightingale, a new charter, needed more time to prove itself.

It didn’t take long for the State Board to decide the schools’ fate. Denied.  Not just for Stockton, but also for another five schools in other districts.

“We took a bullet today,” a school principal was overheard saying to a colleague as they left the meeting room.

This month’s meeting marked the second time QEIA schools that missed their API marks had come to the Board seeking relief; and it was the second time that Board members rebuffed them. The Board has been liberal in approving waivers for going a little over class size reduction and a little under the teacher experience index, but for academic achievement, well, it’s a bit like Tevye’s ethical choice in Fiddler on the Roof: “On the other hand… No… there is no other hand.”

“They accepted the money. This was a voluntary grant, which they accepted under clear and explicit conditions and, therefore, in following the intent of the law they need to meet those conditions,” said Board President Michael Kirst after the meeting.

The entire board appears to have arrived at a consensus on this issue.  “We seem to have drawn a collective line with regard to the API,” said board member Carl Cohn.  “Even though circumstances have changed dramatically, you still have to have some central tenet of a program like this and, for me, it is the API. ”

But Stockton school officials find the reasoning inconsistent.  If the goal is to raise student achievement, why take away the money that’s providing additional teachers, resources, counselors and professional development necessary to help students learn.  Van Buren principal Ione Ringen said without QEIA funds she’ll lose more than a quarter of her 32 teachers, boosting class size from 20 to 32.

“Losing this is going to negatively impact our students,” said Ringen.  “We come from high poverty areas with high numbers of second language learners, and having that opportunity to be in a smaller class has allowed them to have more individualized education.”

QEIA, for a quick refresher, was created to settle a lawsuit brought by the California Teachers Association against Gov. Schwarzenegger for failing to keep his promise to repay school districts and community colleges $2 billion “borrowed” from Proposition 98 in 2004-05 to help the state get through a budget crisis.

Under the agreement, schools in the lowest academic levels were eligible to apply for funds to improve achievement by maintaining class size reduction, hiring more counselors, providing more directed professional development, having more highly qualified teachers than the district average, and exceeding their API growth targets averaged over three years.

State Board of Ed action on QEIA waivers since January 2009. (Source:  California Dept. of Ed). Click to enlarge.
State Board of Ed action on QEIA waivers since January 2009. (Source: California Dept. of Ed). Click to enlarge.

Since QEIA began, the State Board has approved 86 waivers and rejected six on non-academic grounds, and denied 16 for not meeting API goals.  As of now, nearly 140 QEIA schools out of 474 have failed to meet at least one requirement.  [Click here for chart] .

Department of Education staff warned the board on Thursday to expect waiver requests to mount.  At least fifty more are on the docket for the July meeting propelled in part by the financial crisis that’s forced schools to lay off teachers and scale back class size reduction.

One waiver request expected to be reconsidered at the May board meeting could break the de facto API denial rule.  Over the past few years, thousands of Iraqi refugees have resettled in eastern San Diego County, within the boundaries of El Cajon Valley High School.

The school population swelled by more than 700 students, nearly all English learners.  El Cajon redirected some of its QEIA funds to organize community and social service organizations to help the students and their families adjust to life in America.  The school’s  API score dropped.

Department of Education staff recommended denial of the waiver, but the board postponed its vote until the next meeting, and asked the staff to try to peel off the refugees’ test scores to see how the school would have done without them.  Regardless of those results, most board members suggested that this could be one of those difficult and exceptional situations that has no precedent.

“It seems to me that that as a state we have an obligation to ensure that our districts welcome these youngsters and make sure that they’re we’ll supported,” said Cohn.  “This is markedly different from any other waiver request that’s been before us.”

Will the real TK stand up?

It’s getting so that understanding the budgetary machinations of Transitional Kindergarten requires a master’s degree, or maybe a Little Orphan Annie Secret Decoder Pin.

In the month since Gov. Brown released his 2012-13 budget plan and recommended canceling Transitional Kindergarten (TK), supporters have found it hard to keep track of what the administration is proposing and where the savings would come from.

They were further confounded yesterday, when the State Legislative Analyst’s Office released its review of the governor’s education budget. Although the LAO seconded the governor’s call to eliminate funding for TK, it seemed to contradict some of the administration’s figures. (See John Fensterwald’s article today for the LAO’s review of the entire education budget proposal).

“At this point, it seems like the Department of Finance is making it up as they go along; we’ve had three different versions of the program in the last four weeks,” said State Senator Joe Simitian.

His bill, SB 1381, which the Legislature passed in 2010, moved up the entry age for kindergarten to September 1 from December 1, phasing it in over three years beginning next fall. It also created the TK program for the children who turn five during that three-month period and are no longer eligible for kindergarten. Instead, they would get TK one year and regular kindergarten the next.

By keeping the age change but eliminating funding for TK, Gov. Brown estimates the state will save about $224 million in ADA dollars next year in reduced kindergarten enrollment. When Sen. Simitian pointed out at a legislative hearing a few weeks ago that districts would still get the same amount of money for another year under the declining enrollment program, a Finance Department official said that had been factored in. Not so, according to yesterday’s LAO report. It said the Legislature would also have to “make a corresponding change to the ‘declining enrollment’ adjustment.” In other words, eliminate that, too.

Trailing language

The administration has been similarly vague on the options for those four-year-olds whose families first thought they’d be going to kindergarten, then to Transitional Kindergarten. As we reported here, at that same legislative hearing in January, Finance Department officials initially said that districts could provide TK, but wouldn’t receive any state funds to pay for it. Then they said the state would provide ADA funds once the children turned five.

Sen. Simitian again asked for clarification and it came last week in the budget trailer language, which once again left Sen. Simitian perlexed. It keeps the age cut-off dates, but lets individual districts decide if they want to run Transitional Kindergarten programs. Then the trailer bill says something that both Sen. Simitian and the group Preschool California suspect the administration never intended. It allows school districts to “admit to a kindergarten at the beginning of the school year, a child having attained the age of five years at any time during the school year with the approval of the parent or guardian.”

It also apparently makes the districts eligible for ADA funds even for the four-year olds. That’s how it seemed to Sen. Simitian, and that’s how it appeared to the Legislative Counsel when he asked that office for an interpretation.

According to Preschool California, more than 100 school districts have either started TK pilot programs on their own or indicated that they plan to launch them in the fall despite the governor’s proposal. At least one district, San Francisco Unified, told parents not to bother enrolling their children for TK, because there won’t be a program without state funding.

That could create unequal access to education for children, with one district offering a version of TK while a neighboring district does not. If the latter district is low-income, then there may be an equal protection violation. At the very least, said Sen. Simitian, it’s going to create chaos and anxiety up and down the state.

“I don’t mean to say this with attitude, but I’ve got so much frustration at this point,” said the senator. The Legislature already debated and approved the bill, “and now the administration is trying to revisit the issue through the budget process. That’s completely inappropriate,” said Sen. Simitian, adding that if the governor wants to change policy, he should introduce a bill like everyone else.

Gov. pulls trigger, hits education

(John Fensterwald coauthored this article.)

Midyear budget cuts hit California like a tornado on Tuesday, leaving public schools with less damage than anticipated while bearing down on state colleges and universities with full force. Gov. Jerry Brown announced that although state revenues rose, it wasn’t enough to stave off the so-called “trigger cuts” built into this year’s budget.

With revenues more than $2.2 billion below projections, Brown said the state has to cut another $1 billion in spending. Of that, about $328 million will come from K-12 education, which is significantly less than the $1.4 billion worst-case scenario.

There was no such reprieve for higher education; the University of California, California State University, and the state’s community college system will each lose an additional $100 million in the new year.

"We have to live within our means," said Gov. Brown in announcing nearly $1 billion in mid-year cuts. (source:  Governor's press conference) Click to enlarge.
"We have to live within our means," said Gov. Brown in announcing nearly $1 billion in midyear cuts. (Source: Governor's press conference) Click to enlarge.

I want to invoke a Latin phrase here,” said Brown at a press conference in the Capitol. “Nemo dat [quod] non habet; it means no man gives what he does not have. The state cannot give what it does not have.”

Several times during his comments, the governor acknowledged that he’s sensitive to the hardships the reductions will cause, but said the state has to live within its means or it will end up like Greece, Italy, and Spain, countries that overspent to excess and are now unable to climb out of the holes they dug.

Higher ed, higher fees

His argument didn’t sway critics, especially at the three college and university systems, which have already lost billions of dollars in state funding in recent years.

“The governor is the Grinch that stole Christmas,” said Foothill-De Anza Community College District Chancellor Linda Thor, only half jokingly. Although she knew the cuts were a strong probability, Thor said it still means another $2.8 million from her district ($3.3 million if you count the lack of cost-of-living increases), and that’s on top of $24.6 million in cuts over the last three years.

For the rest of the academic year Foothill-De Anza will dig into a rainy day fund established during better times, but that’s running low after several years of stormy economic weather.

What’s more, starting this summer student fees will jump from $36 a credit to $46. That’s far below the rest of the nation, but it’s still nearly $1400 a year for a full-time student, and community colleges have a high percentage of low-income students.

De Anza College awarded financial aid to more students in the current fall quarter than it did to all students in the entire 2010-11 academic year.

California State University students will also be paying more. Last month the Board of Trustees approved a 10 percent fee hike that will kick in next fall. CSU has already raised fees by 29 percent over the past year and a half.

“It is disheartening to say the least when your budget is cut by an initial $650 million, but to face an additional $100 million reduction midyear makes things extremely challenging,” said CSU Chancellor Charles Reed in a statement on the university’s website.

Cuts put brakes on school buses

Funding cuts for K-12 schools under Proposition 98 are a bit fuzzier. The governor and legislative leaders had predicted that revenues would rise $4 billion over the May revise amount.  If revenues were down by the full $4 billion, public schools would have been cut $1.4 billion, or about 3 percent.  Since revenues weren’t that low, schools will see a midyear total cut of $328 million, or about 0.7 percent. That’s an average of $55 per student.

But that’s not exactly how the governor presented it. Brown broke the reductions into two parts: First, a $79.6 million reduction in the basic school funding, called revenue limit funding. That’s the equivalent of about a half-day of school cut, instead of a potential elimination of a whole week.

The second cut is more substantial; a $248 million reduction in home-to-school transportation, in other words, school buses. Taken together, they amount to an average of $55 per student.

However, because school transportation funding primarily affects rural and low-income urban districts ­– and uses an outdated, quirky formula ­– the impact will vary widely among districts, from less than $7 per student in the 19,000-student Antioch Unified, to a whopping $638 per student in the 744-student Southern Humboldt Joint Unified.

Los Angeles Unified, the state’s largest district, which will be absorbing the biggest transportation hit of $38.6 million – $59 per student – announced that it plans to file suit today to halt the cut. The district contends that the cuts would violate a 30-year-old court mandate resulting from a desegregation lawsuit that set up magnet schools and a school choice program; 35,000 students in the district now take buses. At the same time, the alternative – cutting additional services to the classroom ­– would violate the state’s constitutional duty to provide equal educational opportunities.

“LAUSD cannot withstand further budget cuts without adversely impacting the educational benefits offered to its students,” Superintendent John Deasy said in a statement. “We stand with our students to say enough is enough.”

Transportation funding has huge disparities, because it’s based on a decades-old allocation formula that punishes districts that have grown rapidly. California is last in the nation in terms of the proportion of students bused to school: 14 percent, according to Stephen Rhoads, a lobbyist with Strategic Education Services in Sacramento who has focused on the transportation issue.

In his press conference, Brown characterized the transportation cut as flexible, giving districts the ability to backfill bus service by making cuts in other areas. But it’s not as easy as that. Rob Ball, associate superintendent of Twin Rivers Unified in Sacramento County, said that the district already reduced bus routes as much as it could, with some students now walking three miles to a bus stop. Buses also transport high school students through rough neighborhoods in North Sacramento to Grant High; eliminate transportation, and fewer students would show up to school, reducing the state’s tuition reimbursements. This year, said Ball, the district will take the $1 million transportation cut out of its reserves.

Rhoads said that heavily affected districts will lobby legislators to combine the transportation and revenue limit cuts, so that the pain is spread evenly among districts. The Education Coalition, representing the PTA and teachers, administrators, and school boards associations, expressed sympathy. The transportation cut will devastate transportation services and hit poor and neediest students the hardest, it said in a statement. “It will also put at risk the safety and lives of students who will be forced to walk on unsafe roads and through dangerous conditions.”

Brown’s turn: $7 billion for schools

(Kathryn Baron co-wrote this post.)

Gov. Jerry Brown released his much-anticipated ballot initiative Monday, to temporarily raise sales and income taxes and use the money to repay K-12 schools and community colleges billions of dollars owed to them. The governor is hoping to qualify the initiative, titled The Schools and Local Public Safety Protection Act of 2012, for November’s election.

The proposal calls for a half-cent sales tax increase for four years, in lieu of Brown’s failed attempt to get the Legislature to approve an extension of the one-cent sales tax increase that expired July 1. The measure also would raise income taxes on California’s wealthiest 2 percent. Together, the tax increases would raise $7 billion annually for education. But it’s not quite new funding. Two billion of that will compensate the schools for what they lost this year when the state diverted sales tax revenue to counties and cities to pay for added safety services. By approving the initiative, voters would make that tax shift to local governments permanent.

With the initiative, Brown is acknowledging that schools have been disproportionately hit with budget cuts over the past four years and, under Proposition 98, are legally entitled to a larger share of new revenue when the state economy rebounds. He’s also banking on what a series of polls over the past month have said: Voters are willing to pay more taxes – if the money is earmarked for education.

“This initiative will not solve all of our fiscal problems,” Brown wrote in a two-page letter to the public. “But it will stop further cuts to education and public safety.”

Brown’s plan will join perhaps a half-dozen other tax initiatives, some with big backers, that have either been submitted to the Attorney General for review or soon may be. One, by the California Federation of Teachers, was submitted to the State Attorney General’s office just hours after the governor’s. That proposal and another from Los Angeles civil rights attorney Molly Munger would raise income taxes exclusively on the wealthy to pay for education. ** (see correction) A third, by the Think Long Committee for California, would lower the income tax while extending the sales tax to cover services, such as accounting fees and nail salons. A fourth would tax oil production in California. The initiatives also vary on who would benefit. One would include preschool funding; others would fund the state’s public four-year colleges, UC and CSU. Brown’s initiative would fund neither, only K-12 and community colleges.

Senate President pro Tem Darrell Steinberg and Assembly Speaker John Perez, both Democrats, issued a statement together praising Brown’s initiative. “The Governor’s revenue plan is fair, focused and forward-thinking,” said Perez. “We’ve done enough damage …. It’s time to stop the bleeding and begin reinvesting in public education and local public safety. The Governor’s plan dedicates new revenue where it’s most needed,” said Steinberg.

At the same time, Mark Hedlund, Steinberg’s press secretary, and Steve Glazer, Brown’s political adviser, acknowledged that the governor will need to negotiate with sponsors of other initiatives to whittle down the choices on the ballot, ideally to one. “People need to be convinced to back the best. This (Brown’s) is a good approach to take,” said Hedlund.

Glazer was more cryptic: “The governor is talking to the other folks. We’re confident there would be good environment next November.”

Assembly Republican Leader Connie Conway of Tulare, on the other had, condemned “a massive $35 billion tax increase (five years times $7 billion) on hard-working Californians and job creators,” and pledged that “Assembly Republicans will again stand united as the last line of defense for taxpayers.”

Brown blamed continued intractability by Republican lawmakers, who first refused to put the initiative on the ballot, for forcing him to take his plan directly to voters. Brown and unions that are expected to support the initiative will need to collect 807,615 voters’ signatures by April.

The governor released  the densely worded 14-page initiative and a short open letter without explanation, leaving veteran Sacramento budget watchers scratching their heads over the details.

Need for clarification

It’s not clear how much of the $7 billion would be new money, versus funds to cover past debts. It could be about half, depending on what happens next week, when the State Department of Finance announces whether to order the automatic midyear budget “trigger” cuts of up to $1.5 billion due to lower than hoped for revenue predictions. The state also owes schools about $14 billion for failing to fully fund Proposition 98 in past years; the tax increases will enable some of this to be repaid as well.

The half-cent increase will raise the state sales tax to 7.75 percent ­– still a half-cent less than Californians paid before a temporary 1 percent increase expired July 1.

The higher income tax would affect only individuals earning more than $250,000 (couples $500,000); they’d pay 1 percent more, increasing their rate to to a rate of 10.3 percent. Individuals earning between $300,000 and $500,000 (couples $600,000 and $1 million) would pay 1.5 percent more, raising their rate to 10.8 percent. Individuals earning more than $500,000 ($1 million for couples) would pay 2 percent more: 11.3 percent. The tax would be retroactive to Jan. 1, 2012 if the initiative passes.

If the initiative fails, however, there would be more massive cuts, including the likely suspension of Proposition 98. What’s more, cities and counties would be left holding the bag, since the $5 billion in sales tax revenue to pay for all those services the state pushed on to them would revert to the general fund, while the obligation to provide those services would remain at the local level.

** The Advancement Project initiative by Molly Munger would raise the income tax for all wage earners, although, with the progressive structure of California’s income tax, 92% of the additional tax would be paid by couples earning more than $70,000. For couples, the increases range from 4/10ths of 1% on incomes after all deductions under $35,000 to 2.2% for couples with income after all deductions over $5 million, according to the initiative website.

Let’s make a deal for ed funds

A group of billionaires, old-line political movers and shakers, and influential advocates released their recommendations Monday for changing the state’s tax structure to increase state revenues by $10 billion a year, with half of that going to K-12 schools and community colleges and another $2.5 billion for the University of California and California State University.

How the $10 billion in new revenues will be distributed.  (click to enlarge)
How the $10 billion in new revenues will be distributed. (Click to enlarge)

The Think Long Committee for California, chaired by Nicolas Berggruen, founder and president of Berggruen Holdings, intends to place two initiatives on the 2012 ballot to overhaul the state’s tax and finance structures, and to amend the school funding law, Proposition 98.

The proposals, explained in the committee’s 24-page report, A Blueprint to Renew California, seek to get the state out of debt by reducing personal income taxes at every level, cutting corporate taxes, and reducing sales taxes for consumer goods while extending them at a higher rate for services like haircuts, accounting, and car repairs.

“Nearly one-half of California’s $2 trillion economy is composed of services – none of it taxed,” wrote Berggruen and Nathan Gardels, an adviser to the Think Long Committee, in an OpEd piece in yesterday’s Sacramento Bee. “If you eat a doughnut in a coffee shop, the sales tax on goods applies. If you use a legal or financial service, it is not taxed. In other words, the doughnut subsidizes lawyers, accountants, and other services.”

Similar ideas have been kicking around for years. In early 2009, Gov. Schwarzenegger established the Commission on the 21st Century Economy, which also proposed tax code changes to stabilize the state’s revenue. That commission, which was chaired by Gerald Parsky, now a member of the Think Long Committee, failed to get any traction in the state legislature.

Strings attached to new school funds

For at least the first year, the new education funds would be spoken for, used to reduce at least half of the $9.4 billion deferral of school funds by the state. (Initially the delayed payments were supposed to be just a few days, from the end of one fiscal year to the start of the next. But in recent years the delays have grown longer and the deferrals larger.)

After that, the $5 billion becomes an additional permanent source of discretionary funds for schools that is not subject to the fluctuations of state revenues, according to Tim Gage, a consultant to the committee. However, it doesn’t get folded into Proposition 98, which would raise the base amount due to schools.

But there is a caveat. In exchange for the annual $5 billion, the state would never have to repay as much as $14 billion in maintenance fees; that’s the gap in funding that occurs during recessions or other economic downturns, when Prop 98 is either suspended or reduced. Schools are currently first in line to get that money restored when the economy improves.

John Mockler, a former executive director of the State Board of Education and the author of Prop 98, said he supports some of the recommendations, but he could barely contain his anger at that part of the plan, which he described as arrogant and likened to a form of extortion.

“Somebody borrows money from you; they borrow $100 and they come and say, ‘I know I owe you $100, here’s $4, but first you have to change your hairstyle, lose a little weight, and tune up your car.’ Excuse me, you have a legal debt, a constitutional debt created by two constitutional amendments,” said Mockler.

The California Teachers Association slammed much of the Blueprint, calling the Think Long Committee “out of touch with California voters and their commitment to fund public education,” based on some recent polls.

“Rather than help public schools recover from the billions they have lost, the committee ties future funding increases to unproven education reforms. This is taking the state in the wrong direction,” said CTA president Dean Vogel.

But Gage insists that it’s a good deal for schools because they’ll get the $5 billion a lot sooner than if they had to wait for state revenues to increase enough to recoup the maintenance factor funds. What’s more, he said, “This money would be available as discretionary revenues to be used for any school purpose.”

Panel of independents

Members of the Think Long Committee cross the political spectrum from former Republican secretaries of state George Shultz and Condoleeza Rice to Democrats Gray Davis and longtime state assembly leader Willie Brown.*

Since members of the Think Long Committee were not appointed by any government agency and have no ties to special interest groups, they weren’t beholden to any point of view and reached consensus on all the proposed recommendations, wrote Berggruen in the Sacramento Bee article.

“The ideologically rigid will have a hard time putting the Think Long proposal in any box,” wrote Berggruen. “We came together only as an independent group of concerned citizens who believe in California’s promise and who want to get the state back on the right track.”

*Complete list of members:  Nicolas Berggruen, David Bonderman, Eli Broad, Willie Brown, Gray Davis, Maria Elena Durazo, Matthew Fong (the former State Treasurer died June 1, 2011), Ronald George, Antonia Hernandez, Robert Hertzberg, Gerry Parsky, Condoleeza Rice, Eric Schmidt, Terry Semel, George Shultz, and Laura D’Andrea Tyson.

Big midyear hit for Prop 98 likely

The first shoe fell with a thud Wednesday, when the Legislative Analyst’s Office predicted that a $3.7 billion state revenue shortfall this year would result in $2 billion in midyear “trigger” cuts, including $1.5 billion in Proposition 98 funding and $100 million each to the University of California and California State University.

The other shoe will drop next month when the state Dept. of Finance issues its own revenue estimates and then sets the midyear cuts based on the rosier of the two projections.

The LAO is predicting a $13 billion state deficit next year, even after $2 billion in midear cuts this year, declining gradually over five years. Click to enlarge.
The LAO is predicting a $13 billion state deficit next year, even after $2 billion in midear cuts this year, declining gradually over five years. Click to enlarge.

The expected cuts, which will bite into services for the disabled as well, follow dreary revenue reports for the first four months of the fiscal year, and so should come as no shock. The repercussions were felt immediately Wednesday, with CSU trustees approving a 9 percent tuition increase for next year unless the state increases funding by at least $138 million next year. The $100 million midyear cut will put CSU that much more in a hole and wipe out the system’s reserves.

Under the budget passed last year, the shortfall also will lead to a $10 per credit community college fee increase, and will compound problems for K-12 districts, especially those that, hoping against hope, didn’t build in sufficient reserves or don’t have contingencies for negotiating additional staff furlough days this spring. Under the worst-case scenario, some of those districts, the LAO said, may run right out of cash by year-end and have to seek a state emergency loan.

The $1.5 billion in Prop 98 cuts would include the $248 million in home and school transportation payments – more than half of funding for the program – and $1.1 billion in standard revenue limit funding for districts. The latter equals a cut of $180 per student, about 3 percent of state tuition payments.

The transportation cuts, an average of $41.60 per student, will disproportionately affect rural and poor urban students, according to a breakdown by Stephen Rhoads, a lobbyist with Strategic Education Services in Sacramento. In rural Humboldt County, the cut amounts to $113 per student; in Mariposa County, $346 per student; for low-income students, the cut would average $49 per child, compared with $23 in wealthier districts. If students stop attending school regularly after bus routes are cut, districts would see a further erosion in revenue.

The Legislature made contingencies for cuts when it shifted $2 billion in sales tax revenue from Prop 98 to pay for transferring prisoners to county and local jails. Rather than immediately cut education, the Legislature assumed that the state would take in an extra $4 billion in revenue – a deal it cut with the California Teachers Association that in the end turned sour.

CTA President Dean Vogel, commenting on the LAO report, called for fixing the state’s “unfair tax structure and corporate tax breaks” in order not to shortchange education.

“It’s time to put a fair and equitable tax system in place so that our students and the most vulnerable Californians don’t have to continue to do without,” he said.

Looking ahead to a sluggish economy and an unemployment rate that will likely remain above 8 percent for another five years, the LAO assumes that the midyear cuts won’t be restored for years. Even with the midyear cuts, the LAO is predicting that the state will end this year $3 billion in the red, and the deficit will grow to $13 billion next year, and will remain above $5 billion per year through 2016-17.

If there’s good news for schools, it’s in the LAO’s projection that the funding obligation for K-12 and community colleges will rise $4 billion next year. But more than half of that will be simply part of what the state owes the schools: restoring Prop 98 to the level before the $2 billion in sales tax money was diverted and then partially repaying for the lost $2 billion this year ($400 million per year for five years).

With unemployment beginning to drop next year, per capita income will rise 4 percent, resulting in an increase of nearly $1 billion in the Prop 98 obligation. But, with the Prop 98 increase contributing to the $13 billion deficit, the LAO suggested that the Legislature would have to consider suspending Prop 98 – and how to do it.

It added two more cautionary notes: Even though an upsurge in revenue may enable the state to fund Prop 98 an average of $2.5 billion a year beyond the minimum guarantee from 2013-14 to 2016-17, it will still end up owing education $10 billion in past obligations. And it will not have begun to pay down CalSTRS’ unfunded pension liability. “Addressing the unfunded liabilities of just the teachers’ retirement fund probably will require billions of dollars of additional payments annually over the coming decades,” the report said.

No guarantee for career academies

Jerry Winthrop roared with laughter when the director of a career academy asked him if the programs will be protected in the event that California’s revenues fall short and the state pulls the trigger on education funding at the end of the year. Winthrop, who oversees more than 400 California Partnership Academies, told the 25 academy coordinators and teachers gathered at an Oakland High School last week that they may want to learn how to write grant proposals.

Jack Aiello, who asked the question, didn’t intentionally make a joke. His Electronics Academy at Independence High School in San Jose’s East Side Union High School District is about 20 years old. Aiello wants to see it reach 21.

In normal times, the school only had to submit an annual report and it was pretty much guaranteed continued funding as long as it met all the state requirements. In these uncertain financial days, however, there’s no sure thing, not even for the tried and true.

The academy has a 95% graduation rate (15 to 20 percentage points higher than the rest of the school), boasts strong attendance, and sends a large group of students to community and four-year colleges.

But recently Aiello has been finding it difficult to do things exactly the way the State Department of Education wants them done, and that makes him a little tense. “There are so many stresses on budgets and trying to make everyone happy that it’s hard to follow all the rules exactly the way they’re supposed to be followed,” he said.

For example, students in California Partnership Academies are supposed to be in the same classes together so they can form a bond among themselves and with their teachers. But when an academy class in a core subject, like English, math, science, or history, has an unfilled seat or two, Independence High has been placing non-academy students in it. That could cost the program its state funding.

“Jack, I bleed for you, man, but I have 200 schools about to close. Your superintendent and principal signed on the line every year that you took money,” said Winthrop. “They’re taking state funds while not doing what they’re contractually obligated to do. They’re putting you in a position where you’re out of compliance.”

Money drying up

Winthrop is tall and imposing and, having started three academies during his teaching days, is arguably one of a handful of CDE staff who can hold court on California Partnership Academies. That’s what he did at Oakland’s Media Academy High School last Friday, running through a PowerPoint presentation and fielding questions on what to expect in state funding for next year. The answer: Don’t get your hopes up.

As we reported here last week, a new report from UC Berkeley’s Career Academy Support Network gave academies high marks, particularly for improving graduation and college-going rates for students considered at risk of dropping out of school.

Funding sources for partnership academies.  (Source:  Edutopia. Sept. 2010) Click to enlarge
Funding sources for partnership academies. (Source: Edutopia. Sept. 2010) Click to enlarge

At the same time, two major sources of funding for academies are drying up within a year, putting about 200 in jeopardy. So it was natural that most questions from academy directors focused on other places to seek funding, and the chances that they’ll be able to get a slice of a new, but small, state academy grant program for next year.

“Is there any other funding source?” asked one teacher. “Not that I know of at this time,” Winthrop answered, “but send me a note; there are lots of places to get money here and there if you know how to write grants.”

The woman sitting to my left, Brenda Calvert with the Green Hospitality, Tourism and Recreation Academy at John F. Kennedy High School in Fremont, cupped her hand over her mouth and whispered, “I’m really nervous about this.  Our first seniors are graduating this year.”

To my right, Ryan Cheshire had just started a multimedia animation and videogame design academy at Encinal High School in Alameda with a seed grant from the CDE.  He said they knew the program was sun-setting at the end of this academic year, but hoped the legislature would step in and extend the program.

“One year is just not enough time.  It’s a complex program, there are so many different parts to it that at one year, you’re just scratching the surface of being effective,” said Cheshire.

A brief history

As it turns out, there is one new state source of funding; it’s just so small that the competition is expected to be fierce.

During a special session last April, the Legislature passed SBX1 1, authored by State Senate President pro Tem Darrell Sen. Steinberg.  It was supposed to provide $40 million in

Growth of Career Academies. (Source:  Career Academy Support Network). Click to enlarage
Growth of Career Academies. (Source: Career Academy Support Network). Click to enlarage

grants over five years, to support up to 100 clean technology and renewable energy partnership academies, with the money coming from the Renewable Resource Trust Fund and paid for by a small surcharge on utility bills from.

Republicans insisted that the funds come from Proposition 98 general funds for education.  So the program now has a little over $3 million for the first round of grants and no guarantee that the remaining $37 million will be available.  Instead of nearly 100 academies, the amended law will now pay for about 21 grants.  Nevertheless, Winthrop expects hundreds of schools to apply.

Another bill, SB 70, fades out at the end of this school year, but Sen. Steinberg said he is already in talks to try to refund it.

California first passed legislation for partnership academies in 1984, providing money for 10 pilot programs.  Three years later, a second bill added forty more academies.  Those funds have been renewed over and over since then.

That’s how Aiello’s academy continues to operate, and where Oakland’s Media Academy High School gets the bulk of its funds.  The Media Academy is marking its 25th year, and director Michael Jackson has been at the school for all of them.  Although his funding is the most secure – a tenuous commitment these days – Jackson says the state is moving too quickly to start new academies, especially when so many existing programs could use some help.

“Another way to look at it is there’s way too many of these academies to do them right,” said Jackson, especially for the $70,000 or so that they each receive from state Proposition 98 funds. “Why don’t they put more money and support into the ones they have that are working and see if you can’t built a little more slowly until the economy recovers.”

Dems’ budget: Prop 98 with twist

Giving K-12 and community colleges more money with one hand and taking it away with the other, Democratic leaders are proposing a balanced budget that would fund K-12 schools at last year’s level while meeting the state obligation to education under Proposition 98. They are doing this without $10 billion in temporary taxes that Republicans refuse to extend. No easy feat, this is budgeting with a twist – of the arm of education groups, which could sue over budget maneuvers (but probably won’t).

Nine days ago, Democratic lawmakers passed a state budget by majority vote, which Gov. Jerry Brown vetoed. Today they will try again, only with Brown’s full support. After months of stubbornly trying, Brown over the weekend gave up hope of persuading four Republicans to temporarily extend taxes in exchange for pension and environmental law changes and a cap on state spending.

Brown said the proposed budget would require up to $1.9 billion in midyear education cuts, including seven fewer school days, if rosy revenue estimates come up short. The budget will be balanced but will not solve the state’s structural deficit. That will take higher taxes, and he promised to propose them in an initiative on the November 2012 ballot.

Details were sketchy Monday on how Brown, House Speaker John Perez, and Senate President pro Tem Darrell Steinberg balanced the budget. Brown promised budget briefings after the Legislature approves the budget. (He actually said that in a press webcast.) But this is basically how they plan to square the circle:

  • Democrats are building in $5.2 billion more in revenue, including the optimistic projection of $4 billion in natural growth in taxes, mainly from high-income earners, beyond the $6.6 billion that Brown included in his May budget revision.
  • Since K-12 schools and community colleges are entitled to about 40 cents of every new dollar under Prop 98, they would get about an extra $2.1 billion of the $5 billion. Instead, Democratic leaders will nullify that by diverting 1.06 percent of the state sales tax to local governments to pay for realignment that shifts more state functions to cities and towns. That 1 percent will no longer count toward Prop 98.

According to John Mockler, the architect of Prop 98 and occasional consultant for the California Teachers Association, who was in on negotiations on Sunday, this will be a one-year deal, and groups in the Education Coalition will not sue over it. The November 2012 ballot initiative will call for permanently reimbursing schools to replace the loss of state sales tax revenue. (Update: Next year’s budget would be written so that schools would be compensated even if a budget initiative failed). “We’re supportive [of Brown’s plan for realignment] but not chumps,” Mockler said. (Rick Pratt, vice president of the California School Boards Association, said Mockler must have been speaking for the CTA, because CSBA hadn’t been consulted.)

  • About $1.5 billion in child care programs that have been included within Proposition 98 will be moved outside of it, further lowering the Proposition 98 guarantee. According to Mockler, a previous court ruling gives the Legislature authority to do this. But Pratt said it would be a “bad precedent” to move a program outside of the Prop 98 obligation just because the Legislature decides not to fund it.
  • If the projected revenue increases come up short, then in January Director of Finance Ana Matosantos could order up to $2.6 billion in cuts, starting with $700 million to higher education and social services, and then the rest to K-12 schools and community colleges. Midyear cuts are especially tough on districts, which set budgets by July 1. So the Legislature will approve cutting another seven days off the end of the school year – likely giving California the shortest school year in the United States, if not the developed world, at 168 days. It’s not clear whether the Legislature would mandate or simply permit a shorter year. (Update: Economist Chris Thornberg of Beacon Economics, a Los Angeles consulting firm, was asked whether Democrats should rely on $4 billion more in tax revenue this year “They’re out of their minds,” he told the Sacramento Bee.)
  • In his initial January budget, Brown had proposed delaying payment of an additional $2.1 billion owed to schools and community colleges in 2011-12 until the following year. In his May budget revision, which assumed Republicans would agree to extend taxes, Brown withdrew the deferral and even rescinded several hundred million dollars in past deferrals. But in the latest proposal, Democrats would reinstate Brown’s $2.1 billion deferral from January and add $700 million to it. This would bring the total of deferrals to more than $10 billion. In yesterday’s post, I pointed out potential dangers of doing this.

The bottom line is that K-14 schools will receive $48.3 billion in Prop 98 money next year, including $2.8 billion in new deferrals. Asked Monday how he could meet the Prop 98 obligation without tax extensions, Brown replied “very legally and creatively.”

“It is very creative,” Pratt said. “I don’t know about very legal.”

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According to the Sacramento Bee, the latest budget will also include the following features in the Democrats’ budget that Brown vetoed last week:
  • $1.7 billion from eliminating redevelopment agencies;
  • $300 million from $12 per vehicle increase in DMV registration fee;
  • $200 million in enforcing an online tax of Amazon;
  • $150 million cut each to University of California, California State University;
  • $150 million cut to state courts.

The Prop 98 disappearing act

When Gov. Brown vetoed the budget yesterday, he also halted one of the “legally questionable maneuvers” referred to in his veto message, in which legislators attempted to ignore the constitutional funding requirements of Proposition 98. Analysts at the education consulting firm School Services of California said they were reviewing the numbers in the budget bill when they noticed something was missing from the Prop 98 guarantee – more  $1 billion.

In a video conversation and an article for their clients, Vice President Robert Miyashiro and Associate Vice President Michael Ricketts describe how the Legislature essentially suspended Proposition 98 without the constitutionally mandated two-thirds vote.

The governor’s May revise assumed that the Legislature would extend temporary taxes, bringing in about $4 billion for the next fiscal year. Without that revenue, the Proposition 98 portion owed to the schools would drop by about $1.6 billion. “Any greater reduction in Proposition 98 funding for schools, whether through cuts or deferrals, would require a suspension of the guarantee,” requiring Democratic and Republican votes to reach the two-thirds threshold for suspension, they write in their article.  To balance the budget, the Democrats proposed deferring $2.85 billion, an additional $1 billion.

Like the best of illusions, this one appeared to fund K-12 education without any new cuts, at about $50.4 billion. At the same time, however, legislators raised the amount deferred into the 2012-13 school year by nearly $3 billion, about a billion more than the governor first proposed.

“We think this is a very troubling precedent,” Miyashiro said in the video. In the 23 years since voters approved Prop 98, it has been suspended twice, he noted, “but never has the legislature simply ignored the two-thirds vote requirement for suspension and underfunded the guarantee.”

How can they do this? Apparently, it’s not difficult. “The legislature can actually do anything they want until they’re challenged,” explained Ricketts with a wry laugh. If the budget hadn’t been vetoed, and this provision was allowed to stand, he said it could have rendered Proposition 98 meaningless “for purposes of establishing a base for funding for education because the legislature year-to-year could fund it any level it wanted to just with a simple majority vote.”

Gov. no girly-man

The veto also gave Gov. Brown a little more street cred with educators. Talk around the hall lockers is that he exhibited more muscle yesterday in taking on his party and the Republicans than his predecessor Gov. Mr. Universe ever showed.

“I think it was a very strong leadership move for the governor,” said Mike Hanson, superintendent of Fresno Unified School District.  “He’s laying out the rules of the game; it’s got to be a budget that will work.”

Like many superintendents, Hanson has had to make years of painful cuts and is hopeful that the governor’s firm stand will force a reengagement that brings both political parties back to the table to develop a “permanent and attainable” solution. Fresno Unified will have 522 fewer teachers next year, and several hundred fewer classified staff, and the district is actually in better shape than most because it has a 7 percent reserve – which they’ll soon be drawing down.

“If the governor were to fold and to sign the budget, his political future in the state would just be in the toilet,” said Bob Blattner of Blattner & Associates, an education consulting firm based in Sacramento. “It would be another four years of Schwarzenegger with a smaller collar size.”

Blattner said his clients were terrified that the budget approved on Tuesday would have led to mid-year budget cuts because so many of the savings and revenues were based on shaky assumptions. He said the governor’s action gave them hope for a structural change that would give them a sustainable and predictable budget solution. He said that by standing up against the status quo of legislative inaction, Brown showed that there’s an adult at the wheel who knows where the state should be going.