Nick Ut / Associated Press

Gov. Jerry Brown speaks in favor of Proposition 30 at an Inglewood rally last month. Brown insists that prescribed cuts to K-12 and higher education will go through if the measure loses Tuesday.

Is there a Plan B for the state budget if California's Proposition 30 fails?

Published: Saturday, Nov. 3, 2012 - 11:00 pm | Page 1A
Last Modified: Friday, Mar. 29, 2013 - 4:37 pm

Gov. Jerry Brown has framed it as a simple choice for voters: Pass Proposition 30 or schools will suffer early shutdowns and college students will pay higher tuition.

But education leaders privately have discussed fallback efforts to spare schools from some of the worst consequences, especially after the initiative fell below 50 percent in recent polls.

School groups are expected to lobby hard to reverse or ease budget reductions headed their way if voters reject Proposition 30. They have two main paths: the Capitol or the courts.

"The education community will use every tool at its disposal to fight the cuts," said Kevin Gordon, a longtime K-12 lobbyist.

Brown insists the budget is a closed book. He says he will not revisit the prescribed cuts to education, so schools must deal with less funding this year if voters reject Proposition 30. He promises to be a stubborn gatekeeper, no matter how hard education forces lobby.

"The cuts are in the budget, the law of California," Brown said Thursday in San Francisco. "They cannot be changed unless the Legislature wants to reverse it and the governor signs the bill, and I won't sign the bill. You can take that to the bank."

His stance has political benefits heading into the election, since he wants voters to know their decision on Proposition 30 has serious consequences, what critics consider a "gun to the head." California also has assured lenders the state will cut school funding to balance its books if the initiative fails; a reversal could hurt the state's credit position.

A major problem with reversing school trigger cuts is finding money or savings elsewhere to fill the gap. Brown and lawmakers are uncomfortable with reopening a budget that already involved cuts to health and social service programs, and the governor has said he does not want to use more accounting gimmicks.

A Field Poll released Thursday showed Proposition 30 with support below 50 percent but maintaining a 48-38 percent lead, with 14 percent undecided. Backers believe the initiative stands a chance if Brown can reach enough undecided voters, especially a wave of last-minute online registrants. Opponents take heart in the measure's final-month dip below 50 percent.

Big cuts for schools if measure fails

Under the budget the governor signed in June, K-12 schools and community colleges would face a combined $3.1 billion program cut if the measure fails, while the University of California and California State University would lose a combined $500 million, according to the Legislative Analyst's Office.

As currently written, that would translate into higher fees for college students. At K-12 schools, effects would vary district by district. Many have planned to abbreviate the school year, including Sacramento City Unified, San Juan Unified and Natomas Unified locally. Districts save money by furloughing teachers and staff.

Some districts have already laid off enough teachers or have sufficient rainy-day savings to survive the school year without further noticeable effects. Others must still negotiate savings with employee unions.

Proposition 30 opponents and many Republican lawmakers are skeptical that districts would actually follow through with dramatic cuts, pointing to the substantial influence of school labor groups.

Republican lawmakers say there are other programs to cut or dollars to tap. GOP leaders sent education groups a letter this week offering to work with Democrats on an alternative to trigger cuts after the election, though their caucuses have not provided specific ideas.

"What I do believe is there will be enormous pressure on the Legislature to undo the trigger cuts, and it wouldn't surprise me at all if they are either lessened or eliminated completely," said Assemblyman Don Wagner, R-Irvine.

He said he does not believe Republicans would agree to more taxes, especially if voters reject them Tuesday. But he suggested there are ways to cut deeper into social services or take millionaire-tax money dedicated for mental health services.

Education lobbyist Bob Blattner said he doesn't think Brown will change course. But he agreed that budget writers have found money before where there seemingly was none, often relying on questionable ideas that borrow from future years.

"There are so many smart people in that building, if the political will is there to skate, I think they could find a way to go out further on thin ice for one more year," Blattner said. "But I don't think there's enough will to roll the governor."

If Proposition 30 fails and Brown sticks to his guns, education groups could seek relief through the courts. The California School Boards Association says it will resume its legal fight against a 2011 budget maneuver that resulted in $2 billion less annually for K-12 schools and community colleges.

To impose the $3.1 billion trigger cut on school programs, the state plans to count bond payments and some early childhood spending as education spending, contrary to past practice. School officials say that may run afoul of the state constitution, and they are weighing whether to sue on that count.

Late state payments may spark lawsuits

Beyond that, education groups may consider suing the state over roughly $10 billion in annual late payments to school districts, said Bill Lucia, president of EdVoice, a nonprofit advocate. Districts have borrowed from outside lenders, used reserves or cut programs because the state has deferred school payments to save money on paper. If Proposition 30 is approved, the state would start reversing that practice.

"We don't think the current financing situation is constitutional, and we're looking at it carefully," Lucia said. "Cash deferrals are unconscionable."

Democrats say they never wanted to impose education cuts or delay payments but that their hand was forced by a deep recession and a lack of sufficient revenues. Even if school groups win court cases, budget writers question where the money would come from to give to schools.

Senate President Pro Tem Darrell Steinberg said talk about alternatives to trigger cuts is premature. He said Democratic lawmakers are focused on passing Proposition 30 to ensure the state budget has a solid footing and the Capitol can avoid a battle among interest groups.

"The focus is on winning Proposition 30, and we can still win," Steinberg said.

Even if Brown and lawmakers preserve trigger cuts, they could soften the impact on education by loosening regulations or taking a more optimistic fiscal outlook.

The state could, for instance, allow districts to contract out services or remove class-size caps, according to the Legislative Analyst's Office. Such moves would be unpopular with labor unions.

Some education officials think Brown could offer another path by assuming higher state revenues in the next two fiscal years or devoting a higher share of state dollars to education in the budget he releases in January.

If the governor gives districts reason to think they will receive more money in future years, they may be able to spread out the trigger-cut pain beyond the spring semester, said Ron Bennett, president of School Services of California, which advises districts on how to budget.

"I think it changes layoff notices, and it changes how much you have to shorten the school year," Bennett said. "It changes things pretty dramatically. A one-time cut is always easier than an ongoing cut."

Finally, some help could come from Proposition 39, a separate initiative that changes the state's corporate tax formula such that multistate firms based elsewhere would pay an estimated $1 billion more each year. That would bring in $500 million for the current budget, which could help ease some trigger cuts.

Unlike with Proposition 30, Brown and lawmakers did not account for Proposition 39's passage in their June budget.

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