For the past 40 years, ever since California voters passed Proposition 13, the Capitol’s annual budget wrangle has been dominated by how much money would go to K-12 schools – for good reason.
Not only are the schools educating six million kids, but they are number one on the voting public’s priority list, and are by a large margin the biggest single slice of the general fund budget.
The stage is set for a big confrontation over whether extra cash should be stashed as a hedge against recession, as Brown wants, or be spent on expensive – and permanent – new services that would be difficult to reduce if revenues fell.
It will be different this year – and that difference will, counterintuitively, increase the budget’s political friction.
Not only does Gov. Jerry Brown’s 2018-19 budget fully meet the schools’ constitutionally mandated share of state revenues, but also catches up on all spending cuts that previous budgets had made due to revenue shortfalls.
Uniquely, any reductions in school allocations are treated as debts to be repaid later, a process known as “settle-up.”
Schools are getting all they are owed thanks to voter-approved tax increases and a healthy economy. Brown’s budget envisions that per-pupil spending from all sources, including local property taxes, would average $15,654, up 66 percent from 2011-12, the first year of Brown’s second stint as governor.
Local school officials and education unions still say, of course, that more money is needed. Their big complaint is that rising demands from pension systems covering teachers and support staff are soaking up much of the increased financing.
Because the state is catching up on its school debts, the complicated school finance formula of Proposition 98, passed by voters in 1988, means that schools will not automatically get half or more of any additional revenues, as they have in the past.
“That is not the situation this year,” Mac Taylor, the Legislature’s top budget adviser, told his bosses last month. “Almost all of it is, in effect, free to you.”
There’s another factor in the equation, as well. Brown’s budget also fills up the state’s constitutionally mandated “rainy day fund” so, as with schools, it would not automatically claim a share of any additional revenues.
“That, too, is not a factor right now,” Taylor advised. “It’s almost all discretionary money,” he continued, telling legislators they are “not as restricted as you have been in the past.”
With Taylor also projecting that the state could have several billion dollars more in revenue than Brown assumes, the stage is set for a big confrontation over whether extra cash should be stashed as a hedge against recession, as Brown wants, or be spent on expensive – and permanent – new services that would be difficult to reduce if revenues fell.
Brown’s fellow Democrats have signaled that with money pouring into the state treasury they want big chunks for long-pending priorities such as child care, welfare grant increases and perhaps health coverage for undocumented immigrants.
Brown continues to warn of an overdue recession he says would cost the state $20 billion a year in lost revenue.
“Fortunately,” he said as he introduced his budget, “we haven’t hit that recession yet, but we will.”
Brown will not be facing voters again and clearly wants to leave his successor a healthy reserve rather than a barrel of red ink – something Brown 1.0 didn’t do in 1983 and almost all recent governors have also failed to do.
He has the inherent power to build more reserves and block any major new entitlement spending, if he wants to use it.
But he would have to face down members of his own party and the vast array of groups seeking more money from Sacramento. And with school money off the table, the confrontation over priorities would be much starker than usual.
Dan Walters is a columnist at CALmatters. Reach him at email@example.com.