Governor’s Proposals for the 2013-14 State Budget and K-12 Education

Presented to the TRUSD Board of Trustees

January 29, 2013

Presented to the TRUSD Board of Trustees

January 29, 2013

Rob Ball Kate IngersollAssociate Superintendent Executive DirectorBusiness Support Services Fiscal Services

Rob Ball Kate IngersollAssociate Superintendent Executive DirectorBusiness Support Services Fiscal Services

Education Receives More . . . For the first time in five years - an increase in funding

Revenue limit deficit still more than 20%

The Governor continues to deal with the “wall of debt”

Proposition 98 guarantee could grow at 3.4% to 5.3% rate over the next several years

Other forecasts have proven to be overly optimistic

Manipulations of Proposition 98 could strangle education funding

Glory years funded by highly educated workforce

Distribution Method is Different Slightly higher funding – New method of distribution – the LCFF

Revenue limits and categorical programs are replaced by base grants and supplemental grants over a phase-in period

The stated goal is to focus more resources on California’s most needy students

$971

($4,458)

$500

($6,842)

$1,205

($1,976)

$543

($3,601)

$948

$167

$1,018

($7,000)

($6,000)

($5,000)

($4,000)

($3,000)

($2,000)

($1,000)

$0

$1,000

$2,000

2008-09 2009-10 2010-11 2011-12 2012-13 2013-14

General Fund ReserveEnacted Budget vs. Final Reserve

(in millions)

Enacted Budget Final Reserves One Year Later

?

State Budget Reserve

Forecast

Per-ADA Revenue Volatility

Per-ADA Revenue Change

0%

-15%

-10%

-5%

0%

5%

10%

15%

1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14

Average 1.5%

Proposition 98 Major Proposition 98 budget changes for K-12 education include:

$1.8 billion to reduce interyear deferrals to $5.6 billion

$1.6 billion to begin implementation of LCFF for school districts

$400.5 million to support energy efficiency projects in schools from Proposition 39 revenues

$100 million increase for the K-12 Mandate Block Grant to fund the Science Graduation Requirement and Behavioral Intervention Plan mandates

$62.8 million for a 1.65% COLA for selected categorical programs

$48.5 million for charter school ADA growth

Revenue Limits The Governor’s Budget makes no reference to current law and

revenue limit funding

There is no direct reference to the statutory COLA

Provides a 1.65% COLA for selected categorical programs and sufficient funding to increase support for LEAs by 4.5% under the LCFF

There is no reference to the current 22.272% deficit factor

Nevertheless, until state law is changed, revenue limits are the means by which state apportionment aid is distributed to LEAs statewide

2013-14 Revenue Limit Factors

Statutory COLA

District Type2012-13

3.24% (actual)

2013-14

1.65% (estimated)

Elementary $202 $106

High School $243 $128

Unified $212 $111

Revenue Limit Deficit Factors8

.14

0%

11

.01

0%

10

.12

0%

8.8

01

%

8.8

01

%

8.8

01

%

6.9

95

%

0.0

00

%

0.0

00

%

0.0

00

%

3.0

02

%

2.1

43

%

0.8

92

%

0.0

00

%

0.0

00

%

7.8

84

%

18

.35

5%

17

.96

3%

20

.60

2%

22

.27

2%

22

.27

2%

0%

5%

10%

15%

20%

25%

30%

35%

Base Revenue Limit After Deficit Factor at TRUSD

$5,331

Base Revenue Limit History

$6,621

$6,405

$5,948$5,862$5,819$5,896

$5,635

$6,950

$7,212 $7,187

$7,330

$7,542$7,653

$5,000

$5,500

$6,000

$6,500

$7,000

$7,500

$8,000

2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14Year

Funded Base Revenue Limit

Base Revenue Limit

Apportionment Deferrals $1.8 billion in 2013-14 to further reverse the interyear K-12

apportionment deferrals that were implemented before and during the economic downturn beginning in 2008-09

During the peak of the downturn, approximately 45% of state aid payments owed to school districts were deferred to the following year

This deferral buy down is a one-time expenditure and does not impose a similar cost on the state in subsequent years

For 2012-13, the state reduced K-12 deferrals by $2.2 billion

At the end of 2013-14, the Governor’s Budget estimates that $5.6 billion in deferrals will remain

Governor Brown is again proposing a major overhaul of California’s system of school finance

California’s current school finance system is “overly complex, administratively costly, and inequitably distributed”

The Governor proposes a sweeping reform of the state’s school finance system with the Local Control Funding Formula (LCFF)

Sufficient funding to increase support for LEAs by 4.5% under the LCFF

In 2013-14, the deficit factor would remain unchanged at 22.272%

Local Control Funding Formula

Major LCFF Elements The LCFF would replace revenue limits and most categorical

program funding

Funding would generally be flexible

Elements of the proposed formula

A base grant target equal to the undeficited statewide average base revenue limit per ADA – $6,816 (includes the 1.65% COLA)

Added funding for K-3 Class-Size Reduction (CSR) and 9-12 Career Technical Education (CTE)

Major LCFF Elements Additional funding based on the demographics of the schools,

including:

English Learner population

Pupils eligible for free and reduced-price meals

Foster youth

These additional amounts will be calculated as 35% of the base grant times the number of eligible students

Concentration grant for 35% of the grade span base grant multiplied by the districtwide % eligible students that exceed 50% of total enrollment

LCFF Grade Spans

Factors K-3 4-6 7-8 9-12

Grade Span Base Grant per ADA

$6,342 $6,437 $6,628 $7,680

Adjustment factors

11.2% CSR

-- --2.8% CTE

CSR, CTE amounts

$710 -- -- $215

LCFF and Categorical Programs Other elements of the formula:

Special Education, Child Nutrition, QEIA, After School Education and Safety, and other federally mandated programs are not included in the formula

Transportation and Targeted Instructional Improvement Grant (TIIG) funding continue as add-ons to the formula for those school districts that currently receive funding through these programs

And the funds can be used for any educational purpose

Timeline: Phased in over seven years – completed in 2020-21

Federal Fiscal Cliff“Fiscal Cliff” put in a much better perspective

U.S. tax revenue: $2,170,000,000,000

Federal budget: $3,820,000,000,000

New debt: $1,650,000,000,000

National debt: $14,271,000,000,000

Recent budget cuts: $38,500,000,000

Let’s now remove 8 zeros and pretend it’s a household budget:

Annual family income: $21,700

Money the family spent: $38,200

New debt on the credit card: $16,500

Outstanding balance on the credit card: $142,710

Total budget cuts so far: $38.50Source: Anonymous