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

1. Governor’s Proposals for the 2013-14 State Budget and K-12 Education Presented to the TRUSD Board of Trustees January 29, 2013 Rob Ball Kate Ingersoll Associate Superintendent Executive Director Business Support Services Fiscal Services

2. 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

3. 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

4. State Budget Reserve Forecast

5. Per-ADA Revenue Volatility

6. 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

7. 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

8. 2013-14 Revenue Limit Factors

9. Revenue Limit Deficit Factors

10. Base Revenue Limit After Deficit Factor at TRUSD $5,331

11. 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

12. Local Control Funding Formula • 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%

13. 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)

14. 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

15. LCFF Grade Spans

16. 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

17. 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: $38.50 Source: Anonymous