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2016 Proposed California Budget Update from Governor Jerry Brown

Branché Jones

January 11, 2016


Governor Jerry Brown This week California Governor Jerry Brown released his proposed budget that invests significantly in K-12 education. The California budget update contains very good news for the education community while also storing away money in a healthy reserve. This begins the budget deliberation process, next the legislature will begin to hold hearings on the various proposals in the budget and the Governor will submit revisions to his budget in May. In this proposed budget the Governor wants to continue to restrain spending and increase budget reserves, and these dire economic predictions support his proposal to add about $3.5 billion to the Rainy Day Fund in 2016-17.  This proposal seeks to transfer $2 billion more to the Budget Stabilization Account (BSA) than what is required under Proposition 2, and would bring the BSA total to just over $8 billion.

Continued Growth in K-12 Spending and LCFF Implementation

The Governor estimates that the Proposition 98 guarantee for 2016-17 will be $71.6 billion, which he compares to the pre-recession guarantee of $56.6 billion in 2007-08 and the deep recession guarantee of $47.3 billion in 2011-12.  The increase in the guarantee for 2016-17 is sufficient to provide a fourth year investment of about $2.8 billion for LCFF implementation.  The Department of Finance calculates that this funding will eliminate about 49% of the remaining LCFF funding gap, and when combined with the roughly $12.8 billion provided over the prior three years, will bring total LCFF implementation to about 95%.  The budget proposal also provides a very modest $1.7 million increase to the county office of education LCFF to cover COLA and ADA adjustments.

One-Time Discretionary Funding

Upward adjustments of the Prop. 98 Guarantee in 2014-15 and 2015-16 allow the Governor to again propose an allocation of fully flexible, one-time funding to school districts, county offices and charter schools.  The amount proposed for 2016-17 is $1.2 billion, and builds on the $3.6 billion provided over the last two budgets.  Note that all of these funds count toward offsetting any mandate reimbursement claims filed by the LEAs receiving the funds.

California School Facilities

The Governor continues to cite “deficiencies” with the existing school facilities program and emphasizes the need for a new state program that is less complex and focuses on districts that have less local capacity to build or modernize schools.  He observes that the $9 billion bond proposed for November 2016 does not reform the existing program but, in response to a question at his press conference this morning, did not state that he is currently opposed to that measure.  The budget proposal, however, makes fairly clear that he intends to work with the Legislature and stakeholders to provide some sort of alternative to the November school bond measure.

Early Education Block Grant

The Administration proposes to consolidate Prop. 98 funding for the State Preschool Program, transitional kindergarten, and the Preschool Quality Rating and Improvement System Grant into a $1.6 billion Early Education Block Grant.  The Governor suggests that the block grant will provide greater local flexibility to address community needs and focus on the most at-risk children.  The proposal does not include many specifics, but promises further detail by the May Revision.  Many legislators, including Speaker of the Assembly Anthony Rendon, have stated that expanding early education opportunities is their top priority.  Stay tuned.

Career Technical Education

The Governor proposes to continue the commitment made in the 2015 Budget Act to provide $900 million in one-time funding over three years for competitive matching grants to support high-quality CTE programs.  Funding for 2016-17 will be $300 million.

Proposition 39 Energy Efficiency

The budget proposes $365.4 million to support school district, county office and charter school energy efficiency projects in 2016-17.  This is an increase of about $50 million over what was provided last year.

Cost-of-Living Adjustments (COLA)

The COLA is calculated at 0.47%, and the budget proposal includes $22.9 million to provide COLAs to categorical programs that remain outside of the LCFF, including Special Education, Child Nutrition, Foster Youth, Preschool, American Indian Education Centers, and the American Indian Early Childhood Education Program.
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