CA State Budget Update - Conference Committee Acts on K-12 Spending Plan

The Legislature’s Budget Conference Committee has just voted to approve the vast majority of what will become the Budget Act for 2017-18. A few sticking points remain, primarily related to the use of tobacco tax revenues for Medi-Cal (the Governor wants to cover general costs of Medi-Cal expansion related Obamacare, while key legislators want to increase reimbursement rates for doctors accepting Medi-Cal patients).  The Legislature will need to resolve these issues so that a budget bill can be in print at least 72 hours before a vote on the floor, prior to the Thursday, June 15 deadline.  Although we do not have complete details of the K-12 budget, we have summarized the K-12 actions taken by the Budget Conference Committee last night.

Proposition 98 Guarantee – The 2017-18 Guarantee is projected to be $74.5 billion, which is very slightly under the May Revision proposal.  2016-17 is adjusted to $71.4 billion, and 2015-16 to $69.1 billion, both consistent with the May Revision.  The Guarantee was calculated assuming the Governor’s General Fund revenue estimates, although the Legislature adopted the Legislative Analyst’s Office (LAO) property tax estimates (slightly lower) for the three-year budget period.

LCFF Implementation – A compromise of $1.36 billion for LCFF implementation is a little lower than the May Revision, but higher than the initial Senate and Assembly Budget Committee actions.  We do not yet have the annual gap closure percentage from Department of Finance, but it is likely to be close to 42%, with overall progress toward “full” LCFF funding increasing to about 97%.

One-Time Discretionary Funds – Districts, county offices and charters will receive about $147 per ADA in one-time discretionary funds (counting towards prior-year mandate reimbursement claims) based on total funding of almost $877 million.  Our understanding is that these funds will be released in 2017-18 similarly to the one-time funds you have received over the last three years.  This is a major victory compared to the May Revision, which proposed to delay the one-time funding until May 2019.  

Other Important Issues:

  • County offices of education will receive an additional $7 million of ongoing funding related to the costs of LCAP review and support.  We will provide full details of the distribution of these funds when we can confirm in the actual bill language.  At the same time, we will discuss some controversial provisions related to additional “accountability” and cooperation with the California Committee on Educational Excellence.  While this funding is less than hoped, the fact that it is ongoing is certainly an improvement over the prior one-time proposals.
  • The Conference Committee voted (along partisan lines) to adopt the mandatory orientation language which we discussed in our client update yesterday.
  • On pre-school and early education programs, the Conference Committee adopted the funding amounts from the May Revision, which means increases to slots and reimbursement rates should continue according to the original 3-year plan. We are waiting for final language to determine the extent to which districts will be provided some regulatory flexibility, particularly with respect to Title 22 regulations.  It appears those details will be addressed by a workgroup to be convened by the LAO.
  • Regarding the Districts of Choice (DOC) program, the Committee voted to extend the program for an additional 5 years to 2022.  We understand some reforms are proposed, including perhaps reducing the amount of funding basic aid districts will receive for students they serve through DOC.  There will likely be other transparency and accountability measures, which we will provide when the budget language is available.
  • COLA remains at 1.56%, and is applied to the LCFF Base Grant amounts and to selected categorical programs, including special education.

Funding for Other Programs:

  • $50 million for After School Education and Safety Program augmentation
  • $44 million one-time for additional special education costs
  • $25 million one-time for a Classified Employee Credential Program
  • $15 million to restore the CTE Pathways program (we will provide more information on this program as soon as it is available)
  • $10 million one-time for Refugee Student Support
  • $5 million one-time for Bilingual Teacher Professional Development
  • $5 million one-time for a History and Social Science Pilot related to materials aligned to the new frameworks

Budget Act Workshops:

A comprehensive overview of the 2017-18 Budget Act can be accesses at these workshops. Register here.


This article was provided by: Capitol Advisors Group, LLC