Legislative Analyst's Office, August 2000

Spending Plan

Chapter 3

Part 1

Expenditure Highlights

Proposition 98 Education

Proposition 98 Provisions

The budget includes $43 billion in Proposition 98 spending in 2000-01 for K-14 education. This represents an increase of $5 billion, or 13 percent, from last year's budget package. Figure 1 summarizes for the two fiscal years the effect of the budget package on K-12 schools, community colleges, and other affected agencies.

Figure 1
Proposition 98 Budget Summary
(Dollars in Billions)
1999-00 Budget Package 2000-01 Enacted
As Enacted Revised
K-12 Proposition 98
General Fund $23.7 $25.1 $27.3
Local property taxes 9.9 10.0 10.7
Subtotals, K-12 ($33.6) ($35.1) ($38.0)
Average Daily Attendance (ADA) 5,578,766 5,600,743 5,682,112
Amount per ADA $6,025 $6,266 $6,694
California Community Colleges
General Fund $2.3 $2.4 $2.7
Local property taxes 1.6 1.6 1.7
Subtotals, Community Colleges ($3.9) ($4.0) ($4.4)
Other agencies $0.1 $0.1 $0.1
Loan repayment 0.3 0.3 0.4
Totals, Proposition 98 $37.8 $39.5 $42.8
General Fund $26.4 $27.9 $30.4
Local property taxes 11.4 11.6 12.4
Totals may not add due to rounding.

The Proposition 98 totals (including the revised total for 1999-00) reflect the Legislature's action to appropriate more General Fund monies than required to meet the constitutional minimum funding guarantee. Specifically, the Legislature appropriated $1.5 billion more than the 1999-00 minimum funding level and $1.3 billion more than the guarantee in 2000-01, based on revenue estimates adopted in the 2000-01 Budget Act.

K-12 Program Impacts

The K-12 portion of the Proposition 98 budget package includes:

Figure 2 displays K-12 per-pupil funding amounts from 1993-94 through 2000-01. After adjusting for the effects of inflation and changes in attendance accounting, per-pupil funding has increased $1,465, or 28 percent, over the period.

2000-01 Baseline Increases

Compared to last year's budget package, K-12 Proposition 98 funding increased by $4.4 billion. The budget allocates almost $1.6 billion to provide for inflation and growth adjustments. Specifically, the budget includes about $490 million to accommodate a projected 1.45 percent increase in the student population, and almost $1.1 billion for a 3.17 percent cost-of-living adjustment (COLA) applicable to most program funding.

The budget directs the remaining $2.8 billion for other purposes, including new and existing programs (see Figure 3). The major increases are as follows:

Figure 3
Major K-12 Increases--Proposition 98
(In Millions)
Purpose Amount
Revenue limit "deficit reduction" $1,840
Cost-of-living adjustments 1,060
Enrollment growth 491
Teacher recruitment/retention-- low-performing schools 143
Child care 138
Supplemental instruction 102
School/staff performance awards 85
Beginning teacher salary 55a
a Includes carryover of $20 million of one-time savings.

Governor's Vetoes. The Governor vetoed a total of $128 million in ongoing K-12 Proposition 98 funding, including a $61 million legislative augmentation for school safety. As previously noted, the Governor set aside $42 million of the vetoed amount for subsequent legislation to fund one-time child care programs.

Current-Year Funds

The budget adds $1.5 billion of one-time funds to the $33.6 billion of Proposition 98 funds approved for K-12 education in the 1999-00 Budget Act. We summarize the most significant of these one-time allocations below in Figure 4 (see page 24).

Figure 4
Major K-12 Expenditures
One-Time Funds
(In Millions)
Purpose Amount
District and school site block grants $425
School site and staff performance awards 350
English Language Learners 250
Education technology (high schools) 175
Mandates (deficiencies) 139
Digital high school 105a
a Funded from prior-year savings.

Non-Proposition 98 Provisions

The budget package also includes the following significant provisions for K-12 education involving funds "outside" of Proposition 98.

Higher Education

The budget includes significant funding increases for the UC, CSU, California Community Colleges (CCC), and the Student Aid Commission. It provides for employee compensation increases and significant enrollment growth, as well as several programmatic expansions. Figure 5 shows the change in funding for each major segment of higher education for 2000-01 from the General Fund and local property tax revenue.

Figure 5
Higher Education Budget Summary
General Fund and Local Property Tax Revenue
(Dollars in Millions)
2000-01 Budget Change From 1999-00
Amount Percent
University of California $3,205.6 $487.7 17.9%
California State University $2,473.0 $278.9 12.7%
California Community Colleges
General Fund $2,689.4 $371.7 16.0%
Property taxes 1,683.3 114.9 7.3
Totals, Community Colleges $4,372.7 $486.6 12.5%
Student Aid Commission $531.5 $142.0 36.5%

Governor's Vetoes. The Governor deleted $170.1 million from the amount approved by the Legislature for higher education in 2000-01. Of this amount, the Governor deleted $14 million from UC, $6.5 million from CSU, $97 million from CCC, and $51.6 million from the Student Aid Commission.

University of California

The budget provides $487.7 million, or 18 percent, more in General Fund support for UC in 2000-01 than in 1999-00. Of this amount, $108.9 million is for various programs to assist K-12 education, consisting of:

The budget also includes $13.8 million to reduce summer fees on UC campuses to the levels charged in fall, winter, and spring. Figure 6 shows the major funding increases.

Figure 6
University of California
Major Increases 2000-01
General Fund
(In Millions)
Purpose Amount
Employee compensation increases $128.7
Various K-12 initiatives 108.9
Enrollment growth (3.75 percent) 51.2
UC Davis MIND Institute to study neurodevelopmental disorders 30.0
Reduce summer fees 13.8

California State University

The budget provides $278.9 million, or 13 percent, more in General Fund support for CSU in 2000-01 than in 1999-00. This includes $19.9 million to reduce summer fees on CSU campuses to levels charged in the fall, winter, and spring. Figure 7 (see page 28) shows the major funding increases.

Figure 7
California State University
Major Increases 2000-01
General Fund
(In Millions)
Purpose Amount
Increase in compensation pool (6 percent)a $113.2
Enrollment growth (4.5 percent) 73.1
Reduce summer fees 19.9
a How these funds are used (for cost-of-living adjustments, merit increases, and parity adjustments) will be determined through collective bargaining.

California Community Colleges

The budget package contains major funding increases for community colleges. General Fund spending for community colleges totals approximately $2.7 billion in the budget year. This represents a $372 million, or 16 percent, increase above 1999-00 expenditures. The budget also added $105 million in one-time expenditures in 2000-01 that will be accounted for in 1999-00 Proposition 98 funding. Figure 8 shows the major program increases funded in 2000-01. Of the increase for 2000-01, $155 million is for expanding the Partnership for Excellence program to a total of $300 million. These are additional general purpose funds provided to all districts to assist them in improving their productivity and student outcomes. As noted above, the Governor vetoed $97 million in community college funding, including $45 million for equalization.

Figure 8
Community Colleges
Major Increases 2000-01
General Fund
(In Millions)
Purpose Amount
Partnership for Excellence $155.0
Cost-of-living adjustment (4.17 percent) 149.1
Enrollment growth (3.5 percent) 122.9

Student Aid Commission

The budget appropriates $531.5 million from the General Fund for the Student Aid Commission in 2000-01. This is $142 million, or 37 percent, above expenditures in 1999-00. The increase includes provisions to:

The Governor vetoed $51.6 million from the amount of legislative augmentations scaling back increases in Cal Grant award levels.

The Legislature and Governor have agreed to significantly expand the Cal Grant program beginning in the 2001-02 budget year. Senate Bill 1644, which is expected to become law, would entitle all academically and financially eligible students to a Cal Grant. The Student Aid Commission estimates that SB 1644 could increase annual Cal Grant costs from $570 million to roughly $1.2 billion when fully implemented.

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