May 2021

Proposition 98 Overview

LAO May Outlook Estimates of Proposition 98 Guarantee

Dollars in Millions

  2020-21 2021-22 2022-23 2023-24 2024-25
Proposition 98 Guarantee          
General Fund $65,950 $69,009 $71,100a $74,246a $78,329a
Local property tax 25,707 27,056 28,426 29,945 31,552
   Totals $91,657 $96,064 $99,526 $104,191 $109,881
Change From Prior Year          
General Fund $11,467 $3,059 $2,091 $3,147 $4,083
   Percent change 21.0% 4.6% 3.0% 4.4% 5.5%
Local property tax $1,017 $1,349 $1,371 $1,519 $1,607
   Percent change 4.1% 5.2% 5.1% 5.3% 5.4%
Total guarantee $12,483 $4,408 $3,462 $4,665 $5,690
   Percent change 15.8% 4.8% 3.6% 4.7% 5.5%
Inputs          
General Fund taxesb $173,520 $181,535 $187,016 $195,277 $206,005
K-12 average daily attendancec 5,871,581 5,836,917 5,846,490 5,805,094 5,743,152
Growth Factors          
Per capita personal income 3.7% 5.7% 3.0% 4.6% 4.0%
Per capita General Fundd 21.4% 5.6% 3.6% 4.7% 5.8%
K-12 average daily attendancec -0.4% -0.6% 0.2% -0.7% -1.1%
Operative Test 1 1 1 1 1
Proposition 98 Reserve          
Deposit/withdrawal (+/-) $1,645 $2,833 $2,679 $2,391 $1,440
Balance 1,645 4,478 7,157 9,548 10,988
Statutory Cost-of-Living Adjustment 2.3%  1.7% 2.3%  1.8%  1.9%
 
Note: no maintenance factor is created, paid, or owed over the period.      
a The May Revision proposes to adjust the minimum guarantee upward ("rebench") for the expansion of transitional kindergarten to all four-year old children by 2024-25. The estimates of the guarantee in this table exclude this adjustment. If the Legislature adopts this proposal, the associated increases in the guarantee would be approximately $900 million in 2022-23, $1.8 billion in 2023-24, and $2.7 billion in 2024-25.
b Reflects General Fund revenue that affects the calculation of the minimum guarantee.
c Excludes attendance associated with proposed expansion of transitional kindergarten.
d Reflects per capita General Fund plus 0.5 percent (one of the Test 3 factors).