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Description: Our updated economic and revenue forecasts lead us to project different Proposition 98 outcomes than the Governor. Specifically, we estimate a somewhat higher Proposition 98 minimum guarantee for both the current and budget years. We also discuss various issues related to Proposition 98, including an update on the outstanding maintenance factor and our recommendation that the Legislature enact trailer bill language to rebench the Test 1 factor. Finally, based on updated economic data, we estimate that the K-12 cost-of-living adjustment (COLA) will be higher than the Governor’s projection-5.8 percent instead of 5.2 percent. Funding COLAs at this level could lead to additional state costs of around $300 million.