The 2021-22 California Spending Plan

Proposition 98 and K-12 Education

Proposition 98

Proposition 98 Establishes Minimum Funding Level for Schools and Community Colleges. This minimum funding requirement is commonly called the minimum guarantee. The state calculates the minimum guarantee by comparing three main formulas or “tests” (Figure 1). Each test takes into account certain inputs, such as state General Fund revenue, per capita personal income, and K-12 student attendance. The state can choose to fund at the minimum guarantee or any level above it. It also can suspend the guarantee with a two-thirds vote of each house of the Legislature, allowing the state to provide less funding than the formulas require that year. The state meets the guarantee through a combination of state General Fund and local property tax revenue.

Funding Requirement up Significantly in 2020‑21 and 2021‑22. As Figure 2 shows, the estimates of the guarantee under the June 2021 budget plan are up significantly compared with the June 2020 estimates. For 2020‑21, the guarantee is up $22.5 billion (31.8 percent). This increase represents the largest upward revision to the guarantee since the adoption of Proposition 98. For 2021‑22, the guarantee increases by an additional $309 million (0.3 percent) relative to the revised 2020‑21 level. This increase is attributable to growth in local property tax revenue, partially offset by a decline in required General Fund spending. Test 1 is operative in both years, with the change in the General Fund portion of the guarantee equating to about 40 percent of the change in General Fund revenues.

Makes Proposition 98 Reserve Deposits, Triggering Local Reserve Cap. Proposition 2 (2014) established a constitutional reserve account within Proposition 98. The purpose of this reserve is to set aside some Proposition 98 funding in relatively strong fiscal times to mitigate funding reductions during economic downturns. The 2021‑22 budget plan deposits $4.5 billion into this account—$1.9 billion related to 2020‑21 and $2.6 billion related to 2021‑22. The constitutional formulas require these deposits because capital gains revenue is relatively strong and the minimum guarantee is significantly above the 2019‑20 level. The deposits also trigger a statutory cap on school district reserves in 2022‑23. (The cap applies the year after the balance in the reserve exceeds 3 percent of the Proposition 98 funding allocated to K-12 schools.) The cap prohibits medium and large districts—those with more than 2,500 students—from holding general purpose reserves that exceed 10 percent of their annual expenditures. Districts can respond to the cap by designating their reserves for specific purposes, seeking exemptions from their county offices of education (COEs), or spending down their reserves.

Pays Down All Deferrals. The June 2020 budget plan anticipated significant drops in the Proposition 98 guarantee. To reduce school funding to this lower level, the 2020‑21 budget deferred $11 billion in payments to schools and $1.5 billion in payments to community colleges. (When the state defers payments from one fiscal year to the next, it can reduce spending while allowing districts to maintain programs by borrowing or using cash reserves.) The 2021‑22 budget plan pays down all of these deferrals. Beginning in 2021‑22, districts will receive their funding on the regular monthly schedule.

Eliminates Supplemental Payments. Trailer legislation in the 2020‑21 budget plan required the state to make payments on top of the Proposition 98 guarantee beginning in 2021‑22. The Legislature created these supplemental payments to accelerate the recovery of the Proposition 98 guarantee from the decline it anticipated last June. Under the 2021‑22 budget plan, however, the guarantee in 2020‑21 is more than $12 billion above the pre-pandemic level. In recognition of this significant increase, the 2021‑22 budget plan repeals the supplemental payments.

K-12 Education

K-12 Proposition 98 Funding Increases Nearly 29 Percent. The budget plan includes $80.5 billion in Proposition 98 funding for K-12 education in 2021‑22—$18 billion (28.8 percent) more than the 2020‑21 Budget Act level. This increase—combined with the upward revision to the 2020‑21 guarantee and various other adjustments—provides more than $30.5 billion for new K-12 spending. Figure 3 shows how the budget allocates this funding.

Major Spending Increases

Creates Expanded Learning Opportunities Program. The budget provides $1.8 billion for school districts and charter schools to provide in-person expanded learning time opportunities to students in Transitional Kindergarten (TK) through grade 6. In 2021‑22, districts and charter schools must offer expanded learning opportunity programs to all TK through grade 6 students attending classroom-based programs who are English learners or low income (EL/LI), and must serve at least 50 percent of these students. Trailer legislation requires that programs provide at least nine hours of combined in-person instructional time and expanded learning opportunities during the school year and for 30 days during the summer. Beginning in 2022‑23, districts and charter schools must offer the program to all TK through grade 6 students in classroom-based settings and provide services to any students whose parent or guardian requests their plac ement in a program. In 2021‑22, districts and charter schools with a student body that is more than 80 percent EL/LI will receive $1,170 per EL/LI student enrolled in TK through grade 6. The remainder of the funding will be distributed evenly among all other districts and charter schools based on their enrollment of EL/LI students in TK through grade 6, with a minimum grant amount of $50,000. The Legislature and Governor have agreed to increase funding for the program in future years, with the goal of reaching $5 billion at full implementation.

Increases Local Control Funding Formula (LCFF) Concentration Grant Rate. The budget provides a $1.1 billion ongoing augmentation to increase the LCFF concentration grant rate for school districts and charter schools from 50 percent of the base grant to 65 percent. Trailer legislation specifies that the additional funding be used towards increasing the number of staff that provide direct services to students in schools where more than 55 percent of students are EL/LI.

Provides State Funding for All School Meals and One-Time Nutrition Initiatives. The budget package provides $54 million ongoing to provide the state rate for additional meals schools anticipate serving due to temporary federal flexibilities. (A federal waiver issued in spring 2021 extends emergency coronavirus disease 2019 [COVID-19] flexibilities that effectively allow schools to receive federal funding for all school meals served in 2021‑22—not just for meals served to low-income students.) Trailer legislation further requires that, beginning in 2022‑23, schools provide two free meals per school day to any student requesting a meal. The state will cover the cost of meals up to the combined state and free federal rate. This action is estimated to cost $650 million ongoing starting in 2022‑23. The budget further provides $150 million one-time Proposition 98 to local education agencies (LEAs)—school districts, charter schools, and COEs—for kitchen upgrades ($120 million) and training food service staff ($30 million). For the kitchen upgrades, every LEA will receive $25,000, with the remaining funds to be distributed proportionally to LEAs where at least half of the students are eligible for free and reduced-priced lunch. The training funds will be distributed proportionally based on the number of classified employees.

Provides Special Education Base Increase, Makes Future Funding Contingent on Legislative Reforms. The budget provides $397 million ongoing to increase the special education base rate from $625 per student to a new rate of $715 per student. Budget trailer legislation also specifies that state special education funds will only be allocated in the 2022‑23 budget package if the package includes statutory changes designed to improve the academic outcomes of students with disabilities. These changes may include clarification of the role of various educational entities in providing special education services, modifications to the existing funding allocations, and expansion of inclusive instructional practices.

Creates New Early Intervention Preschool Services Grant. The budget package provides $260 million ongoing for a new early intervention preschool grant. The funding can be used to support early intervention services for preschool children at risk of being identified for special education, resources for preschool children with disabilities not required under special education, and other activities that improve school readiness and long-term outcomes for children under the age of five. Funding must supplement existing special education spending and, to the extent possible, promote inclusive practices. Funding is to be distributed to school districts based on the number of first graders with disabilities.

Increases Funding for State Preschool Rates and Slots. The budget package includes $130 million Proposition 98 to provide additional State Preschool slots at school districts and COEs. The package also includes $242 million Proposition 98 to increase rates. Furthermore, the budget package changes State Preschool eligibility, allowing programs to provide wraparound care to students in TK or Kindergarten whose families meet the State Preschool income requirements. Previously, the State Preschool program could only serve three- and four-year olds.

Doubles Funding for Career Technical Education Incentive Grant Program. The budget provides a $150 million funding augmentation for the program, for a total of $300 million ongoing. The budget also makes several changes to the compliance process and program eligibility requirements. Most notably, trailer legislation requires the State Controller to include instructions for how auditors—as part of districts’ annual financial audits—are to determine that grant recipients met the program’s one-to-one match requirements. In addition, trailer legislation modifies the program rules to give priority to high-quality regional-based programs operated by a joint powers agency or COE. Prior to awarding grants in 2021‑22, trailer legislation requires the California Department of Education (CDE) to report on the process it will use to verify that an applicant meets the minimum eligibility standards of the program.

Provides One-Time Funding for Community Schools Grant Program. Community schools are schools with strong community partnerships that focus on the well-being of students and families. Community schools typically include integrated supports services (such as health and behavioral health), family and community engagement, collaborative leadership and practices, and extended learning time opportunities (such as after-school care and summer programs). The budget package includes $2.9 billion in one-time Proposition 98 funding to establish new or expand existing community schools. LEAs can apply for grant funds on their own or as a consortium with other LEAs or cooperating agencies (such as a public agency or nonprofit entity). LEAs are eligible to apply if at least half of their student population consists of EL/LI students, or if they have higher than the state average rate of high school dropouts, suspensions or expulsions, child homelessness, foster youth, or “justice-involved youth.” Applicants will receive priority if they (1) have a student body where more than 80 percent of students are EL/LI, (2) demonstrate need for expanded access to integrated services, (3) commit to working with a collaborative agency, and (4) have plans for sustaining the community school model after grant expiration. Figure 4 describes the types of grants, required local match, and allowable uses. Grantees establishing new community schools are to receive priority for planning grants and are eligible to receive implementation grants from 2023‑24 through 2027‑28. As a condition of receiving funding, grantees must submit program and expenditure data to CDE. The Superintendent of Public Instruction (SPI) must, in turn, submit a formal evaluation of the program on December 31, 2027.

The budget package also provides $142 million to establish a network of at least five regional technical assistance centers that will provide support and assistance to prospective applicants and grantees through the 2027‑28 school year. The SPI is to select the technical assistance centers through a competitive grant process, with priority being given to LEAs that partner with institutions of higher education or nonprofit community-based organizations. The centers will be expected to assist schools with conducting a community needs assessment, improving family and community engagement, creating community partnerships, developing sustainable funding sources, coordinating services across child-serving agencies and schools, and accessing and combining funding for services from multiple revenue sources.

Attendance Funding, Independent Study, and Staffing Flexibility

Reinstates Requirements for Classroom Instruction and Resumes Attendance-Based Funding. State law ordinarily requires districts to provide classroom-based instruction as a condition of receiving state funding. Districts must ensure this instruction meets certain daily and annual requirements for the amount of time students spend under the direct supervision of a credentialed teacher. Under this system, the state allocates funding to districts based on the average daily attendance of their students in the current or previous year, whichever is higher. The June 2020 budget plan suspended much of this framework for 2020‑21. Most notably, it suspended the annual time requirement and allowed districts to meet the daily time requirement through classroom instruction, distance learning, or a combination of classroom instruction and distance learning. It also suspended the collection of attendance data and funded districts according to their 2019‑20 attendance levels. (Districts could receive growth funding under certain conditions if they demonstrated increases in enrollment.) The June 2021 budget plan allows these changes to expire, meaning districts will need to resume classroom-based instruction in 2021‑22. For funding purposes, the state will credit districts with their average daily attendance in 2021‑22 or 2019‑20, whichever is higher.

Requires Districts to Offer Students an Independent Study Option in 2021‑22. Independent study is an alternative to classroom-based instruction that allows students to generate district funding based on their participation in programs not conducted at a traditional school site. Independent study programs range from fully online virtual academies to hybrid programs that combine on-site and off-site (as well as synchronous and asynchronous) instruction. Whereas state law ordinarily allows districts to decide whether to provide these programs, budget trailer legislation requires districts to provide an independent study option in 2021‑22. Among other considerations, this requirement is intended to address concerns from parents who might be reluctant to send their students to a regular classroom setting during the pandemic. A district can meet this requirement by operating its own independent study program, allowing students to transfer to another district that provides independent study, or contracting with its COE to operate a program. If none of these options are feasible, a district may ask its COE for an exemption from the requirement. (COEs also are required to offer independent study. They would need to receive approval from the SPI to obtain an exemption. Charter schools are not required to offer independent study.)

Makes Permanent Changes to Independent Study Requirements. Trailer legislation makes several permanent changes to the independent study program. These changes apply to programs offered by all LEAs. Most notably, LEAs must offer synchronous instruction to independent study students throughout the school year, with frequency varying by grade level. These requirements range from daily instruction for TK through grade 3 to weekly instruction for high school students. In addition, LEAs must establish procedures for reengaging with independent study students who do not meet certain requirements, such as students who have completed less than 60 percent of their assigned work in one week, participated in less than 60 percent of scheduled synchronous instruction in one month, or violated their independent study agreement. (This agreement is a document which specifies the student’s coursework and assignments and typically must be signed, in writing or electronically, by the parent or guardian prior to the commencement of instruction for a student enrolled in independent study.) These procedures are to include several elements, such as notification to parents or guardians regarding lack of participation, a plan for outreach from the school to determine a student’s needs, and a standard for when the student and parent should meet with the teacher to reevaluate whether the student should be enrolled in independent study. LEAs also must have a plan for transitioning independent study students back to in-person instruction within five days, if requested by the family. These new requirements do not apply to students who are enrolled in independent study for less than 15 school days during the academic year.

Provides Flexibility From Some Independent Study Rules in 2021‑22. Trailer legislation provides greater flexibility regarding the signing of an independent study agreement. In 2021‑22, these agreements can be signed up to 30 days after the commencement of independent study. The budget package also allows LEAs to earn apportionment funding for independent study that occurs due to COVID-19 quarantine, beginning with the first day of a student’s quarantine.

Modifies Requirements for Receiving Emergency Attendance Funding. Existing law establishes a process for LEAs to earn attendance-based funding when they must close schools or experience significant attendance declines due to an emergency (such as a fire, flood, or epidemic). Trailer legislation modifies the process by requiring LEAs to include a plan for offering independent study to students affected by the emergency within ten days of a closure or major decline in attendance. In addition, LEAs are required to reopen for in-person instruction as soon as possible, unless prohibited under the direction of the local or state health officer. Trailer legislation also specifies that, from September 1, 2021 through June 30, 2022, LEAs generally may not receive emergency attendance funding for closures or attendance declines due to COVID-19 student quarantines. During this period, emergency attendance funding related to COVID-19 is available for quarantined students with special needs whose individualized educational programs do not provide for participation in independent study and for students attending community day schools. (Community day schools are schools for students who have been expelled from a previous school or who have had problems with attendance or behavior.) LEAs may also receive emergency attendance funding during this period if they can demonstrate to the SPI that they have insufficient staff available to provide in-person instruction due to COVID-19 staff quarantines and have exhausted all options for addressing their staffing needs.

Provides More Flexibility for Using Substitute Teachers. State regulations ordinarily allow substitute teachers to work continuously in one assignment for a maximum of 30 days. For the 2021‑22 school year, substitute teachers may work continuously in one assignment for 60 cumulative days.

Transitional Kindergarten

Expands TK to All Four-Year Olds. Budget trailer legislation gradually expands TK eligibility from 2022‑23 through 2025‑26. Figure 5 shows the expansion schedule. At full implementation in 2025‑26, a child who has their fourth birthday by September 1 will be eligible for TK, making the grade available to all four-year olds. (Under current law, a child is eligible for TK if their fifth birthday is between September 2 and December 2 of the coming school year.) This plan is anticipated to cost approximately $600 million in 2022‑23 and $2.7 billion at full implementation in 2025‑26. The Legislature and the Governor have reached an agreement to cover these costs by “rebenching” (adjusting) the Proposition 98 formulas to increase the share of General Fund revenue allocated to schools.

Makes Programmatic Changes to TK. Budget trailer legislation sets class size requirements for TK—specifically, requiring that school districts and charter schools maintain an average TK classroom enrollment of no more than 24 students at each school site. Trailer legislation also specifies a minimum number of adults required in a TK classroom. Starting in 2022‑23, TK classrooms must on average have 1 adult for every 12 students. Starting in 2023‑24 and contingent on additional funding, TK classrooms must on average have one adult for every ten students. Unlike the costs for serving additional students, the state intends to cover the costs of lower staffing ratios using existing Proposition 98 funds. (It will not rebench the minimum guarantee for these costs.) Furthermore, trailer legislation specifies that eligibility for TK does not affect a family’s eligibility for other subsidized preschool or child care programs. For example, if a child is eligible for TK and State Preschool, the family could choose to enroll the child in either of the programs. The budget package also delays implementation of additional child development requirements for TK teachers. State law previously required that, by August 1, 2021, TK teachers have a Child Development Teacher Permit, at least 24 units of early childhood education or child development, or comparable experience. Trailer legislation delays this requirement to August 1, 2023.

Includes Several One-Time Augmentations to Support Expansion. The budget package includes $490 million non-Proposition 98 General Fund for schools to construct or renovate State Preschool, TK, and full-day kindergarten classrooms. The package also includes $200 million Proposition 98 to support State Preschool or TK expansion. Of these funds, each LEA that operates a kindergarten program is to receive a base grant based on its 2020‑21 kindergarten enrollment. COEs are to receive $15,000 for each LEA that operates a kindergarten program in their county. Of the remaining funds, 60 percent will be distributed proportionally based on 2019‑20 kindergarten enrollment and 40 percent will be distributed based on the number of kindergarteners that are EL/LI. Funds can be used for a variety of purposes such as recruitment, training, and materials. The budget package also includes $100 million Proposition 98 in competitive grant funding for LEAs to increase the number of highly qualified State Preschool and TK teachers. Funds will be used to provide State Preschool, TK, and kindergarten teachers with training in specific areas, such as providing instruction in inclusive classrooms and supporting dual language learners. In addition, the budget package provides $10 million non-Proposition 98 General Fund to update the California Preschool Learning Foundations, a publication that describes the skills preschool children typically attain in school.

Non-Proposition 98 Changes

Allocates $22.3 Billion in Federal Relief Funding. As Figure 6 shows, the budget package allocates $22.3 billion in one-time federal K-12 education funding from the Coronavirus Response and Relief Supplemental Appropriations Act and the American Rescue Plan Act. The majority of funding ($20 billion) is provided as grants to schools to cover a broad range of activities. The remaining funds are used to cover costs associated with in-person instruction and expanded learning grants, provide temporary rate and slot increases for after-school and summer learning programs, and support the allocation and monitoring of COVID-19 relief funds.

Provides More Than $800 Million Non-Proposition 98 General Fund. As Figure 7 shows, the majority of the one-time funding (totaling $740 million) is to support two facility grant programs—one specifically for early education programs and another for all K-12 facilities. The budget package also includes non-Proposition 98 General Fund for educator credential fee waivers, updates to State Preschool guidance, teacher professional development, training for school climate surveys, and the Special Olympics.

Supports New and Ongoing Workload at CDE. The budget provides CDE with 164 additional positions and an associated $45.3 million ($39.7 million non-Proposition 98 General Fund and $5.6 million federal funds) for accommodating new workload. Of the $45.3 million, 73 percent is ongoing and 27 percent is one time. Notably, 83 positions and $12.6 million are to backfill positions at CDE associated with the transition of child care programs to the Department of Social Services. These positions are intended to provide CDE with sufficient staff to administer State Preschool and various school nutrition programs that will continue to be administered by CDE. Additional ongoing funding supports existing authorized administrative positions, workload associated with early learning programs, and support for various one-time and ongoing K-12 programs included in the budget package. The most notable one-time augmentations are for contracting with a vendor to provide direct deposit to State Preschool providers, distributing federal reimbursements for child nutrition emergency operations, and supporting increased litigation costs related to COVID-19. A list of all new K-12 workload for the department is on our EdBudget website.