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A Historical Review of Proposition 98


[PDF] The 2013-14 Budget: Proposition 98 Education Analysis

February 21, 2013 - The Governor's 2013-14 budget provides $56.2 billion in total Proposition 98 funding--a $2.7 billion (5 percent) increase from the revised current-year level. The Governor dedicates new monies to paying down school and community college deferrals, transitioning to a new K-12 funding formula, restructuring adult education, funding Proposition 39 energy projects for schools and community colleges, and adding two mandates to the schools mandates block grant. The Governor also proposes various changes and consolidations relating to special education funding. Though we think the Governor's basic approach of dedicating roughly half of new funding to paying down existing obligations and the other half to building up base support is reasonable, we have concerns with many of his specific Proposition 98 proposals. In the areas of adult education, Proposition 39 energy projects, mandates, and special education, we provide alternatives for the Legislature 's consideration. Our assessment of an alternative to the Governor's Proposition 39 proposal can be found both in the Proposition 98 report and in a standalone budget brief--2013-14 Budget: Analysis of Governor's Proposition 39 Proposal.


[PDF] The 2012-13 Budget: Overview of the May Revision

May 18, 2012 - In the May Revision of his 2012-13 budget proposal, the Governor identified a larger budget problem of $15.7 billion for state leaders to address in the coming weeks. While we find that the administration's economic and revenue forecasts are reasonable, we are concerned that the amount of property tax revenues from former redevelopment agencies (RDAs) may be substantially less than the May Revision assumes in 2011-12 and 2012-13. If so, this could increase the state's Proposition 98 school funding obligations and, therefore, the size of the budget problem above administration estimates. Moreover, the administration's $1.4 billion estimate for the amount of General Fund benefit that may be achieved in 2012-13 from transferring former RDAs' liquid cash assets to school districts is highly uncertain. We advise the Legislature to focus on adopting realistic and ongoing budget actions to continue the progress the state has made in reducing its annual operating, or structural, deficit. We describe and assess the administration's major May Revision proposals. In some cases, we offer alternative ways to achieve the savings targeted by the Governor. With regard to Proposition 98, we offer alternatives to both the Governor's basic budget plan and his trigger plan.


The 2012-13 Budget: Proposition 98 Education Analysis

February 6, 2012 - This report analyzes the Governor's Proposition 98 budget package, including his basic budget plan and back-up plan as well as his multiyear plan to retire the "Wall of Debt" as it pertains to outstanding education obligations. The report makes a number of recommendations, including designating new revenues for paying down existing K-14 payment deferrals; replacing the education mandate system with a discretionary block grant; adopting some version of the Governor’s K-12 funding restructuring proposal, with general spending requirements that districts dedicate additional resources to their disadvantaged students; expanding community college categorical flexibility; canceling initiation of the transitional kindergarten program scheduled to begin in 2012-13; and prioritizing access to subsidized preschool for affected low-income children.


[PDF] Overview of Proposition 98 Budget Proposals

March 5, 2015 - Presented to Senate Budget Subcommittee No. 1 on Education Finance


[PDF] The 2012-13 Budget: Proposition 98 Maintenance Factor: An Analysis of the Governor's Treatment

May 31, 2012 - The Governor’s Proposition 98 budget package is built on two main assumptions regarding the creation and payment of “maintenance factor.” These two assumptions produce unreasonable outcomes for schools and the rest of the state budget in the near term and long term. In particular, the Governor’s approach would ratchet down the Proposition 98 base in some years (including 2011-12), ratchet up the base in other years (including 2012-13), and, in some cases (including 2012-13 and 2014-15), lead to schools receiving almost exclusive benefit from any growth in state revenues. We recommend the Legislature reject the Governor’s approach and adopt a budget package based upon a more reasonable approach. Specifically, under our recommended approach, maintenance factor is created any time school funding falls below the level otherwise needed to keep pace with growth in the economy, and maintenance factor is paid such that school funding is built up to the level it otherwise would have been absent the earlier shortfalls. We believe our recommended approach both keeps the underlying rationale for the creation and payment of maintenance factor linked and goes furthest in honoring the intent of Proposition 98 and Proposition 111.


[PDF] Overview of Proposition 98 Budget

March 6, 2012 - Presented to Assembly Budget Subcommittee No. 2 on Education Finance


Proposed Settlement Agreement of CTA v. Gould

June 3, 1996 - Proposed Settlement Agreement of CTA v. Gould


[PDF] Proposition 98: May Revision Overview

May 21, 2012 - Presented to Assembly Budget Subcommittee No. 2 on Education Finance


[PDF] California's Fiscal Outlook: LAO Projections, 2005-06 Through 2010-11

November 16, 2005 - The state's budget outlook for 2006-07 and beyond has improved considerably as a result of a major increase in revenues and significant savings adopted in the 2005-06 budget plan. The state, however, still faces major operating deficits in the next several years.


Excess ERAF: A Review of the Calculations Affecting School Funding

March 6, 2020 - This report focuses on a state law enacted in the 1990s that shifts some of the property tax revenue in certain counties from schools and community colleges to other local agencies. For historical reasons, the shifted revenue is known as “excess ERAF.” (The acronym refers to the local accounts—known as Educational Revenue Augmentation Funds—that facilitate the shift.) We recently found that some counties are calculating excess ERAF in ways that seem contrary to state law and shift too much property tax revenue from schools to other agencies. We have three specific concerns related to the calculation of excess ERAF that together affect about $350 million in annual property tax revenue. Earlier this year, the Newsom administration began to address one of these concerns. In this report, we recommend the Legislature direct the administration to enforce state law on our other two concerns. We also recommend improving oversight to prevent similar issues from arising in the future.


[PDF] The 2014-15 Budget: Proposition 98 Education Analysis

February 14, 2014 - This report analyzes the Governor's 2014-15 Proposition 98 budget proposals. The Governor’s 2014-15 budget includes $11.8 billion in Proposition 98 spending increases (attributable to 2012-13, 2013-14, and 2014-15). Of that amount, the Governor dedicates $6.7 billion to paying off outstanding one-time obligations and $5.1 billion for ongoing programmatic increases. We believe the Governor's plan is a reasonable mix of one-time and ongoing spending--eliminating the largest outstanding one-time obligation and significantly increasing ongoing programmatic support for schools and community colleges. The Governor's Proposition 98 wall of debt plan also includes a reasonable multiyear approach to paying off all outstanding school and community college obligations one year before the expiration of Proposition 30 revenues. Our report also analyzes the Governor's specific proposals for career technical education, student assessments, and independent study programs. Though we think these proposals generally have merit, we offer various recommendations for refining them.


[PDF] The 2020-21 Budget: The Fiscal Outlook for Schools and Community Colleges

November 20, 2019 - This report examines how the Proposition 98 minimum guarantee might change over the coming years. The report has five parts. First, we explain the formulas that determine the minimum guarantee. We then explain how our estimates of Proposition 98 funding in 2018‑19 and 2019‑20 differ from the estimates included in the June 2019 budget plan. Next, we estimate the 2020‑21 guarantee. Fourth, we explain how the minimum guarantee could change through 2023‑24 under two possible economic scenarios. Finally, we identify the amount of funding that would be available for new spending commitments in the upcoming year and describe some issues for the Legislature to consider as it prepares to allocate this funding.

In addition to this report, you can find the main California's Fiscal Outlook report along with a collection of other fiscal outlook material on our fiscal outlook budget page.