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The 2019-20 Budget: California's Fiscal Outlook


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The 2019-20 Budget: Proposition 98 Outlook

November 14, 2018 - In this report, we examine how the minimum guarantee might change over the next several years and discuss the factors likely to be driving those changes. We then examine key aspects of district budgets—focusing on the main cost pressures facing districts over the next several years.

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.

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The 2019-20 Budget: May Revision Multiyear Budget Outlook

May 17, 2019 - This report presents our office’s independent assessment of the condition of the state General Fund budget through 2022-23 assuming the economy continues to grow and all of the Governor’s May Revision spending proposals are adopted.

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The 2018-19 Budget: Proposition 98 Outlook

November 15, 2017 - Proposition 98 (1988) establishes a minimum annual funding requirement for schools and community colleges. In this report, we (1) explain how our estimates of the minimum requirement have changed since the adoption of the June budget plan, (2) identify the new funding available in 2018-19, and (3) highlight a few key trends affecting schools and community colleges over the next four years.

This is part of a collection of material for The 2018-19 Budget: California’s Fiscal Outlook. See a complete list of this year's fiscal outlook material on our fiscal outlook budget page.

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The 2019-20 Budget: Overview of the Governor's Budget

January 14, 2019 - This report presents our office’s initial assessment of the Governor’s Budget. The budget’s position continues to be positive. With $20.6 billion in discretionary resources available, the Governor’s budget proposal reflects a budget situation that is even better than the one our office estimated in the November Fiscal Outlook. The Governor’s Budget allocates nearly half of these discretionary resources to repaying state liabilities. Then, the Governor allocates $5.1 billion to one-time programmatic spending, $3 billion to reserves, and $2.7 billion to ongoing spending. Although the Governor’s allocation to discretionary reserves represents a smaller share of resources than recent budgets, the Governor’s decision to use a significant share of resources to pay down state debts is prudent. The Governor’s ongoing spending proposal is roughly in line with our November estimate of the ongoing capacity of the budget under an economic growth scenario. This was just one scenario, however. Recent financial market volatility indicates revenues could be somewhat lower than either we or the administration estimated.

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The 2020-21 Budget: California's Spring Fiscal Outlook

May 8, 2020 - This report provides an update on the budget’s condition in light of the public health emergency and economic downturn associated with the coronavirus disease 2019. Our outlook presents two potential scenarios—a somewhat optimistic “U-shaped” recession and a somewhat pessimistic “L-shaped” recession—and assumes a baseline level of expenditures. Under these two scenarios, the state would have to address an $18 billion or $31 billion budget problem. The state’s newly emergent fiscal challenges are likely to extend well beyond the end of the public health crisis. Under both of our economic scenarios, budget deficits persist until at least 2023-24 with multiyear deficits summing to $64 billion in the U-shaped recession and $126 billion in the L-shaped recession.

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The 2021-22 Budget: The Fiscal Outlook for Schools and Community Colleges

November 18, 2020 - This report provides our fiscal outlook for schools and community colleges. State budgeting for schools and the California Community Colleges is governed largely by Proposition 98. The measure establishes a minimum funding requirement for K‑14 education commonly known as the minimum guarantee. This report provides our estimate of the minimum guarantee for the upcoming budget cycle. (The 2021‑22 Budget: California’s Fiscal Outlook contains an abbreviated version of our Proposition 98 outlook, along with the outlook for other major programs in the state budget.)

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The 2019-20 Budget: Analysis of the Department of Social Services Budget

February 22, 2019 - In this report, we evaluate the Governor's major human services budget proposals for programs administered by the Department of Social Services, including the California Work Opportunities and Responsibility to Kids (CalWORKs), the Supplemental Security Income/State Supplementary Payment (SSI/SSP), the In-Home Supportive Services (IHSS), and foster care.

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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.

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The 2020-21 Budget: Structuring the Budget

February 10, 2020 - California has made significant progress in recent years to make its budget more resilient. Yet the process of achieving resilience can never be considered finished. This report lays out a framework for evaluating the budget’s structure using two key tools: reserves and operating surpluses. Using this framework, we evaluate the Governor’s proposed 2020-21 budget structure. We find that building more reserves or preserving a larger operating surplus would be prudent.

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The 2020-21 Budget: Analyzing UC and CSU Cost Pressures

December 18, 2019 - California operates two public university systems: (1) the University of California (UC), consisting of 10 campuses, and (2) the California State University (CSU), consisting of 23 campuses. The Legislature faces many pressures to increase funding for UC and CSU in 2020‑21. This report examines these university cost pressures, assesses the state’s capacity to fund some of them, and identifies options for expanding budget capacity to fund additional cost pressures.

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Building Reserves to Prepare for a Recession

March 7, 2018 - Reserves are of critical importance to the health of the state's budget. These funds help cushion the impact of a budget problem that emerges during a recession. In this report, our office provides an overview of revenue losses that have occurred in past recessions to consider the magnitude of a budget problem that could emerge in the future. Then, we describe the Governor's reserve proposal for 2018-19 and compare this level to past reserves and other states. Next, to aid the Legislature as it evaluates the Governor’s proposal, we present a framework that the Legislature can use to plan for a recession and determine a target level of reserves. Finally, we conclude with our office’s comments on the Governor’s proposed level of reserves in light of this framework and present some alternatives for legislative consideration.

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The 2020-21 Budget: Overview of the Governor's Budget

January 13, 2020 - This report presents our office’s initial assessment of the Governor’s budget. We estimate the Governor had a $6 billion surplus to allocate to discretionary purposes in 2020-21. The Governor allocates most of the surplus toward one-time purposes, including maintaining a positive year-end balance in the state’s discretionary reserve. Under the administration’s estimates, total reserves would reach $20.5 billion at the end of 2020-21—this represents a $1.7 billion increase from the 2019-20 enacted level. California continues to enjoy a healthy fiscal situation. Despite its positive near-term picture, the budget’s multiyear outlook is subject to considerable uncertainty. In addition to describing the condition of the budget under the Governor’s proposal, this report discusses tools the Legislature can use to mitigate against these heightened risks.

January 20, 2020: Upon further review, one item included in the original version of Appendix Figure 3 on discretionary on health spending should not have been included (specfically, use of the Medi-Cal drug rebate fund to offset General Fund costs). Removing this item—which reduces General Fund spending—from the list of discretionary choices made in the Governor’s budget increases our calculation of the surplus to $6 billion. The document is updated to reflect these changes.

Update 1/24/20: Adjusted Judicial Branch items in Appendix Figure 1 to reflect ongoing spending.

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The 2021-22 Budget: Medi-Cal Fiscal Outlook

November 18, 2020 - Medi‑Cal, the state’s Medicaid program, provides health care coverage to about 13 million of the state’s low‑income residents. Medi‑Cal costs generally are shared between the federal and state governments. In a typical year, the General Fund covers a little more than 20 percent of total Medi‑Cal costs, with federal funds and other state and local funds respectively covering the remaining 65 percent and 15 percent of total costs. In this web post, we describe the major factors that we expect to drive changes in General Fund spending in Medi‑Cal over the near term—in 2020‑21 and 2021‑22—and over the longer term through 2024‑25. We also describe a number of key assumptions that we made in our spending projections.

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The 2021-22 Budget: Analysis of the Medi-Cal Budget

February 16, 2021 - This post analyzes the major adjustments to the Medi-Cal budget in 2020-21 and 2021-22, with a focus on the technical adjustments such as the administration’s caseload estimates. We will further analyze the major discretionary Medi-Cal proposals in separate publications and communications to the Legislature.

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The State Appropriations Limit

April 21, 2021 - This report: (1) describes how appropriations limits work for the state, school districts, and local governments in California; (2) explains why the limit is a constraint for state government; and (3) concludes with a variety of short- and long-term policy options—both of which we think the Legislature will need to take—in response to the issue.

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The 2018-19 Budget: Hastings College of the Law

February 15, 2018 - In this report, we provide an overview of the Governor’s proposed budget for Hastings College of the Law, describe the school’s proposed spending plan, assess that plan, and offer an associated recommendation.

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The 2020-21 Budget: Initial Comments on the Governor’s May Revision

May 17, 2020 - On May 14, 2020, Governor Newsom presented a revised state budget proposal to the Legislature. In this post, we provide an overview of the overall budget condition under the May Revision estimates and proposals; the major actions the Governor took to close an estimated $54 billion budget gap; and give our initial comments on this budget package.

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The 2020-21 Budget: Overview of the California Spending Plan (Final Version)

October 5, 2020 - Each year, our office publishes the California Spending Plan to summarize the annual state budget. This publication provides an overview of the 2020‑21 Budget Act, provides a short history of the notable events in the budget process, and then highlights major features of the budget approved by the Legislature and signed by the Governor. All figures in this publication reflect the administration’s estimates of actions taken through June 30, 2020, but we have updated the narrative to reflect actions taken later in the legislative session. In addition to this publication, we have released a series of issue‑specific posts providing more detail on various programmatic aspects of the budget.