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


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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 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 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 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.

Video: Press Availability Video Call

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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.

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The 2019-20 Budget: California's Fiscal Outlook

November 14, 2018 -

The budget is in remarkably good shape. Under our estimates of revenues and spending, the state’s constitutional reserve would reach $14.5 billion by the end of 2019-20. In addition, we project the Legislature will have nearly $15 billion in resources available to allocate in the 2019-20 budget process. The Legislature can use these funds to build more reserves or make new one-time and/or ongoing budget commitments.

The longer-term outlook for the state also is positive. Under our economic growth scenario, the state would have operating surpluses averaging around $4.5 billion per year (but declining over time). Under our recession scenario, the state would have enough reserves to cover a budget problem—provided the Legislature used all of the available resources in 2019-20 to build more reserves.

Along with the Fiscal Outlook, you can find a collection of other fiscal outlook material on our fiscal outlook budget page.

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[PDF] Overview of Proposition 98 and K-12 Issues

May 30, 2019 - Presented to: Budget Conference Committee

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The 2019-20 Budget: Overview of the California Spending Plan (Final Version)

October 17, 2019 - Each year, our office publishes California Spending Plan, which summarizes the annual state budget. In July, we published a preliminary version of the report. This, the final version, provides an overview of the 2019‑20 Budget Act, then highlights major features of the budget approved by the Legislature and signed by the Governor. In addition to this publication, we have released a series of issue‑specific, online posts that give more detail on the major actions in the budget package.

Correction (10/29/19): Figure 4 total.

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The 2020-21 Budget: School District Budget Trends

January 21, 2020 - In this report, we examine district budgets—both looking back at actual experiences to date and looking ahead at what experiences could be over the next few years. First, we provide background on districts and their budgets. We then discuss trends in districts’ main cost drivers. Next, we examine overall district fiscal health, with a particular focus on districts in fiscal distress. In the final section, we identify some ways the Legislature could help school districts address their cost pressures moving forward.

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The 2018-19 Budget: Overview of the Governor's Budget

January 12, 2018 - This publication is our office’s initial response to the Governor’s 2018-19 budget. In the proposed plan, the Governor places a high priority on building reserves, proposing a total reserve balance of nearly $16 billion. We believe the Governor’s continued focus on building more reserves is prudent in light of economic and federal budget uncertainty. In addition to building reserves, the Governor’s proposed budget allocates sizeable funding increases available within the constitutionally required guarantee for schools and community colleges and supports a variety of new infrastructure projects. This report also discusses how new federal tax changes may affect state revenues and reasons why we believe there could be more resources available in May.

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[PDF] EdBudget Tables (May 2016)

May 17, 2016 - At key times during the state’s budget cycle, we post tables containing important information about the education parts of the budget. This May posting reflects the 2016-17 May Revision proposals. The tables cover Proposition 98, K-12 education, child care and preschool, higher education, and student financial aid.

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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: 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 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 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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[PDF] Overview of the May Revision Proposition 98 Package

May 13, 2019 - Senate Budget Subcommittee No. 1 on Education Finance