LAO Analysis of the 1997-98 Budget Bill
K-12 Education Overview

Major Issues
Overview

Proposition 98

Proposition 98 Allocations by Segments
Governor's Budget Proposals for Prior-Year Proposition 98 Funds

1997-98 Budget Proposals
Proposition 98 1997-98 Spending by Major Program

Major Issues

K-12 Education

Legislature's Funding Decisions Need to Balance State and Local Needs

The Governor's Budget proposes to direct all new Proposition 98 funding in 1997-98 to support new or expanded K-12 categorical programs. No budget-year increase in general purpose funding is proposed.
After providing adequate funding to support continuing program costs and other financial commitments, we recommend the Legislature direct about half of any available funds for state-directed purposes and use the remaining funds to increase local general purpose funding (see page E-17).
We also recommend the Legislature reform the system of K-12 categorical programs by consolidating 21 programs into four categorical block grants. This would increase local flexibility and focus district programs on improving student achievement (see page E-68).

Survey on Class Size Reduction Shows Implementation Has Stretched Thin Teacher and Facility Resources

A survey of 150 districts showed three major problems with the current program, including (1) the inflexibility of the 20 students to one teacher limit creates substantially higher costs and other problems for districts, (2) teachers hired for the program are less qualified than teachers hired in previous years, and (3) districts appear to be running out of lower cost options for class-size facilities.

Our recommendations include (1) providing greater district flexibility over the use of teachers funded under the program, (2) delaying implementation of a fourth grade due to shortages of qualified teachers and facilities, and (3) approving the per-pupil level of class size funding proposed in the budget (see page E-35).

LAO's Ten-Year Plan for Increasing District Maintenance and Eliminating Deferred Maintenance

District deferred maintenance needs totaled about $2.7 billion in 1995-96. To address this problem, we recommend the state commit $2 billion in new state funds over ten years to help districts reduce or eliminate their current backlog.
In return, districts must commit to increasing ongoing maintenance over three years to a level that ensures that districts are no longer deferring needed maintenance. Districts would be eligible for the $2 billion in deferred maintenance funds only if a commitment to adequate maintenance is made (see page E-82).

Large Increase in Federal Funds Magnifies the Flaws in the Design of the State's Subsidized Child Care Programs

The budget proposes to add significant new federal child care funds in 1997-98 to existing programs in the state Department of Education (SDE). The proposal does little to address significant program problems, however, including (1) undue complexity in the design and administration of the program and (2) inability of the programs to absorb large funding increases.

We recommend reducing by $43.9 million the additional funding for SDE child care programs. These funds could be directed to the Department of Social Services if needed for welfare reform or could be restored to SDE in the future as the programs are able to expand (see page E-91).

Overview

K-12 Education

The budget includes an increase in K-12 Proposition 98 funding of $1.7 billion in the budget year. This is $190 per student, or 3.9 percent, more than the revised estimate of per-student expenditures in the current year. The budget also proposes to spend $836.9 million from prior-year Proposition 98 funds in 1997-98.

Figure 1 (see page 6) shows the budget from all fund sources for K-12 education for the budget year and the two previous years. Proposition 98 funding constitutes about three-fourths of overall K-12 funding. In 1997-98, Proposition 98 funding is projected to increase by $190 per student to $5,010. This is a 3.9 percent increase from the revised 1996-97 per-student amount.

The budget also proposes to spend $836.9 million from prior-year Proposition 98 funds in 1997-98. As a result of increases in the minimum amounts guaranteed to schools in 1995-96 and 1996-97 (due primarily to higher tax revenues and increased ADA), the state owes schools $629.5 million more for those years (referred to as "settle-up" funds). An additional $207.4 million results primarily from unspent prior-year Proposition 98 funding.

Figure 1 also shows that the budget includes expenditures of $3.2 billion in federal funds in 1997-98. This is $478 million, or 18 percent, more than estimated federal expenditures in the current year. Major changes in federal K-12 funding include the following additional amounts: $226 million for child development, $95 million for Goals 2000, $89 million for child nutrition and $78 million for special education.

School Districts by Type and Enrollment. A total of 5.4 million pupils attended school in California's 999 school districts in 1995-96. Figure 2 (see page 7) provides enrollment data by size of school district. Enrollment levels vary significantly among school districts. For example, the state's largest school district, Los Angeles Unified, enrolled 647,600 students in 1995-96, which is more than the combined enrollment of over 600 of the state's smallest school districts.

Figure 1

K-12 Education Budget Summary
1995-96 Through 1997-98

(Funding in Millions)

Actual
1995-96
Estimated 1996-97 Proposed
1997-98
Change From
1996-97

Amount Percent

K-12 Proposition 98

State (General Fund)

Cash $16,086.8 $17,542.7 $18,919.8 $1,377.1 7.9%

Loan repayment 100.0 150.0 200.0 50.0 33.3

Local property tax revenue 8,574.9 8,727.2 9,027.5 300.3 3.4

Subtotals, Proposition 98 ($24,761.7) ($26,419.9) ($28,147.3) ($1,727.4) (6.5%)

Other Funds

General Fund

Teachers retirement $775.4 $809.4 $848.7 $39.3 4.9%

Bond payments 721.6 762.9 812.1 49.1 6.4

Other programs 106.8 162.4 155.5 -6.9 -4.2

State Lottery funds 691.5 582.0 582.0 -- --

Other state funds 40.4 64.1 57.5 -6.6 -10.2

Federal funds 2,590.8 2,695.0 3,173.1 478.1 17.7

Other local 2,188.2 2,166.4 2,161.8 -4.7 -0.2

Totals $31,876.3 $33,662.2 $35,938.0 $2,275.8 6.8%

K-12 Proposition 98

Average Daily Attendance (ADA) 5,320,064 5,450,480 5,578,346 127,866 2.3%

Amount per ADA $4,636 $4,820 $5,010 $190 3.9%

Expenditures per ADA in Comparison to Other States. Figure 3 compares expenditures per ADA in constant dollars (that is, adjusted for inflation) for selected states, the nation as a whole, and California. The states selected for comparison are the eight largest states, which we refer to as the "Big Eight": Florida, Illinois, Michigan, New Jersey, New York, Ohio, Pennsylvania, and Texas. We also show an average for the "Big Six," which includes the eight states less New Jersey and New York. As shown in Figure 3, including New Jersey and New York in the calculation significantly increases the average. New Jersey and New York spent approximately $9,900 per ADA in 1995-96.

Figure 3 shows expenditures per ADA projected through 1997-98 for California. Data for the other states was available through 1995-96. Be-

Figure 2

Distribution of School Districts by Enrollment
October 1995

Enrollment Level Number of Districts Enrollment

Elem High School Unified Total Total Percent of Total

More than 200,000 -- -- 1 1 647,612 12.0%

100,000 to 199,999 -- -- 1 1 130,360 2.4

50,000 to 99,999 -- -- 6 6 373,113 6.9

40,000 to 49,999 -- -- 3 3 136,085 2.5

20,000 to 39,999 2 5 33 40 1,093,180 20.2

10,000 to 19,999 21 10 55 86 1,214,070 22.4

5,000 to 9,999 45 17 61 123 877,224 16.2

2,500 to 4,999 65 18 50 133 478,208 8.8

1,000 to 2,499 95 25 50 170 303,237 5.6

500 to 999 89 18 22 129 93,471 1.7

Less than 500 269 11 27 307 63,327 1.2

Totals 586 104 309 999 5,409,887 100.0%

Data exclude county offices of education. Grand total including county offices is 5,467,224.

tween 1964-65 and 1984-85 California's spending per ADA was roughly equal to both the US average and the average for the "Big Six." Starting in about 1985, California's spending began to increase at a slower rate, and it actually fell during the early 1990s. In 1995-96 California's expenditures per ADA began to increase again. Even with this turn-around, California expenditures per ADA are about $1,000 lower per student than the U.S. and the Big 6 averages.

Proposition 98

Proposition 98, enacted in 1988 as a voter-approved amendment to the California Constitution (later amended by Proposition 111 in 1990), establishes a minimum funding level for K-12 schools and the California Community Colleges (CCC). Proposition 98 also provides support for direct educational services provided by other agencies, such as the state's special education schools and the California Youth Authority. Proposition 98 funding constitutes about three-fourths of overall K-12 funding.

The minimum funding levels are determined by one of three specified formulas. Figure 4 briefly explains the workings of Proposition 98, its "Tests," and other major funding provisions. The five major factors involved in the calculation of each of the Proposition 98 "Tests" include: (1) General Fund revenues, (2) state population, (3) personal income, (4) local property taxes and (5) K-12 ADA.

Because these factors change during the year, the minimum guarantee under Proposition 98 also changes. Any additional amount needed to fund any increase in a previous year's guarantee is referred to as Proposition 98 "settle-up" funding. As noted above, the Governor's budget includes $629.5 million related to "settle-up" for prior years ($225.7 million from 1995-96 and $403.8 million from 1996-97).

Figure 4 shows that currently "Test 1" is equal to 34.5 percent of General Fund revenues plus local property tax revenues. This percentage was originally calculated to be about 40 percent. In recognition of shifts in property taxes to K-14 schools from cities, counties and special districts, the rate was adjusted to the current rate of approximately 34.5 percent.

Figure 4

Proposition 98 at a Glance

Major Provisions of Proposition 98

Proposition 98 guarantees K-14 school agencies an annual amount of funding equal to the greater of:

a specified percent of the state's General Fund revenues (Test 1), or

the amount provided in the prior year, adjusted for growth in students and inflation (Tests 2 and 3).

This minimum guaranteed amount is determined by the steps below.

Step 1: Compute "Test 1"

Test 1. Multiply 34.5 percent times state General Fund revenues and add local property taxes.

Step 2: Compare Inflation Factors

Compare the annual change in:

Per capita personal income to

Per capita General Fund revenues plus 0.5 percent.

The lower of these factors determines which "Test" is compared to Test 1.

Step 3: Calculate Either Test 2 or Test 3

If the per capita personal income change is lower, calculate Test 2.

Test 2 = Proposition 98 amount provided in prior year (combined state aid and local property taxes) adjusted for change in K-12 ADA and annual change in per capita personal income. Subtract current-year property taxes to yield the General Fund amount under Test 2.

If the per capita General Fund revenue change is lower, calculate Test 3.

Test 3 = Same as Test 2 except that the inflation factor used is the annual change in per capita General Fund revenues plus 0.5 percent.

Step 4: Compare Test 1 to Either Test 2 or Test 3

The higher General Fund amount is the "Test" in effect for that year and is the minimum guaranteed by Proposition 98.

Other Major Funding Provisions

Suspension

Proposition 98 also includes a provision allowing the state to suspend the minimum funding level for one year through urgency legislation other than the budget bill.

Restoration ("Maintenance Factor")

Proposition 98 includes a provision to restore prior-year funding reductions (due to either suspension or the "Test 3" formula). The overall dollar amount that needs to be restored is referred to as the "maintenance factor."

Proposition 98 Allocations by Segments

Figure 5 displays the allocation of Proposition 98 funding by segment. The overall increase for Proposition 98 in the current year is $452.3 million. As Figure 5 shows, K-12 education's share of this amount is $403.8 million, the Community College's allocation is $48.2 million, and other agencies' funding of $0.3 million accounts for the balance.

The budget proposes $31.4 billion for Proposition 98 in 1997-98. The shares allocated to the three components remain virtually unchanged from the 1996-97 revised shares. Community College Proposition 98 funding issues are discussed in the Higher Education section of the Analysis (please see Section F).

Figure 5

Proposition 98 Allocations
1996-97 and 1997-98

(Dollars in Millions)

1996-97

1997-98
Proposed
Change From 1996-97
Revised

Budget Act Revised Change

Proposition 98

"Test" Test 3 Test 3

-- Test 3

--

Total Proposition 98 $29,063.8 $29,516.1 $452.3 $31,428.9 $1,912.7

K-12 Education

Amount $26,016.1 $26,419.9 $403.8 $28,147.3 $1,727.4

Share 89.5% 89.5%

-- 89.6%

--

Community Colleges

Amount $2,956.5 $3,004.7 $48.2 $3,193.3 $188.6

Share 10.2% 10.2%

-- 10.2%

--

Other Agencies

Amount $91.2 $91.4 $0.3 $88.2 -$3.3

Share 0.3% 0.3%

-- 0.3%

--

Governor's Budget Proposals for Prior-Year Proposition 98 Funds

As noted earlier, the budget proposes to allocate to K-12 education $836.9 million in prior-year Proposition 98 funds. Figure 6 shows the major expenditure proposals which include:

Figure 6
K-12 Education Governor's Budget Proposals For Prior-Year Revenue
(In Millions)


Revenue Limits
Equalization and deficit reduction	$304.2
Additional growth in ADA	264.4
Subtotal		$568.6
Program Expansions
Facilities for class size reduction	$151.0
CTC alternative credentialing	9.0
Standardized account code	9.0
Statewide assessments	6.0
Single gender schools	5.0
Oxnard HSD extended year program	3.9
Other	1.0
Subtotal		$184.9
New Programs
High school technology	$50.0
Child care facilities	15.0
California Student Information System	10.0
Angel Gate Academy (at-risk students)	6.4
Kern telecommunications	2.0
Subtotal		$83.4
Total		$836.9
Sources
Proposition 98 "Settle-Up"		$629.5
Unspent class size reduction		140.0
Proposition 98 Reversion Account		42.8
Other sources		24.6

$304.2 million to be equally divided for revenue limit equalization and deficit reduction. The Legislature provided for this allocation in Chapter 203, Statutes of 1996 (AB 3497, Richter). While this increase is built into the base for 1997-98, Chapter 203 requires that the 1996-97 amount not be released until February 1998. Thus, there is both a one-time and ongoing effect of these funds in 1997-98.
$264.4 million due to revised ADA estimates. This cost continues in 1997-98.
$151 million for classroom facilities for the class size reduction (CSR) program. Of this amount, the budget proposes to redirect $140 million from unspent CSR funds in the current year.
$50 million for a new High School Education Technology Incentive Grant Program.

We discuss the proposals shown in Figure 6 later in this Analysis.

1997-98 Budget Proposals

The budget proposes a Proposition 98 funding increase of $1.7 billion for 1997-98. Figure 7 highlights each of the major changes proposed for K-12 Proposition 98 in the budget year. The major budget proposals include:

$530.3 million for enrollment growth, based on a projected ADA increase of 2.35 percent in 1997-98.
$628.8 million to provide a 2.53 percent cost-of-living adjustment (COLA).
$296.8 million to expand the class size reduction program to a fourth grade.
$76.7 million set-aside for special education funding equalization and funding reform legislation.

We discuss the details of these proposals later in this Analysis.

Figure 7

Governor's K-12 Budget Proposals
1997-98 Proposition 98

(In Millions)

1996-97 (revised) $26,419.9

Enrollment Growth

District revenue limits $438.6

County offices of education 13.5

Special education growth 74.5

Summer school growth 3.7

Subtotal $530.3

Cost-of-Living Increases

Revenue limits $490.9

County limits 12.4

Special education 76.4

Other 49.1

Subtotal $628.8

Funding Adjustments

Class size reduction--base adjustment $160.1

School restructuring -26.4

Special education adjustments -51.9

Other -6.7

Subtotal $75.1

Program Expansions

Child care $26.1

Mandates 14.8

Volunteer mentor 10.0

Beginning teacher 10.0

Assessment 4.4

Early mental health initiative 3.0

Subtotal $68.3

New Programs

Class size reduction--additional grade $296.8

Special education reform 76.7

Ed Tech Center 1.0

K-12 fiscal data 0.5

Subtotal $375.0

Proposition 98 loan repayment $50.0

1997-98 (proposed) $28,147.3

Change from 1996-97 (revised) $1,727.4

Proposition 98 1997-98 Spending by Major Program

Figure 8 shows Proposition 98 spending for the major K-12 programs. Revenue limit funding accounts for $20.2 billion in 1997-98, or about 72 percent of overall Proposition 98 expenditures. The state General Fund supports about 55 percent of revenue limit funding, and local property taxes provide the remaining 45 percent.

Except for revenue limits, the largest K-12 program is special education. Including a proposed General Fund set-aside for funding reform, special education funding is expected to increase by $180 million in 1997-98. The class size reduction program, started in 1996-97, will be the second largest categorical program in 1997-98, with proposed expenditures of $1.3 billion. Funding for most other categorical programs remains flat in 1997-98 because the Governor's budget includes neither COLA nor growth funding for these programs.

Figure 8

Major K-12 Education Programs
Funded by Proposition 98
1996-97 and 1997-98

(Dollars in Millions)

Estimated
1996-97
Proposed
1997-98
Change From
1996-97

Amount Percent

Revenue Limits

Schools $10,558 $11,201 $643 6.1%

Counties 174 191 17 9.5

Property tax revenue 8,512 8,808 296 3.5

Subtotals, revenue limits ($19,244) ($20,199) ($955) (5.0%)

Special Education

State General Fund $1,860 $1,959 $99 5.3%

GF set-aside for reform -- 77 77

--

Property tax revenue 215 220 5 2.2

Subtotals, special education ($2,075) ($2,256) ($180) (8.7%)

Mega-Item--
Categorical Programs

Desegregation $546 $496 -$49 -9.0%

Economic impact aid 366 416 49 13.5

Home to school transportation 480 478 -2 -0.4

School improvement 360 360 --

--

Instructional materials 157 157 --

--

Other programs 551 534 -17 -3.1

Subtotals, Mega Item ($2,461) ($2,442) (-$19) (-0.8%)

Other Programs

Class size reduction $771 $1,259 $488 63.3%

Child development 517 556 40 7.6%

Adult education 452 452 --

--

ROC/P 272 272 --

--

Summer school 155 163 8 4.9

Mandates 105 120 15 14.1

Deferred maintenance 35 35 -1 -2.4

Early mental health 12 15 3 25.0

Volunteer mentor -- 10 10 --

Other programs 170 170 -1 -0.4

Subtotals, other programs ($2,489) ($3,051) ($561) (22.5%)

Proposition 98 loan repayment $150 $200 $50 33.3%

Totals $26,420 $28,147 $1,727 6.5%

Return to 1997-98 Budget Analysis Table of Contents
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Figure 1
K-12 Education Budget Summary 1995-96 Through 1997-98
(Funding in Millions)
	Actual 1995-96	Estimated 1996-97	Proposed 1997-98	Change From 1996-97
	Actual 1995-96	Estimated 1996-97	Proposed 1997-98	Amount	Percent

K-12 Proposition 98
State (General Fund)
Cash	$16,086.8	$17,542.7	$18,919.8	$1,377.1	7.9%
Loan repayment	100.0	150.0	200.0	50.0	33.3
Local property tax revenue	8,574.9	8,727.2	9,027.5	300.3	3.4
Subtotals, Proposition 98	($24,761.7)	($26,419.9)	($28,147.3)	($1,727.4)	(6.5%)
Other Funds
General Fund
Teachers retirement	$775.4	$809.4	$848.7	$39.3	4.9%
Bond payments	721.6	762.9	812.1	49.1	6.4
Other programs	106.8	162.4	155.5	-6.9	-4.2
State Lottery funds	691.5	582.0	582.0	--	--
Other state funds	40.4	64.1	57.5	-6.6	-10.2
Federal funds	2,590.8	2,695.0	3,173.1	478.1	17.7
Other local	2,188.2	2,166.4	2,161.8	-4.7	-0.2
Totals	$31,876.3	$33,662.2	$35,938.0	$2,275.8	6.8%
K-12 Proposition 98
Average Daily Attendance (ADA)	5,320,064	5,450,480	5,578,346	127,866	2.3%
Amount per ADA	$4,636	$4,820	$5,010	$190	3.9%

Figure 2
Distribution of School Districts by Enrollment October 1995

Enrollment Level	Number of Districts				Enrollment
Enrollment Level	Elem	High School	Unified	Total	Total	Percent of Total

More than 200,000	--	--	1	1	647,612	12.0%
100,000 to 199,999	--	--	1	1	130,360	2.4
50,000 to 99,999	--	--	6	6	373,113	6.9
40,000 to 49,999	--	--	3	3	136,085	2.5
20,000 to 39,999	2	5	33	40	1,093,180	20.2
10,000 to 19,999	21	10	55	86	1,214,070	22.4
5,000 to 9,999	45	17	61	123	877,224	16.2
2,500 to 4,999	65	18	50	133	478,208	8.8
1,000 to 2,499	95	25	50	170	303,237	5.6
500 to 999	89	18	22	129	93,471	1.7
Less than 500	269	11	27	307	63,327	1.2
Totals	586	104	309	999	5,409,887	100.0%

Data exclude county offices of education. Grand total including county offices is 5,467,224.

Figure 4
Proposition 98 at a Glance
Major Provisions of Proposition 98
Proposition 98 guarantees K-14 school agencies an annual amount of funding equal to the greater of: a specified percent of the state's General Fund revenues (Test 1), or the amount provided in the prior year, adjusted for growth in students and inflation (Tests 2 and 3). This minimum guaranteed amount is determined by the steps below.
Step 1: Compute "Test 1"
	Test 1. Multiply 34.5 percent times state General Fund revenues and add local property taxes.
Step 2: Compare Inflation Factors
Compare the annual change in: Per capita personal income to Per capita General Fund revenues plus 0.5 percent. The lower of these factors determines which "Test" is compared to Test 1.
Step 3: Calculate Either Test 2 or Test 3
If the per capita personal income change is lower, calculate Test 2.
	Test 2 = Proposition 98 amount provided in prior year (combined state aid and local property taxes) adjusted for change in K-12 ADA and annual change in per capita personal income. Subtract current-year property taxes to yield the General Fund amount under Test 2.
If the per capita General Fund revenue change is lower, calculate Test 3.
	Test 3 = Same as Test 2 except that the inflation factor used is the annual change in per capita General Fund revenues plus 0.5 percent.
Step 4: Compare Test 1 to Either Test 2 or Test 3
The higher General Fund amount is the "Test" in effect for that year and is the minimum guaranteed by Proposition 98.
	Other Major Funding Provisions
Suspension
Proposition 98 also includes a provision allowing the state to suspend the minimum funding level for one year through urgency legislation other than the budget bill.
Restoration ("Maintenance Factor")
Proposition 98 includes a provision to restore prior-year funding reductions (due to either suspension or the "Test 3" formula). The overall dollar amount that needs to be restored is referred to as the "maintenance factor."

Figure 5
Proposition 98 Allocations 1996-97 and 1997-98
(Dollars in Millions)
	1996-97			1997-98 Proposed	Change From 1996-97 Revised
	Budget Act	Revised	Change	1997-98 Proposed	Change From 1996-97 Revised


Proposition 98
"Test"	Test 3	Test 3	--	Test 3	--
Total Proposition 98	$29,063.8	$29,516.1	$452.3	$31,428.9	$1,912.7
K-12 Education
Amount	$26,016.1	$26,419.9	$403.8	$28,147.3	$1,727.4
Share	89.5%	89.5%	--	89.6%	--
Community Colleges
Amount	$2,956.5	$3,004.7	$48.2	$3,193.3	$188.6
Share	10.2%	10.2%	--	10.2%	--
Other Agencies
Amount	$91.2	$91.4	$0.3	$88.2	-$3.3
Share	0.3%	0.3%	--	0.3%	--

Figure 7
Governor's K-12 Budget Proposals 1997-98 Proposition 98
(In Millions)

1996-97 (revised)		$26,419.9
Enrollment Growth
District revenue limits	$438.6
County offices of education	13.5
Special education growth	74.5
Summer school growth	3.7
Subtotal		$530.3
Cost-of-Living Increases
Revenue limits	$490.9
County limits	12.4
Special education	76.4
Other	49.1
Subtotal		$628.8
Funding Adjustments
Class size reduction--base adjustment	$160.1
School restructuring	-26.4
Special education adjustments	-51.9
Other	-6.7
Subtotal		$75.1
Program Expansions
Child care	$26.1
Mandates	14.8
Volunteer mentor	10.0
Beginning teacher	10.0
Assessment	4.4
Early mental health initiative	3.0
Subtotal		$68.3
New Programs
Class size reduction--additional grade	$296.8
Special education reform	76.7
Ed Tech Center	1.0
K-12 fiscal data	0.5
Subtotal		$375.0
Proposition 98 loan repayment		$50.0
1997-98 (proposed)		$28,147.3
Change from 1996-97 (revised)		$1,727.4

Figure 8
Major K-12 Education Programs Funded by Proposition 98 1996-97 and 1997-98
(Dollars in Millions)
	Estimated 1996-97	Proposed 1997-98	Change From 1996-97
	Estimated 1996-97	Proposed 1997-98	Amount	Percent
Revenue Limits
Schools	$10,558	$11,201	$643	6.1%
Counties	174	191	17	9.5
Property tax revenue	8,512	8,808	296	3.5
Subtotals, revenue limits	($19,244)	($20,199)	($955)	(5.0%)
Special Education
State General Fund	$1,860	$1,959	$99	5.3%
GF set-aside for reform	--	77	77	--
Property tax revenue	215	220	5	2.2
Subtotals, special education	($2,075)	($2,256)	($180)	(8.7%)
Mega-Item-- Categorical Programs
Desegregation	$546	$496	-$49	-9.0%
Economic impact aid	366	416	49	13.5
Home to school transportation	480	478	-2	-0.4
School improvement	360	360	--	--
Instructional materials	157	157	--	--
Other programs	551	534	-17	-3.1
Subtotals, Mega Item	($2,461)	($2,442)	(-$19)	(-0.8%)
Other Programs
Class size reduction	$771	$1,259	$488	63.3%
Child development	517	556	40	7.6%
Adult education	452	452	--	--
ROC/P	272	272	--	--
Summer school	155	163	8	4.9
Mandates	105	120	15	14.1
Deferred maintenance	35	35	-1	-2.4
Early mental health	12	15	3	25.0
Volunteer mentor	--	10	10	--
Other programs	170	170	-1	-0.4
Subtotals, other programs	($2,489)	($3,051)	($561)	(22.5%)
Proposition 98 loan repayment	$150	$200	$50	33.3%
Totals	$26,420	$28,147	$1,727	6.5%

LAO Analysis of the 1997-98 Budget Bill K-12 Education Overview