Legislative Analyst's Office Analysis of the 2002-03 Budget Bill

Instructional, Library, and Science Materials

We recommend that the Legislature (1) redirect $625 million requested for the "Instructional Materials Realignment Initiative" instead to our recommended Academic Improvement Block Grant and (2) deny requested advance appropriations totaling $1.95 billion for fiscal years 2003-04 through 2006-07, in order to preserve the Legislature's fiscal flexibility in the future.

The 2002-03 Governor's Budget requests $625 million for the Instructional Materials Realignment Initiative. The proposal eliminates funding ($356 million, current year) for four existing categorical programs—K-8 Instructional Materials, grades 9-12 Instructional Materials, K-4 Classroom Library Materials, and K-12 School Library Materials—and consolidates their purposes into a $250 million instructional/library materials block grant. As a transitional element, the proposal supplements the block grant with three one-time programs totaling $375 million—a textbook grant ($200 million), a library materials grant ($100 million), and a science laboratory equipment/materials grant ($75 million). The budget funds these one-time grants from the Proposition 98 Reversion Account, which is a depository for unspent balances from previous Proposition 98 appropriations. The new $250 million block grant would be funded with a direct Proposition 98 appropriation, counting towards the 2002-03 minimum funding guarantee.

Current- and Budget-Year Funding

Figure 1 compares current-year state funding for instructional/library materials with the budget proposal. An important change between the current and budget years shown by Figure 1 involves the Schiff-Bustamante Standards-Based Instructional Materials Program, established by Chapter 312, Statutes of 1998 (AB 2841, Bustamante). The current year represents the last of four annual $250 million appropriations for the program that were included in Chapter 312. The Legislature established the program as a limited-duration supplement to help school districts purchase new textbooks aligned with recently adopted state academic content standards in the core curriculum areas of language arts, mathematics, history/social science, and science. Under the terms of Chapter 312, the Schiff-Bustamante program sunsets on June 30, 2002. The Governor's proposal implicitly assumes that some continuing state assistance is required for purchasing new standards-aligned materials, and for that reason requires that school districts first certify that they have provided standards-aligned materials to all pupils before they may spend any of the proposed block grant funds for other instructional/library materials purposes.

Figure 1 also shows estimated amounts available from lottery funds earmarked by Proposition 20 for instructional materials purchases. Not displayed in the figure, yet still an important element in available funding, are various local funding sources used each year by school districts for instructional and library materials. Based on prior-year State Controller reports, we estimate that school districts annually spend over $700 million from local funding sources.

Advance Appropriations for 2003-04 Through 2006-07. The Governor's initiative includes the introduction of legislation (1) detailing terms of the proposed grants and (2) appropriating Proposition 98 funds—totaling $1.95 billion—in advance for the instructional/library materials block grant for four fiscal years following the budget year. Figure 2 shows that these appropriations increase from $350 million in 2003-04 to $600 million in 2006-07. At the time of this Analysis, no bill had been introduced, nor had the administration provided the Legislature with draft language.

Analyst's Recommendations

We think the administration's concept of consolidating the four existing instructional and library materials programs into a single block grant is a good one. In one major respect, however, the Governor's initiative is internally inconsistent. On the one hand, it includes a $250 million block grant intended to increase school district flexibility. On the other hand, it divides $375 million of one-time monies into three narrowly specified allocations—textbooks, library materials, and science laboratory equipment/materials. We believe that school districts would be better able to effectively and efficiently meet instructional, library and science materials needs—that inevitably vary from place to place—by having even greater flexibility than that proposed by the Governor's initiative. This greater flexibility is possible in a larger block grant that also encompasses a broader set of purposes. Accordingly, we recommend that the Legislature redirect the $625 million of the initiative to a larger Academic Improvement Block Grant—totaling $1.5 billion—that we discuss in detail in a section of this chapter about "Reforming Categorical Program Funding." Under our recommended approach, school districts (as a condition of participation in the Academic Improvement Block Grant) would need to assure that all pupils have textbooks aligned with content standards within 21 months of the State Board of Education's adoption of textbooks for specific content areas. This feature would ensure that the state's interest in having standards-aligned textbooks in all classrooms is addressed, but on a more realistic schedule than the nine-month restriction imposed as part of the Governor's initiative.

As mentioned above, the Governor's initiative also calls for advance appropriations—totaling $1.95 billion—for four fiscal years beyond the budget year. It is not clear what advantage these advance appropriations would confer on either the state or school districts. The administration states that its intent in proposing the advance appropriations is to more closely align the allocation of state funding with the planned state textbook adoption cycle. There are too many "moving parts" in this cycle, however, to reliably predict necessary state levels of funding up to four years in advance. Moreover, advance appropriations of this magnitude prematurely make Proposition 98 allocation decisions that are better left to the Legislature to decide in the annual budget process, based on annual reassessments of overall K-14 education needs. In order to preserve its fiscal flexibility, and assure that annual spending decisions are made on the basis of timely information and assessments of priorities, we recommend that the Legislature deny the administration's request for advance appropriations.