LAO 2005-06 Budget Analysis: Education TOC Analysis of the 2005-06 Budget Bill
Education Issue-By-Issue Contents


Funding Per Student

Proposition 98

Proposition 98 Allocations

Enrollment Funding

Setting Education Priorities for 2005-06

Crosscutting Issues

Proposition 98 Budget Priorities

Governor's Major Proposals

Budget Creates Costs Without Identifying Funding

Proposed Constitutional Amendments Affect K-14

Current-Year Guarantee Level Is Pivotal

LAO Forecast—Higher Revenues, Lower Guarantee

Balance State and Local Fiscal Needs

Building a Base Budget for 2005-06

Align Budget With Workload Priorities

STRS Proposal Lacks Benefits

K-14 Priorities Under a Higher Guarantee

Governor's Vocational Education Reform

Proposal Addresses an Important Problem

Proposal Not Fully Developed

Legislature Needs Details

State Teachers' Retirement System (1920)


The Basics of the STRS Plan

Actuarial Valuation Finds Funding Shortfall

Local Program Has No Local Control or Responsibility

System Problems

Long-Term Solutions

Governor Proposes Cost Shift to School Districts


Short Term: Does the Governor's Proposal Work As a 2005-06 Budget Solution?

Long Term: Does the Proposal Move Toward the Goals of Local Control and Responsibility?

K-12 Education

K-12 Introduction

Overview of K-12 Education Spending

Per Pupil Spending Grows by $362 in 2005-06

Major K-12 Funding Changes

Proposition 98 Spending by Major Program

Enrollment Trends

Budget Issues

School District Financial Condition

Retiree Benefits Pose Long-Term Challenge

Some District Liabilities Are Huge

Require District Plans for Addressing Liabilities

Create a New Declining Enrollment Option

Declining Enrollment Affects Many Districts

Option: Permanently Increase Revenue Limits

Add a Declining Enrollment Revenue Limit Adjustment

Categorical Reform

Categorical Reform and Supplemental Instruction

Complex "Holdback" for At-Risk Instructional Programs

Mandate Ruling Creates Another Cost Pressure

Block Grant Faces Implementation Problems

Add the Required Supplemental Instruction Programs To the Block Grant

Linking Teaching With Learning

Recent Developments Enhance Flexibility, Ignore Accountability

Enhance Flexibility and Strengthen Accountability

Assure Block Grant Monies Are Tied to Need

Special Education

Technical Issues Offer Savings

Revise Federal Supplanting Calculation

Significant Technical Problems With Budget Proposal

Use Funds to Meet Special Education and Other Priorities

Make Mental Health Shift Permanent

Budget Would Suspend Mandates

Other Issues

Cleanup Needed on New Formula

Incidence Factor Remains Outdated

Charter Schools

Existing Block Grant Funding Model Has Become Virtually Unworkable

Working Group Makes Some Progress Toward New Model

Governor's Proposal Is Not Viable Reform Option

Alternative Approach Could Achieve Simplicity, Clarity, and Comparability

Alternative Authorizers Could Improve Quality


Newly Identified Mandate Review

Offsetting Revenues Process Is Needed

Strengthen Language on Offsetting Revenues

After School Programs And Proposition 49

21st Century Community Learning Centers Not Spending Federal Grants


Funds Are Consistently Underutilized

Restructure Program and Serve More Kids

Proposition 49: After School Education and Safety Program

Child Care

Eligibility Depends Upon Family Income and CalWORKs Participation

Governor's Child Care Reform Proposals

Eligibility Reforms

Shifting CalWORKs Families to AP Programs

Eliminating the Long-Term CalWORKs Child Care Guarantee

Two-Tiered Waiting Lists

Advantages to Governor's Proposal

Implementation Concerns

LAO Recommendation

Governor Proposes Further Reforms for 11- and 12-Year-Olds

Child Care Terminology

Types of Providers

Other Terms

Reimbursement Rate Reforms

Two Types of Service Models— Vouchers and Direct State Contracts

Proposal Creates a Tiered Reimbursement Rate Structure for AP Providers

Governor's Tiered Reimbursement Proposal

Environmental Rating Scales

Proposal to Create Incentives for Quality Makes Sense

Reform Could Promote Child Development

Tiered System Would Reflect Real Cost of Service Differences

A Star Rating System Would Make Quality Differences Transparent

A Tiered Reimbursement Could Address Significant Problems in the Current System

Transition Title 5 Provider Reimbursement to RMRs

Reimbursement Rates Should Reflect a Systematic Approach to Improving Quality in Child Care

"Pick-Five" Regulations Would Enhance Rate Equity

New RMR Survey Methodology Shows Promise

Commission on Teacher Credentialing (6360)

Revised TDAA Fund Condition Requires Additional Explanation

If Fund Statements Reliable, Action Should Be Taken to Keep CTC Solvent

Other Issues

Few Details on Other Proposals

Higher Education

Higher Education Introduction

Total Higher Education Budget Proposal

Major Funding Sources

Funding by Segment

Major Cost Drivers for Higher Education

Major Budget Changes

Budget Issues

Intersegmental: Higher Education "Compact"


Concerns With the Compact

Compact's Funding Targets Are Disconnected From Master Plan

Compact Would Place Higher Education Funding on "Autopilot"

Compact's Accountability Provisions Are Inadequate


Intersegmental: Higher Education Enrollment Growth and Funding

Higher Education Enrollment Trends

Enrollment Down in 2004-05, But Master Plan Intact

Disconnect Between Enrollment Funding and Actual Enrollment

Governor's Budget Proposal

Determining Enrollment Growth Funding for 2005-06

How Much Enrollment Growth Should Be Funded?

Provide 2 Percent Enrollment Growth

Ensuring That Enrollment Targets Are Met

How Much General Fund Support Should Be Provided for Each Additional Student?

Background on the Development of the Marginal Cost Methodology

UC and CSU Used Different Methodologies Before 1992

Legislature Called for New Methodology in 1990s

Recent Departure From the 1995 Marginal Cost Methodology

LAO Recommendations Based on 1995 Methodology

Legislative Review of Marginal Cost Methodology Needed

Intersegmental: Student Fees

Lack of Fee Policy Has Resulted in Volatility and Disparity

Governor Makes Agreement With UC and CSU on Student Fees

Governor's Agreement Has Serious Shortcomings

Fee Agreement Used to Justify All Budget-Year Fee Proposals

Adopt Share-of-Cost Fee Policy

Use Share-of-Cost Approach to Assess Budget-Year Fee Levels

Legislature Should Budget New Fee Revenue

Score Fee Revenue From Second-Year Phase In Of Excess-Unit Fee Initiative

State Lacks CCC Fee Policy

Increasing CCC Fee Shifts Costs to Federal Government Without Hurting Students

University of California (6440)

Student Fee Increases

Intersegmental Issues Involving UC

Impact of LAO Recommendations

California State University (6610)

Student Fee Increases

Intersegmental Issues Involving CSU

Impact of LAO Recommendations

California Community Colleges (6870)

Major Budget Changes

Proposition 98 Spending by Major Program

Student Fees

Enrollment Growth

Enrollment Changes Over Time

Recent Slight Decline in CCC Enrollment— The Story Behind the Numbers

Enrollment Funding

State's Effort to Equalize District Funding Should Remain a High Priority

Greater Accountability Needed

"Partnership for Excellence" Has Expired

District-Level Accountability to Be Developed

Local Autonomy in Course Offerings Should Be Balanced With State Oversight

Cal-PASS Helps Districts to Improve Outcomes, Fosters Accountability

Student Aid Commission (7980)

Major Budget Proposals

Private University Cal Grant

Create Parity for Financially Needy Students Attending Public and Private Universities

National Guard APLE Program

New Warrants Have No Budget-Year Cost

EdFund Operating Surplus

Use Larger Budget-Year Swap to Restore Cal Grant Benefits