Governor Arnold Schwarzenegger released his May Budget Revision on May 14, 2010.  The revised budget proposal outlines $19.1 billion in “solutions,” addressing a $17.9 billion shortfall and leaving the state with a $1.2 billion reserve.   The solutions are primarily in the form of spending reductions ($12.4 billion), along with alternative funding and fund shifts ($3.4 billion), and $3.4 billion in federal funds (down from $7 billion in the January budget proposal). 

The biggest change in the May Revision is the elimination of the CalWORKs Program effective October 1^st for net state savings of $1.2 billion in 2010-11.  The state would forfeit $3.7 billion in federal matching dollars and become the only state without a welfare-to-work program.  The governor also proposes cutting in-home health care for elderly and disabled residents for a savings of $637.1 million and cutting Medi-Cal services for a total of $522.7 million. 

The Governor’s January Budget proposed maintaining state funding for schools at approximately the same level for 2010-11 as schools received in 2009-10.  However, the May Revision adjusts, or “rebenches” the 2010-11 Proposition 98 guarantee downward by $1.4 billion to reflect the proposed elimination of child care programs administered through the California Department of Education.  Therefore, the Proposition 98 funding level for 2010-11 is $48.4 billion, of which $35 billion is General Fund.  For 2009-10, the Proposition 98 funding level is $49.9 billion, of which $35.8 billion is General Fund.  The Governor continues to support more local autonomy in managing school funding through maximum categorical flexibility. 

The Legislative Analyst advises the Legislature to reject the elimination of CalWORKs and child care funding.  The LAO believes that alternative spending reductions—in conjunction with other budget actions—could help sustain critical components of these programs.  The LAO also advises that rather than looking for ways to lower the Proposition 98 guarantee, the Legislature “should forthrightly suspend Proposition 98 if the minimum guarantee is above the level of funding that the state can afford.”

Republican lawmakers continue to reinforce their position against new taxes.  They want to see more emphasis on job creation and support for small businesses in order to grow California’s economy.  Senate Republican leader Dennis Hollingsworth also stated, “The preservation of education, public safety and infrastructure priorities is important and that shows in (the governor’s) budget.”

Senate Democrats’ Plan:  In response to the governor’s May Revision, the Senate Democrats propose $4.9 billion in ongoing tax increases to help close California's $19.1 billion budget gap and prevent deep cuts in social service and health programs.  Revenue includes: 

·               Suspend corporate tax breaks scheduled to begin January 1 ($2.05 billion)

·               Raise the vehicle-license fee (VLF) to 1.5 percent ($1.2 billion)

·               Extend income tax surcharge scheduled to end December 31. ($1 billion)

·               Extend a $217-per-dependent income tax reduction ($430 million)

·               Increase the state's alcohol tax ($210 million)

 Assembly Democratic Caucus Plan:  On May 25^th, the Assembly Democrats offered a California Jobs Budget Proposal to solve the deficit while creating private sector jobs and preventing cuts to schools, public safety, and social and health programs.  The Assembly proposal also includes plans for job creation and retention especially in K-12 school districts, higher education, and local police and fire departments.  The proposal is designed to be “revenue neutral” and passed with a majority vote of the Legislature.  Components include:

·  Securitize the revenue from the California Redemption Value (CRV) Fund (deposits on bottles and cans) for the next 20 years by selling a $9 billion bond.

·  Pay off the securitization in the next 8-10 years with the Oil Severance Tax ($1.2 billion per year).  California is the only oil producing state which does not require an Oil Severance Tax. 

·  To make the proposal revenue neutral, the state gives local government 0.25% of its existing share of sales tax and replaces the lost revenues from the remaining $600 million of oil tax revenues. 

·  Local government then raises its own sales tax by 0.25% and dedicates the entire proceeds to schools, thus freeing up a portion of the state’s General Fund obligation to schools.  The total sales tax paid by the consumer remains the same.

·  Delay the repeal of the corporation tax increase for three years.

The Governor and the Legislature are in the process of convening a 21-member commission that will make its recommendation on common core standards to the State Board of Education by July 15. Both the Senate and the Assembly have named each of their five members and the Governor is expected to name his eleven this week.

The Academic Standards Content Commission would compare California’s standards with common core and decide which is better. If it basically liked common core, then, in line with federal guidelines, it could alter no more than 15 percent of them. The State Board of Education, once getting the commission’s recommendation by July 15, must then vote the package up or down by August 2. It cannot make any changes.

Lawsuit update:  Robles-Wong, et al. v. State of California

Stanford Law’s Youth and Education Law Project, part of the Mills Legal Clinic, is representing the plaintiffs in Robles-Wong, et al. v. State of California, filed in Alameda County Superior Court, along with firm Bingham McCutchen and attorney William Abrams.

The lawsuit calls attention to the disparity in per-pupil spending between California and other states — a more than $2,800 gap, the plaintiffs said.

Sixty students and families, nine school districts, the California School Boards Association, the California State PTA, and the Association of California School Administrators filed the lawsuit together.

They are asking a judge to make the state rid itself of its current education finance system, determine what spending level would meet “the needs of California’s school children” and create a new way to fund schools.

May 21st, 2010 | The Daily News

American Civil Liberties Union lawsuit against Los Angeles Unified School District: Reed v. Smith

A Superior Court judge has served notice to school districts statewide that the seniority rights of teachers do not trump the fundamental right of students to an equal opportunity for a good education.

Los Angeles Superior Court Judge William Highberger issued a preliminary injunction Wednesday preventing any teacher layoffs for budgetary reasons at three Los Angeles Unified middle schools where large numbers of teachers have been given pink slips.

The judge’s ruling only affects this year at the three schools. The case must now move to trial for permanent relief. Since the suit is also against the state, there are larger implications ­– and opportunities for a negotiated settlement, which the plaintiffs’ lawyers say they’re open to.

May 14th, 2010 John Fensterwald, educatedguess.org