Credit: Alison Yin/EdSource
A year ago, we wrote in this space that it was time to have an honest conversation about California's structural budget problems. We note that despite the record education spending the state is planning, the highly volatile nature of state tax revenues could turn that good news into bad news almost overnight. Did. No one cared.
Last year, it was no surprise that our cries for the sky to fall were ignored. We were writing this article just months after Gov. Gavin Newsom reported a nearly $100 billion surplus in the May 2022 revision. And his January 2023 budget, despite running into a modest deficit, still projected an atmosphere of “nothing to see here.” Things looked pretty good 12 months ago. That's not the case now, and despite the governor's optimism, the fiscal situation may be bad for some time to come, which is why we're bringing this topic up again. If you are as concerned about the future of California's schools and students as we are, you will agree that we need to have a serious conversation about supporting education investments with stable returns.
The Legislative Analysis Service cited a $68 billion “budget challenge” in its latest fiscal outlook. But the more dire news is that state revenue forecasters predict that the state will enter a recession in 2022, resulting in a significant revenue shortfall for the promised budget between 2023 and 2024. It came as the government announced that a sustained budget deficit is expected from 2027 to 2028. . At the national level, there is talk of a “soft landing'' for the economy. In California, the ride seems a bit choppy.
And, as expected, talk of cutting K-12 funding has already begun to emerge. We know from the experience of the Great Recession that lawmakers were quick to cut per-pupil funding, delay payments to schools, and swap funding with local governments. Although there are Prop. 98 reserves to draw on this time, LAO says those funds could be depleted to get out of the budget hole in 2023-24 and 2024-25 if the economy worsens. They note that school districts may find themselves in a precarious funding situation. .
But as they say in the infomercial, “Wait, there's more.” There's been a big push from state leaders to develop a “continuous improvement” model for California schools. This will increase teacher recruitment and retention, new programs that address students' social and emotional learning needs, and experiment with a “whole child” approach to schooling by funding programs such as: , representing a significant financial investment in the billions of dollars. community school. The problem is that his funding for many of these programs was a one-time deal. Ignoring the issue of school funding stability means the state's strategy to shift learning paradigms is at risk of losing resources in the coming years.
The governor just released a proposed budget for fiscal year 2024-25 that focuses heavily on the deficit and education funding. This has been done by tightening the squeeze on schools while delaying funding for a variety of programs, including subsidies for daycare centers, transitional kindergartens, full-time facilities, and funding for the UC and CSU systems. This means that many of the gaps will be filled. This year, the strategy appears to be to fund the status quo. Utilize reserves. Delay some of the money here and move billions of dollars there. Also, in general, cuts to special projects funded with one-time funds should be avoided whenever possible. I just hope it doesn't get any worse.
Notably, the governor's Treasury is projecting a $38 billion deficit, or $30 billion less than LAO's figure from five weeks ago. It's not easy. Part of the explanation is that the recent stock market rally has helped make the earnings outlook more positive. As the governor essentially said, large changes in tax revenue are “normal” in California. That is the question.
Solving the state's structural fiscal problems is difficult, and all factors need to be included in the discussion. These include reforms to Proposition 13, accounting for long-term liabilities such as pensions, and expanding the sales tax base to include services. Conversations should include incentives for state and local governments to save. That could include nontraditional elements like sovereign wealth funds, or unpopular elements like a broader consumption tax or the return of a national inheritance tax.
We are seriously considering how the state should fund education. Uneven funding means that strategic investments such as continuous improvement are often two steps forward and one step back. If we are serious about transforming California's schools and supporting students with adequate and equitable funding, we need to start talking and taking action to ensure stable funding.
Erin Hayes He is policy director and senior fellow at the Berkeley Youth Institute, an affiliated research center of the Goldman School of Public Policy at the University of California, Berkeley.
patrick murphy He is director of resource equity and finance at the Opportunity Institute, a national education policy organization focused broadly on education policy from cradle to career, and a professor at the University of San Francisco.
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