Funding for California schools through Suggestion 98 is heading upwards, even though the country'due south general fund will still be facing a small arrears over the next couple of years. That's co-ordinate to the latest budget forecast released yesterday by the Legislative Analyst's Office (LAO).

Land Legislative Analyst Mac Taylor at Wednesday'southward press conference.

"Our numbers reflect growth in Proffer 98 of a couple of billion each yr, even more in the out years," said Legislative Analyst Mac Taylor during a press briefing in Sacramento.

Passage of Proposition 30 is a significant function of that, said Taylor, along with budget cuts in recent years and the state's economic recovery. Suggestion 30, which temporarily raises the sales tax and increases income taxes on the wealthiest Californians, is expected to enhance the Prop. 98 guarantee by about $three billion a yr.

Information technology's a different story for the land'due south general fund, which will have a $1.nine billion shortfall over the next ii fiscal years, instead of the slight surplus initially estimated by the LAO. "I recall information technology'southward a little fleck of a tale of two budgets there," Taylor said.

Forecast of state operating surplus. (Source: LAO). Click to enlarge.

But by 2014-15 the LAO predicts a small operating surplus in the general fund, too. Referring to a chart in the forecast report [see figure 2] that illustrates the budget moving from a deficit to nearly $10 billion surplus by 2017-18, Taylor flashed a congratulatory smile and remarked, "this is one of the first non-crimson confined that we've shown in in this certificate for quite a while."

Jonathan Kaplan, a senior policy analyst with the nonprofit, nonpartisan California Budget Projection, said the passage of Proposition 39 likewise gives a boost to the general fund and therefore to the Prop. 98 minimum guarantee. Prop. 39, the election initiative that changes tax law for multistate businesses operating in California, is expected to increase revenues by about $450 meg this year, with virtually of that going to schools. Beginning in 2013-14, information technology'due south expected to generate virtually $1 billion a year. Half of that volition get into clean free energy research and development, and the remainder will go into the general fund; Prop. 98's share of that would be effectually $200 meg.

"The big question is where practise you put those dollars? Where are you going to spend this increase in the Proposition 98 guarantee?" said Kaplan.

Education spending through 2017-18. (Source: LAO) Click to enlarge.

Under the current budget, $2.2 billion of Prop. 30 money immediately goes to paying downwardly the nearly $10 billion in deferred payments to schools and community colleges that the state has racked up during the recent dry years. Looking ahead to adjacent year, at that place will be demands from cash-strapped schools that have had to lay off teachers and classified staff, close libraries and cut extracurricular activities.

"The very simplistic way of framing that is do you lot pay back the deferrals or do you increase programmatic funding?" said Kaplan,

Prop 98 Forecast. (Source: LAO). Click to enlarge.

noting that Gov. Jerry Dark-brown has already signaled his preference is for fiscal prudence. The Legislature, on the other hand, may be nether pressure level to let schools rebuild programs and staff.

Deputy Legislative Analyst for education Jennifer Kuhn said there'due south likely to exist enough growth in Prop. 98 funds side by side year to both retire the deferral – and other 1-fourth dimension obligations, such as the years of unpaid mandates – and to build up the base for schools. She pointed out that decreasing the deferral by $2.2 billion this academic yr frees up that money and then it can be used to pay down another $2.2 billion next year and the yr after, until information technology's paid off. "It's similar a congenital-in payment plan," said Kuhn.

Given all the options, she said, "it'south all the more than important for the Legislature to be thoughtful and deliberative" about what to do with the remainder of the Prop. 98 money."

Of grade, this all assumes that the land Legislature doesn't go on a spending spree to restore other non-education programs as well cut, such equally social services and health. In addition, said Taylor, it also assumes that "the moderate economic recovery will continue." He said about half of the optimistic forecast can be attributed to Prop. thirty passing and about one-half to economic improvements, so it'due south possible the scenario could change, although he doesn't wait a significant downward shift in California's outlook.

"This is a much much more positive situation that we've faced in many, many years," said Taylor. "It'south on the whole pretty good news."

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