01.11.2011 Uncategorized No Comments

K-12 Spending Spared the Ax…For Now

From the Desk of Ernesto Flores

Governor Jerry Brown’s proposed State Budget preserves the current K-12 spending levels while slashing $1.4 billion from higher education. Citing that K-12 budgets have suffered the brunt of spending cuts in the past, the Governor elected to maintain a contribution of $49.7 billion to California’s K-12 schools for 2011-12. However, the State’s ability to maintain K-12 funding may ultimately be decided by a special election in June in which the Governor would be asking for a 5-year extension on the current increases in sales tax, income tax, and vehicle licensing fees otherwise set to expire this year. A failure to pass these extensions would result in approximately $2 billion in cuts to public schools during the 2011-12 fiscal year.

Although many districts are relieved to hear that 2011-12 budget does not immediately cut K-12 spending, there are still concerns in regards to the reconciliation of past cuts and their effect on educational programs. Districts have demonstrated a tremendous wherewithal during the economic downturn, but continue to seek sustainability in the General Fund while maintaining essential services. Many of our districts have been able to increase sustainability through a General Obligation (G.O.) bond program that provides relief directly to the General Fund.

The November 2010 election demonstrated that voters are still supportive of Prop 39 G.O. bond programs and their safeguards. Voters in California approved 92% of G.O. bond programs managed by CFW, while 72% of G.O. bond programs passed overall. This is in stark contrast to the 16 parcel taxes that were rejected out of the 18 placed on the November ballot. If the State Legislature calls a June special election to approve the Governor’s tax plan, there would be an opportunity for districts to address General Fund sustainability and facility needs immediately through a 55% voter approval Prop 39 G.O. bond program. A G.O. bond program could address deferred maintenance, modernization, new construction, technology needs as well as provide the local match to access State Aid funds. The June and November 2012 elections are also the next scheduled opportunity to place a Prop 39 measure on the ballot. Having won 30% of all G.O. bonds approved Statewide in 2010 CFW remains confident that, if structured correctly, G.O. bonds will continue to pass through the remainder of 2011 and 2012. Please give us a call if you need any questions or assistance at (510) 596-8180.

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