Gov. Gavin Newsom unveiled his revised state budget last week with details of how he planned to close a $27.6 billion deficit. Now, outraged educational leaders across California are calling the cuts to school funding “unconstitutional” and has the potential for litigation.
Some of those cuts involve Proposition 98, a 1988 voter-approved, constitutional mandate that guarantees minimum funding for California TK-12 schools and community colleges.
Each year’s Prop 98 funding guarantee is calculated through a complex formula based on a percentage of the state’s general fund revenues or by using the amount schools received the prior year, with some adjustments for attendance and inflation. In other words, under Prop 98, schools must receive at least the same amount of funding they received the prior year. The amount allocated for schools in the 2024-25 budget is important because it serves as the baseline for future years’ allocations.
Newsom’s administration said the state’s income tax revenue collections fell short of projections, so starting in 2022-23, schools received more money than they should have. As a result, his administration wants to lower the baseline funding requirements to account for the lower state revenues.
In his revised budget released May 10, Newsom said general fund revenue dropped by $44.9 billion across the three-year budget window (2022-23 to 2024-25). In an effort to balance the budget, his administration proposed that the $8.8 billion allocated to schools in 2022-23 would be designated as prepayments for the future — meaning that money won’t count in calculating Prop 98 baseline funds moving forward.
“This budget proposal is not only legal and constitutional in our view but is designed to provide predictable and stable support for K-12 schools and community colleges in the wake of last year’s unprecedented disruption in revenue projects,” said H.D. Palmer, the Department of Finance’s deputy director for external affairs.
Newsom’s proposed $109.1 billion Prop 98 education budget for 2024-25 is about $30 billion, or almost 38%, higher than it was just five years ago when it was $79.3 billion in 2019-20, his first year in office, according to documents supporting the governor’s revised budget. It also is higher than last year’s budgeted amount of $105.6 billion.
But educators from the California Teachers Association and the California School Board Association have said the move will reduce Prop 98’s funding guarantee by $11.9 billion for the 2023-24 and 2024-25 fiscal years.
And because the funding formula builds on prior years to determine how much money to allocate to schools each year, educators have said that change could reduce funding for schools by billions of dollars.
David Goldberg, president of the California Teachers Association, said in a statement Friday that Newsom’s proposal will lower school funding for years to come and open the door to “future manipulation” of the Prop 98 guarantee.
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“The Proposition 98 maneuver proposed in the May Revise threatens public school funding. Eroding this guarantee would harm schools for years to come and create the conditions for larger class sizes, fewer counselors, school nurses and mental health professionals, cuts to essential school programs and potential layoffs,” Goldberg said.
When asked if CTA plans to file a lawsuit over the change, Goldberg said the association is “open to any and all strategies and tactics.”
“The floor of our public-school funding system is under threat,” he said. “We are going to explore all paths forward to ensure that public school funding is protected for our students and communities.”
In a news release Friday, the California School Boards Association called the proposal a “ticking-time bomb that threatens to blow up California’s school funding system.”
Robert Manwaring, former K-12 education director of the California Legislative Analyst’s Office, said at a CSBA video panel on May 15 to discuss the budget revisions impact on school funding, that the maneuver is similar “to a school bond, where the state has already spent the money and is going to pay for it in future years but out of the non- (Prop)98 side of the budget,” as if it was not spent on education.
“The problem is the $8.8 billion creates the basis for the calculation for the 2023-34 minimum guarantee, the 2024-25, and beyond,” Manwaring said.