Governor’s Proposals for the 2011 -12 State Budget and K ...images.pcmac.org/Uploads/TahoeTruckee/TahoeTruckee/Divisions... · Since the employment peak, the state has lost 1.3

Governor’s Proposals for the 2011-12Governor’s Proposals for the 2011-12Governor’s Proposals for the 2011-12State Budget and K-12 Education

Governor’s Proposals for the 2011-12State Budget and K-12 Education

Presented by:Ron Bennett, Maureen Evans, John Gray, Michele Huntoon,Jannelle Kubinec, Robert Miyashiro, Sheila Vickers

© 2011 School Services of California, Inc.

IntroductionIntroduction


Overview of Major ThemesOverview of Major Themes

Welcome to the School Services of California, Inc., (SSC) 2011 Governor’s Budget Workshop!

The major themes in today’s presentation are:

A look at state and national economics

The challenges faced by our new Governor

A-1

The challenges faced by our new Governor

How the Governor proposes to deal with those challenges

Proposition 98, revenue limit issues and other education issues

Practical planning considerations and ideas

Remember, the Governor’s Proposal starts, but does not finish the process

As always, we will provide updated information during the year using SSC’s Fiscal Report, Community College Update, website, video reports, and webcasts

Our subtitle this year is “How tough people get through tough times”© 2011 School Services of California, Inc.

State and National EconomicsState and National Economics

The economy is the key to everything

Business generates jobs, personal and corporate income, and capital gains

Government taxes those sources and funds education and other government services

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Businesses are generating cash and profits, but they are not yet confident enough for expansion and hiring

The Feds plan to do less for states in terms of stimulus – no new funding is planned

But the state still hasn’t recovered, and won’t for a long time to come

Good news: Things have stopped getting worse and there is some improvement

Bad news: Full recovery may take until 2016, a year longer than was estimated last year © 2011 School Services of California, Inc.

The Governor’s ChallengesThe Governor’s Challenges

New Governor, new approach, same lousy environment

The Governor faces the biggest deficit ever faced by any governor in U.S. history

And he inherits huge economic problems and a divided Legislature

All of his proposals are opposed by someone:

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All of his proposals are opposed by someone:

Republicans oppose new taxes

Democrats oppose spending cuts

Taxpayers oppose more debt

You cannot balance this Budget without taxes, spending cuts, and maybe some debt

There are no new rabbits and no new hats, but this Governor will need to be a master magician to lead this state © 2011 School Services of California, Inc.

The Governor’s Proposals for 2011-12The Governor’s Proposals for 2011-12

So, how does the Governor propose to dig the state out of this economic quagmire?

Cuts – lots of them

But with the acknowledgement that education has already taken more than its fair share of cuts

Realignment

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Realignment

To restore local control of service delivery and save the state money

Continuation of taxes

Temporary taxes would be extended by five years

Basically the Governor has two plans:

If the taxes are extended, the cuts are as budgeted in January

Education would be flat funded for 2011-12

If the taxes are not extended, an estimated additional $9 billion in cuts would be needed, including large cuts to education


Proposition 98 and The Education BudgetProposition 98 and The Education Budget

Because of suspension, Proposition 98 is not a factor in 2010-11, except for marking the maintenance factor

For 2011-12, there is no proposal to suspend Proposition 98

But if the temporary taxes are not extended, Proposition 98 drops by $2.3 billion

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And the Governor indicates he expects education to take that hit

Additionally, another $6 billion in solutions would need to be found

With extension of taxes education is flat-funded for 2011-12

No midyear cuts are proposed, so we keep the funding level in the enacted 2010-11 Budget through 2011-12

Mandates are funded to the tune of $89 million

The maintenance factor, to be collected in some future “good year,” continues to grow


Best PracticesBest Practices

Best practices are defined as the most efficient (least amount of effort) and effective (best results) ways of accomplishing a task, based on procedures that have proven themselves over time

It will be critical to review the best practices information in the areas of:

Collective bargaining

Capital facilities and infrastructure considerations

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Capital facilities and infrastructure considerations

Cash, borrowing, credit, and reserve levels

Charter school oversight

Communication and outreach to stakeholders

Contingency planning for now and the future

In this economic climate, local educational agencies (LEAs) have to be on their “A” game

It will be important to address each of these potential “land mines” with tried-and-true approaches


Overview of the State Budgetand the State Economy

Overview of the State Budgetand the State Economy


U.S. Economic OutlookU.S. Economic Outlook

While the “Great Recession” is officially over, lasting 18 months from December 2007 to June 2009, strong economic growth remains elusive

U.S. unemployment rate is 9.4% – down from 9.9%

Third quarter U.S. Gross Domestic Product (GDP) was just 2.6%

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Housing starts are one-third of their prerecession levels

But some positive developments point to better times ahead

The stock market has risen significantly, reflecting investor optimism

Individuals are saving more and lowering their debt

Inflation is nonexistent

Corporations and banks are awash in cash© 2011 School Services of California, Inc.


None of our economic forecasters – Legislative Analyst’s Office (LAO), UCLA, or the Department of Finance (DOF) – are predicting a double-dip recession

The consensus view is that the economy will grow slowly in 2011 and then pick up steam in 2012

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Job creation will continue to be a problem, with the natural unemployment rate running above 9% through 2011 and into 2012

Federal policy has yielded mixed results

Stimulus funds have saved some jobs, but the federal deficit has soared

The Fed’s “quantitative easing” has yet to lower interest rates



2.2%1.6%

5.0%

3.7%

1.7%

2.6%

2.0%

4.0%

6.0%

U.S. GDP(% Change)

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-2.7%

-5.4%

-6.4%

-0.7%

-4.0%

-6.8%

-4.9%

-0.7%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

3rd Quarter 4th Quarter 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 1st Quarter 2nd Quarter 3rd Quarter

U.S. GDP as Estimated Jan. 2010

U.S. GDP as Estimated Jan. 2011

2008 2009 2010

Source: Bureau of Economic Analysis, December 22, 2010© 2011 School Services of California, Inc.

Federal DeficitFederal Deficit

Federal deficits soar during the recession, reaching $1.4 trillion in 2009

UCLA forecasts deficits

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UCLA forecasts deficits averaging $1 trillion over the decade

For comparison, California’s total personal income in 2009 was $1.6 trillion

Source: Office of Management and Budget; UCLA December 2010© 2011 School Services of California, Inc.

California’s Economic OutlookCalifornia’s Economic Outlook

California’s economy was hit hard during the recession

Subprime loans and the collapse of housing led the downturn

The state’s 12.4% unemployment rate is the third highest in the nation

Since the employment peak, the state has lost 1.3 million jobs

Construction employment was hit hardest

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UCLA says the state is well positioned for the recovery

UCLA identifies education, health care, exports, and technology as leading the way

Regional differences: Coastal cities will thrive, while the Inland Empire and Central Valley will struggle

The Governor’s Budget, however, expects the labor market to be a continuing challenge

Payroll employment is not projected to reach prerecession levels until 2016, eight years from the beginning of the recession


California’s Unemployment RateCalifornia’s Unemployment Rate B-6

Source: Bureau of Labor Statistics, December 2010© 2011 School Services of California, Inc.

Comparing the Forecasts – JobsComparing the Forecasts – Jobs B-7

Sources: LAO, California’s Fiscal Outlook, November 2010; UCLA Anderson Forecast for the Nation and California, December 2010; 2011-12 Governor’s Budget, January 2011


Comparing the Forecasts – IncomeComparing the Forecasts – Income B-8



Comparing the Forecasts – InflationComparing the Forecasts – Inflation B-9



Recovery Takes a Long TimeRecovery Takes a Long Time B-10


Prior-Year Budget “Solutions”Prior-Year Budget “Solutions”

Ongoing state expenditures have been funded with one-time revenue from:

$17.4 billion in federal stimulus funds

$8.3 billion in higher taxes

$6.5 billion from accelerated tax collections

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$2.1 billion from redevelopment agencies

$1.7 billion in accounting changes from Medi-Cal and state payroll

Solutions that make future deficits worse:

$14.6 billion in Economic Recovery Bonds

$7.6 billion from securitization of tobacco lawsuit settlement

$5.5 billion in loans from special funds and local governments

$2.4 billion from sale of state buildings and mandate deferrals© 2011 School Services of California, Inc.

Prior-Year Budget “Solutions”Prior-Year Budget “Solutions” B-12

Source: DOF, December 2010© 2011 School Services of California, Inc.

The Budget GapThe Budget Gap B-13

$26.7 billion

Assumed Federal funds $3.6Budgeted, but not realized savings $1.7Proposition 22 savings $1.6

Source: 2011-12 Governor’s Budget, p.4

Sunset of Temporary Taxes $7.2Expiration of Federal stimulus $4.0Other-one-time solutions $3.4

Revenue decline $3.1Workload increase $2.1


California’s Debt BurdenCalifornia’s Debt Burden

California’s debt service burden has risen sharply during the recession

California’s credit rating is the worst in the nation

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the worst in the nation

Florida AAA

Georgia AAA

Texas AA+

California A-

Debt service costs total about $5.8 billion in 2009-10

Source: State Treasurer’s Office, December 2010Recession


CartoonCartoon


What’s Proposed for the Rest of the Budget?What’s Proposed for the Rest of the Budget?

Governor Brown proposes $12.5 billion in cuts, which come primarily from other areas of the State Budget

Major reductions include:

$1.7 billion by limiting Medi-Cal services and requiring beneficiaries to share in costs

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share in costs

$1.5 billion by establishing time limits and reducing California Work Opportunity and Responsibility to Kids (CalWORKs) grants

$1 billion in reductions to University of California (UC) and California State University (CSU)

$750 million from the Department of Developmental Services


What’s Proposed for the Rest of the Budget?What’s Proposed for the Rest of the Budget?

$750 million in childcare savings

$486 million by reducing hours for In-Home Supportive Services (IHSS)

$308 million in reduced take-home pay for state employees without contracts

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$300 million (net) from community colleges

It appears that other major savings come from one-time savings and borrowing


What’s Proposed for the Rest of the Budget –RealignmentWhat’s Proposed for the Rest of the Budget –Realignment

The Governor’s Proposed Budget calls for a shift of government services to the local level

Custody and care of juvenile offenders and low-level adult felons

Court security

CAL FIRE, fire and emergency response activities

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Foster care and child welfare services

Adult protective services

Mental health services, including AB 3632

Transfer of responsibilities would be accompanied by dedicated revenues

1% sales tax and 0.5% vehicle license fee (VLF) which have been in effect since 2009

Would continue for an additional five years

Subject to voter approval at the June special election© 2011 School Services of California, Inc.

Realignment and EducationRealignment and Education

The Governor’s realignment proposals could affect LEAs in several ways:

Proposition 98

The 2011-12 proposed level of funding assumes that voters agree to extend temporary tax measures

Absent such action, the Proposition 98 guarantee would drop

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Absent such action, the Proposition 98 guarantee would drop along with revenues

Tax revenues from the 1¢ sales tax and 0.5% from the VLF would be dedicated to a special fund

Results in a reduction to General Fund revenues used for determining the Proposition 98 minimum guarantee

Programs

Structure and funding for child care and mental health is changed to allow for increased local control


What’s Proposed for Redevelopment?What’s Proposed for Redevelopment?

Governor Brown proposes to phase out redevelopment agencies beginning in 2011-12

No new obligations; however, existing obligations will be honored

Freed-up funds will provide General Fund relief

In future years, funds will be available for local government, including

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In future years, funds will be available for local government, including schools

Estimated to be $900 million by 2012-13

Similar amount for education

Proposes constitutional amendment to allow 55% voter approval for limited local tax increases and bonding against local revenues for development projects


Where Do Local Property Taxes Go?Where Do Local Property Taxes Go?

The Governor proposes restructuring the flow of local property tax funding away from redevelopment agencies (RDA) to other local entities

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Shift

The Governor estimates that RDAs will divert $5 billion in property tax revenue from other agencies in 2011-12 allocated in proportionate shares to remaining local agencies

Shift

RDA Funding

Redevelopment Agencies

12%


Bumpy Road for Redevelopment ShiftsBumpy Road for Redevelopment Shifts

A change in the state’s approach to redevelopment funds could yield significant gains for many LEAs

However, there are many practical and political barriers that such a proposal must overcome:

Timing – the Governor expects funds to be available as early as 2011-12, but most RDA projects are capital projects for which there are decades of

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but most RDA projects are capital projects for which there are decades of outstanding payments

Equity by county – the amount of property taxes that go toward redevelopment varies dramatically throughout the state

Equity for LEAs – the proposal calls for the funding to be shared on an equal amount per student within each county, but inter-county disparities will be significant

Boundaries – RDA funds are within county boundaries, but some LEAs cross county lines


General Fund Revenue SourcesGeneral Fund Revenue Sources

Personal Income Tax

The top 1% of state taxpayers paid 43% of this tax in 2008

Taxpayers with incomes

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Taxpayers with incomes more than $100,000 paid 84% of this tax in 2008

Capital gains is a volatile source of income, dropping from $132 billion in 2007 to $35 billion in 2009

Source: 2011-12 Governor’s Budget, Page 39© 2011 School Services of California, Inc.

(Dollars in Millions)

2010-11 2011-12

Prior-Year Balance -$5,342 -$3,357

Revenues and Transfers $94,194 $89,696

Total Resources $88,852 $86,339

Revenues and transfers drop 4.8% because one-time tax accelerations expire

Expenditures drop

General Fund Budget SummaryGeneral Fund Budget Summary B-23

Total Expenditures $92,209 $84,614

Fund Balance -$3,357 $1,725

Budget Reserve:

Reserve for Encumbrance $770 $770

Reserve for Economic Uncertainties -$4,127 $955

Budget Stabilization Account $0 $0

Total Available Reserve -$4,127 $955

Expenditures drop 8.2% from major cuts to most state programs

The reserve is just 1.1% of revenues and transfers

Source: 2011-12 Governor’s Budget, p.10© 2011 School Services of California, Inc.

Risks to the Budget ProposalRisks to the Budget Proposal

Flat funding for K-12 education is dependent upon voters approving the extension of the current temporary taxes

The Legislature must place this proposal on the ballot, requiring two-thirds vote in each house

Two Republicans in each house must agree – will be a tough sell!

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Two Republicans in each house must agree – will be a tough sell!

Voters may turn this down even if it gets on the ballot

Legislature must approve shifting special funds (Proposition 63 for mental health and Proposition 10 for First 5 Program)

Two-thirds vote is required

The Legislature must approve the local government realignment proposal and place the tax extension proposals on the ballot to pay for realignment


Risks to the Budget ProposalRisks to the Budget Proposal

Court challenges could thwart full implementation of the program reductions and fund shifts

Last November, voters protected local government funding by adopting Proposition 22

This measure is at odds with the Governor’s Proposal for

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This measure is at odds with the Governor’s Proposal for redevelopment funds and transportation bonds

The economic recovery could stall and revenues could underperform the forecast

Problems in Europe could threaten California’s export market

Massive federal deficits could rekindle inflation

A trade war with China could weaken exports and spur inflation

The recovery rate could simply be slower than expected© 2011 School Services of California, Inc.

Budget Contingency PlanBudget Contingency Plan

The Governor’s Budget assumes that the temporary taxes are extended by the voters for five more years

The Budget also proposes that additional reductions be made in the event that the tax extensions are not approved

This leaves schools in a position of needing at least two plans

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Option 1 – flat funding – continues the funding level contained in the enacted Budget for 2010-11 into 2011-12

Option 2 – a $2 billion reduction in funding – results in a loss of about $330 per ADA for the average district

Districts will need to plan for both eventualities until the fate of the tax extensions is determined

Additionally, economic changes between now and enactment of the 2011-12 Budget could also cause a revision, up or down


What Does it Mean to be Protected?What Does it Mean to be Protected?

The Governor featured “protecting education” as a major theme

He acknowledged that education had taken the brunt of past cuts

Protection isn’t perfect, but it does mean:

No midyear cuts to school agencies for 2010-11

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Minor additional reductions for 2011-12, if the tax extensions pass

But it also means that we will have to fight for funding if the tax extensions do not pass

We think, in light of past cuts, education should be protected whether the taxes pass or not

So, while there is room for improvement, the protection offered is better than we have had during the past three years – as long as the taxes pass


Projected vs. Actual Funding Per ADAProjected vs. Actual Funding Per ADA B-28


Per-ADA Revenue VolatilityPer-ADA Revenue Volatility

As in the past, we continue to have very high volatility in revenues directed toward education

2011-12 continues the roller-coaster ridebecause of the election contingency

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Revenue levels proposed for 2011-12 are 0.3%lower than 2010-11 if the tax extensions pass

Revenues would be an estimated $330 per average daily attendance (ADA) lower than 2010-11 if the tax extensions do not pass

California needs to provide a more stable revenuestream for schools


Per-ADA Revenue VolatilityPer-ADA Revenue Volatility B-30


California’s Education Spending Lags the NationCalifornia’s Education Spending Lags the Nation B-31

National Average

-$2,580 per student


Budget and Special Election TimelineBudget and Special Election Timeline

The Governor released his Budget Proposal on January 10

He has called for legislative action within the next 60 days to adopt all necessary statutory changes to implement the Budget

These are usually the Budget Trailer Bills

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These changes would conform to the Governor’s Budget Proposal

The actual Budget Bill, however, would not be adopted

In June, the voters will decide whether to continue $8.8 billion in temporary taxes

If the taxes are extended, the Legislature would then adopt the Budget Bill before the new fiscal year begins

If the taxes are rejected, further unspecified cuts would be required© 2011 School Services of California, Inc.

Historic Shift ProposedHistoric Shift Proposed

When Jerry Brown was Governor the first time around, he presided over a dramatic shift of power and responsibility from local to state government

With passage of Proposition 13 in 1978, local governments lost 57% of property tax revenue

The state backfilled the loss to avoid massive layoffs and loss of services

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The state backfilled the loss to avoid massive layoffs and loss of services

The state assumed greater responsibility for programs

As Mayor of Oakland, Brown saw the challenge faced by local government in administering programs without control of revenues to support them

The Governor’s Budget Proposal comes full circle by shifting services and power back to the local level

Includes funding to support the shift© 2011 School Services of California, Inc.

Long-Term SolutionsLong-Term Solutions

Do we need tax reform or less spending? We need both!

Per-capita state revenues are higher than other states

But per-capita spending is even higher

Revenues rely too much on the volatile sales and income taxes

B-34

Property tax is much more stable

Expenditure patterns are also different

We spend far less than the national average on education

More than average on prisons, health and welfare, and social services

To be more normal in education spending, we must learn how to be more normal and spend less in other areas as well


Shared Interest in Collective BargainingShared Interest in Collective Bargaining

The economic realities of the last three years are taking a toll on the labor-management relationship

A majority of districts continue to settle at the table, but of those who end up at impasse, a higher percentage are not settling in mediation

Whether agreement is reached at the table, in mediation, or during fact-

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Whether agreement is reached at the table, in mediation, or during fact-finding, management and labor share an interest in:

The fiscal solvency of the LEA

Minimizing the impact of reductions on students and the instructional program

Maintaining fair compensation and safe working conditions


Management InterestManagement Interest

With approximately 90% of a district’s unrestricted revenues dedicated to employee compensation, management has an interest in reducing personnel expenditures

Layoffs

Concessions from employees

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Concessions from employees

Compensation (e.g., salary reduction, increase in health and welfare contributions)

Working Conditions (e.g., class size, preparation time)

Management will want some assurances if things get worse – and they could if the temporary tax extension initiative fails

In the end, it is management and the board that must ensure the fiscal solvency of the district


Union InterestUnion Interest

The rising cost of health care has effectively reduced the take home pay of most employees

Class sizes are already near the top for teacher-to-student ratios, and the staffing ratios of counselors, librarians, and school nurses in our schools is near the bottom

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Many employee groups have made concessions and may be asked to make them again

Employees will want changes in working conditions and/or workload in exchange for reductions in compensation

Furloughs result in a reduction in pay and a commensurate reduction in workload – but furloughs may not be enough

The union will want some assurance that salary concessions and working conditions will be restored when revenues improve


Does the Budget Bridge the Gap?Does the Budget Bridge the Gap?

Does the Governor’s Budget bridge the gap between union and management interests and the economic and political realities?

Flat funding is better than more cuts

Flat funding isn’t guaranteed by the Governor’s Proposal

Statutory timelines for layoffs don’t allow for a “wait and see” approach

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Statutory timelines for layoffs don’t allow for a “wait and see” approach

Districts must act to reduce personnel costs assuming the temporary tax initiative fails

Continued uncertainty sets both sides of the negotiations table up for a very difficult time

Early resolution of the extension of temporary taxes would help

We would prefer that the Governor agree to hold K-12 harmless whether the taxes are extended or not


Major State General Fund Expenditures by AreaMajor State General Fund Expenditures by Area B-39

Dollars in Billions

1998-99 2010-11 % Increase

K-14, Proposition 98* $35.2 $49.7 41%

Higher Education (CSU and UC) $4.7 $7.4 57%

Natural Resources $1.2 $2.0 67%Natural Resources $1.2 $2.0 67%

Health and Human Services $15.3 $27.0 76%

Corrections $4.4 $9.3 111%

General Fund Revenues $57.3 $94.1 64%

* Includes state general fund and local property taxes

Sources: Legislative Analyst’s Office, State Spending Plan: 1998-99 and 2011-12 Governor’s Budget Summary


K-12 Education Took Biggest CutsK-12 Education Took Biggest Cuts B-40

Dollars in Billions % Change 2007-08 to

2010-112007-08 2008-09 2009-10 2010-11

K-12 Education $42.5 $35.5 $34.6 $36.3 <14.5%>

Higher Education $11.8 $11.7 $10.6 $11.6 <1.4%>

General Fund Expenditures by Major Program Area

Higher Education $11.8 $11.7 $10.6 $11.6 <1.4%>

Health and Human Services $29.7 $30.9 $25.0 $27.0 <9.3%>

Corrections and Rehabilitation $10.2 $10.3 $8.2 $9.3 <9.0%>

Natural Resources $1.9 $2.0 $1.9 $2.0 8.3%

Source: 2011-12 Governor’s Budget Summary


The Education Budget and Challenges Ahead

The Education Budget and Challenges Ahead


The Proposition 98 DilemmaThe Proposition 98 Dilemma

Proposition 98 is supposed to set a minimum funding guarantee for K-12 education and community colleges, but during a recession all bets are off

The Legislature suspended Proposition 98 for 2010-11, funding education $4.3 billion below the “minimum guarantee”

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The Governor’s Budget proposes a complex plan that departs from full funding of Proposition 98 or suspension of the “minimum guarantee” to a specified level

The 2011-12 Proposition 98 dilemma: K-14 funding at the Proposition 98 “minimum guarantee” cuts funding in 2011-12 by $2 billion from the 2010-11 funded level


The Proposition 98 DilemmaThe Proposition 98 Dilemma

According to the LAO, the Proposition 98 guarantee falls to $47.5 billion in 2011-12 from $49.7 billion in the current year

The expiration of temporary taxes drives down the guarantee

In addition, baseline cost adjustments (enrollment growth, cost-of-living adjustment [COLA], and backfilling the one-time deferral savings) would

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adjustment [COLA], and backfilling the one-time deferral savings) would require an additional $3.2 billion

The Governor’s Budget proposes flat funding for K-12 education if the temporary taxes are extended

The Legislature has the authority to extend the taxes; however, the Governor is calling for voter approval instead

A June 2011 ballot measure is proposed


The Tradeoff for K-12 EducationThe Tradeoff for K-12 Education

If the temporary taxes are extended, K-12 education would receive less than what is called for under Proposition 98

The Governor’s Budget realigns some state programs to local governments and redirects almost $6 billion to a newly created Local Revenue Fund, bypassing the General Fund and Proposition 98

Only $5 billion would flow through the General Fund, resulting in an

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Only $5 billion would flow through the General Fund, resulting in an additional $2 billion for Proposition 98, which would be roughly sufficient to maintain flat funding in 2011-12

Proposition 98, however, may provide more funds to K-14 education if the economy and revenues outperform the forecast

2011-12 is expected to be a Test 1 year, which guarantees 41% of General Fund revenues to education

Unexpected revenue gains of $5 billion or more in 2011-12 would also yield an additional $2 billion for Proposition 98


Proposition 98 FundingProposition 98 Funding C-4

Source: DOF and LAO © 2011 School Services of California, Inc.

Revenue LimitsRevenue Limits

The Governor’s Budget proposes the following for revenue limits:

For 2010-11: No change to the enacted 2010-11 Budget Act levels

For 2011-12:

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Full funding for an estimated 0.22% increase in ADA

No funding increase for the estimated 1.67% statutory COLA

19.608% deficit factor, which eliminates the statutory COLA

The actual statutory COLA is dependent on data published by the U.S. Department of Commerce in April 2011 and will be updated in the May Revision


Revenue Limit COLARevenue Limit COLA

Statutory COLA

District Type 2010-11-0.39%

2011-121.67%

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(Actual) (Est.)

All Elementary Districts -$24 $102

All High School Districts -$29 $123

All Unified Districts -$25 $107


Revenue Limit Deficit FactorsRevenue Limit Deficit Factors C-7


Undeficited Base Revenue Limit – Example Undeficited Base Revenue Limit – Example C-8


Base Revenue Limit After Deficit FactorBase Revenue Limit After Deficit Factor

Apply the 2011-12 deficit factor of 19.608% to the undeficited base revenue limit

Example for the Average

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$1,273

$6,493

Example for the Average Unified District

= $6,493 x (1.0-0.19608)= $6,493 x 0.80392= $5,220

$5,220


Proposed 2011-12 Funding vs. 2010-11Enacted BudgetProposed 2011-12 Funding vs. 2010-11Enacted Budget

The Governor’s Budget does not fund the 1.67% estimated COLA ($107 for unified districts)

The funded base

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19.608% Deficit

$6,493

-$1,273-$1,148 17.963% Deficit

$6,386

The funded base revenue limit drops approximately $19 per ADA from the 2010-11 level


Deficit Factor Cuts Funding Below 2010-11Deficit Factor Cuts Funding Below 2010-11

The deficit factor establishes the funded base revenue limit

If the deficit factor is unchanged from one year to the next, the statutory COLA is fully funded

If it is reduced, the statutory COLA is fully funded, plus an additional amount is funded to reverse prior-year cuts

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amount is funded to reverse prior-year cuts

If it is increased, the statutory COLA is not funded and an actual year-over-year cut is imposed

The Governor’s Budget does not fund the statutory COLA and imposes an additional cut of $19 per ADA, on average

This reduces revenue limit funding by roughly $113 million below the 2010-11 funded level


Documents

Governor’s Proposals for the 2011 -12 State Budget and K ...images.pcmac.org/Uploads/TahoeTruckee/TahoeTruckee/Divisions... · Since the employment peak, the state has lost 1.3