California Governor Jerry Brown recently unveiled a controversial plan to close the state’s estimated $25 billion budget gap with one-half of the solutions in proposed expenditure reductions and the other half in proposed revenue. The largest part of the revenue solution is a proposal to temporarily extend for five years some $8.1 billion in revenue that is scheduled to expire at the end of this fiscal year. If that proposal is not enough of a challenge, the governor is also calling for unpopular spending reductions to health and welfare, child care, and higher education and a shift in over $5 billion in programmatic requirements and revenue to cities and counties.
Governor Brown’s first obstacle is the two-thirds supermajority vote requirement needed in each house to place a constitutional amendment on the ballot in June. Since democrats no longer have control of either house, the Governor will have to horse trade with republicans to garner enough votes to get his proposal out of the legislature and on to the ballot. This constitutional amendment would be the vehicle used to extend the temporary taxes and could be approved by the electorate with a simple majority vote.
Unfortunately for California school business officials, the state budget adoption process does not coincide very well with their own. While the Governor’s January budget proposal has historically been used by school districts as the first milestone in their budget development process, so much is still unknown until the actual state budget is signed.
The most critical deadlines for school districts in California include a requirement to issue layoff notices for certificated staff no later than March 15th with a final decision on actual layoffs due by May 15th. We cannot recall a state budget ever being completed by May 15th, and in fact, last year’s state budget was not completed until one hundred days after the constitutional deadline.
Another important date for school districts in California is the requirement to certify to the state that their local agency will meet its financial obligations for the next three years. That deadline is also March 15th. These deadlines force school districts to make assumptions on their future funding levels without knowing for sure what those levels will be. They will generally be adopting their budgets and making assumptions based on the possibility that the extension of the temporary revenues will not be approved and that they will therefore be facing at least a cuts of $349 per student to their general purpose revenue limits. Unquestionably, the level of uncertainty for California school districts has never been higher. How they grapple with this uncertainty over the next five months could be their biggest challenge to date.