Money, money, money, money... money

Governor Newsom released his proposed budget for 2020-2021 a few weeks ago. The good news is that it includes new funds toward education in some important areas. The bad news is that those increases won’t cover some of the basic required expenses districts will have next year. 

I thought it might be helpful to provide a little context on how the state budget process works and to talk about what Newsom included this year for education, as well as what I think needs to change in the final budget the legislature will pass in June. Education finance in California is really complicated and would take waaaaay too long of a blog post than anyone will read to explain, but I’ll try to also include a few quick explanations as well as links you can go to if you want to know more. I totally geek out on this stuff, so enjoy digging into details. But more importantly, it’s critical that we in San Francisco are following the budget (and the related legislative) process every year in Sacramento, and advocate for what we need. What happens there has direct implications on our students in SFUSD.

Quick overview of the process.

The governor releases his proposed budget every year at the beginning of January. It includes the Department of Finance’s estimated revenue for the upcoming year and establishes what his policy priorities are. Once the legislature and advocates have a chance to analyze it, the horse trading begins, along with the new legislative session. The budget is updated in May (called, unsurprisingly, the May Revise) with the latest revenue projections and reflects any new bills that have passed (that have budget implications), any compromises that the governor has already come to with members of the Assembly and Senate in various priority areas, as well as areas of the budget that have been influenced by groups advocating for specific interests. The legislature has until the end of June to pass a final version of the budget that will go into effect on July 1.

This year’s budget proposal.

Governor Newsom campaigned on several education priorities, such as ensuring all 4-year-olds have access to high-quality preschool, and we are continuing to see those reflected this year - his second budget since taking office last January. Also, our state revenue continues to increase (yay!), albeit a little more slowly than in some recent years. But everyone is bracing for some sort of economic downturn, and are therefore being a little conservative about committing to new ongoing vs one-time expenses. 

Newsom included about $3 billion in new spending for education, which is great, like I said. It would take the size of the education budget to about $84 billion. Not bad. For some context, at the worst point in the Great Recession, California spent $47 billion on education. California also guarantees a minimum amount it spends on K-12 education through something called Prop 98. I’ll talk about Prop 98 a little more down below. The other thing to note is that student enrollment is declining across the state. Because school districts receive funding on a per student basis, and because a school can’t necessarily easily decrease its expenses when there are only a couple fewer students, Prop 98 allocates funds differently in this kind of situation, so the amount schools receive per student actually increases a little bit.

The governor also has a great messaging team. When I first read this article right after the budget was released, I thought, “Super! I like what I see here.” But the budget is a several hundred page document, and his budget press conference was a three-hour affair, so it takes a bit of time to really go deep and understand what’s happening. As they say, the devil is in the details.

Below is the high-level list of Governor Newsom’s proposed investments for PreK-12 next year:

  • $1.2 billion increase the base grant through the Local Control Funding Formula (LCFF) - I’ll explain this one more, and what it means in practicality, below 
  • $900 million for educator recruitment and retention
  • $250 million for PreK students with disabilities
  • $300 million for community schools grants
  • $300 million for opportunity grants
  • $15 million for science teaching authorizations
  • $75 million inclusive early education expansion program (10,000 more spots)
  • $60 million for school nutrition
  • $10 million for training for school food service workers

S_G_Growth_2020.png

The only real ongoing investment proposed in this list is the first line - the $1.2 billion towards LCFF. That’s important to note because that affects how much a district has to pay for all its ongoing expenses. This $1.2 billion is essentially a 2.29% COLA, and won’t even cover what some basic new expenses districts are required to incur (see the handy chart from School Services of California below). This isn’t enough. I would like to see the LCFF allocation increase in this budget, for reasons I’ll describe below.

What is LCFF?

I know lots of parents and teachers have no idea what LCFF is, so here’s a quick primer. LCFF, or the Local Control Funding Formula, is how California funds schools. It was one of Governor Brown’s priorities to determine a better way to allocate funds to schools that would give more to districts who have higher populations of students who have high needs, and who need more services and support to be successful. Every district receives a base grant that covers a standard amount per student. Then, school districts receive a supplemental amount for every student who qualifies for free- and reduced-price meals, is an English learner, or is in foster care. If a district has a high concentration (50% or more) of any of these groups of students, the district will receive an additional amount. Districts who receive supplemental or concentration funds are supposed to spend those funds on programs that are specifically designed to improve learning outcomes for those historically underserved students. Districts are also required by law to write a Local Control Accountability Plan (LCAP) that tells the public how they’re spending their money and how that spending is intended to serve the students it’s supposed to serve. You may have heard of the LCAP or even participated in an LCAP community meeting. Districts are required to solicit and respond to input from parents, educators, and students throughout this process.

So that LCFF line in the budget is every district’s general funding. That’s the line that allows us to do what we think we need to do to serve kids well.

Proposed investment outside of LCFF.

All those other lines are great. I’m excited about the proposal to add another 10,000 preschool spots to low-income 4-year-olds. That would get us ⅔ of the way to having universal preschool access for all 4-year-olds across the state. And as this paper discusses, children who attend high-quality preschool “not only perform better in kindergarten, but are also less likely to be placed in special education, less likely to repeat a grade, more likely to graduate from high school, and even less likely to commit crimes.” Providing wrap-around services through community schools is also known to be an effective way to support students to be ready to learn when they come to their classrooms. I love that Newsom wants to invest more deeply in teachers, with more intensive supports for new teachers and funds for workforce development. I’m glad Newsom has also included, and is acknowledging the increased funds we need to provide a free appropriate public education to students with disabilities. Interestingly, he looks to be proposing a change in the way special education funds are delivered by undoing the antiquated AB602. Here’s some history and recommendations about this funding, if you’re curious, and some more detail on what proposed changes to the special education system were made.

But, all those areas I just talked about are one-time expenses. There is lots of overhead associated with one-time grants. Districts will have to decide if it’s worth it to apply, depending on the size and associated requirements. And this $1.8 billion of one-time expenses will not increase the Prop 98 minimum guarantee (brief explanation of that at the bottom of this post). One one-time expense that the governor decided to NOT include this year, that he did last year, is paying down some of the state’s pension liability. Basic math shows that it’s better to pay a larger amount sooner, than tiny amounts in a trickle over time. It will save all of us money. And during Governor Brown’s tenure, the percentage that school districts and teachers had to pay grew, while the state’s obligation decreased. I would love to see us all write our state representatives and ask them to request that the state put some funds towards pension relief now, before we’re in a financial downturn and there aren’t “extra” funds available to help us meet this obligation. 

By the way, School Services of California released a great flyer this week that summarizes the proposed education budget and its impact on students. You can see it here.

Schools still need more money.

Finally, I want to add another layer of perspective to school funding. You’re probably aware that California has been near the bottom in per pupil funding for many years. Because revenue has increased and some of those increases were built into the LCFF legislation, we are now ranked 38th or 41st in the country instead of the bottom of the barrel, depending on which calculation method is used. If California wants to be one of the top ten states for per pupil spending, we need to increase our K12 budget by approximately $30 billion. That is a LOT more than the $3 billion. And of course that’s not a change that can be made in one budget cycle, but we can make a commitment and set a plan.

Interestingly, Assemblymember Maratsuchi (Los Angeles) proposed a bill last year that would change the target for school funding and get us up to that Top Ten list. The bill was not getting any “no” votes in the Assembly. And then Member Maratsuchi had a meeting with Governor Newsom and suddenly decided to table the bill - apparently because there was some thought that Newsom would include some sort of increase or new targets in the 2020-2021 budget. Unfortunately that didn’t happen. While I was in Sacramento right after the release of the draft budget, I heard directly from Maratsuchi that he plans to revive the bill this year. This is something we have to encourage legislators across the state to support. California is the richest state in the richest country in the world. We have to do better. We are in the longest period of economic growth since WW2. And yet, most school districts are cutting their budgets. Still.

Which leads me to my next topic. SFUSD’s budget. You may have heard that we are facing a nearly $32 million shortfall THIS YEAR. I attended the last school board budget committee meeting to hear the presentation about this, what the implications are, and what the plan for handling the shortfall is. You can see the staff presentation here. I also posted about it on Facebook. The full school board will discuss the budget at their next Committee of the Whole meeting on February 4, as well as at the budget committee on February 5. I’m planning to attend both and then will write a post to give an update and commentary on what’s happening there. The other interesting thing happening right now is that the SFUSD is planning to update the Weighted Student Formula and how they do Multiple Tiered Systems of Support. More on that later.

Paying attention to the budget is important business. And yes, it can feel overwhelming and complicated. But we can learn about it little by little, until everyone is comfortable asking questions, giving public comment, advocating to their representatives, and educating others in their community. Join me in the land of budget nerds!

 

Note:

Prop 98, California’s minimum guarantee for schools.

Prop 98 was passed in 1988 as a state constitutional amendment. It was intended to be a set aside of about 40% of California’s budget that would establish a baseline for our schools. It was intended to be a floor. However, it is treated more like a ceiling, with our legislature “checking the box” and moving on to their next funding priority once they’ve put “enough” revenue in that bucket to meet that minimum threshold. During the recession it was even worse. There are some provisions in the Prop 98 formula that allow the state to defer payment to schools when the state’s revenue is in particularly bad shape. Also, the level that Prop 98 is funded in a given year is how the next year’s funding is determined. So sometimes we see the governor and legislature approve one-time expenses as opposed to ongoing expenses, so that they are not putting themselves on the hook for a higher commitment the following year. Sneaky, eh? Understandable, for sure, because there are a lot of other parts of the budget that are important, including areas that directly impact kids and families, like health and human services, housing, and more. But one-time expenses often restrict districts in that they can’t always use those funds in the way that would best serve their own students. You can read more about how Prop 98 works here and here.