The initial news reports show a mixed bag for K-12 education. While the May Revise increases spending to meet Prop 98, the May Revise includes a proposal to borrow $15 billion against future lottery earnings. The net impact to schools is that future lottery earnings would be capped. The lottery proposal (placed on the ballot by the Legislature) would require voter approval. Failing voter approval, a sales tax of one cent for three years would be triggered (Note: Republcians can block the automatice provision for a sales tax increase). Ardella Dailey issued this statement in reaction to the May Revise. As of May 15, the too many variables for Sacramento to resolve and therefore passage of Measure H is the only sure way to guarantee Alameda maintains its current level of edcuational programs.
Governor's budget plan would divert gas taxes to help close gap
Schwarzenegger unveils his spending plan. It would include deeper healthcare cuts to address California's $17.2-billion budget shortfall
By Jordan Rau, Los Angeles Times, May 14, 2008
SACRAMENTO -- More than $828 million in gas tax money that is supposed to go to public transportation projects would be diverted to help bail the state out of its financial problems under a new spending plan“Gov. Arnold Schwarzenegger”Gov. Arnold Schwarzenegger unveiled this afternoon.
To close a $17.2-billion budget shortfall, Schwarzenegger also will propose even deeper cuts to healthcare for the infirm and for legal immigrants, as well as for welfare recipients, than he did in his initial budget plan in January.
His revised budget would:
- Restrict full in-home supportive services for seniors and people with disabilities, and cut the pay of the service workers to the minimum wage. Only the most severely impaired would get aides for household tasks, although in-home medical assistance would continue.
- Eliminate California's $111-million program of healthcare for legal immigrants, and pare back the healthcare provided to impoverished people who have been in the country for five years or fewer. That would save $87 million.
- Eliminate cost-of-living increases for disabled people in the supplemental security income program, part of the Social Security system, with the state keeping $109 million the federal government is providing to California.
- Cut welfare grants under the Cal-Works program by 5% instead of providing a cost-of-living increase, saving $187 million.
The gas taxes Schwarzenegger wants to keep are a product of the higher oil prices Californians have been paying at the pump. The money is intended to improve public transportation, but the state in the past has rerouted the funds for such things as bond payments and school transportation for students.
In his new budget plan, which would need approval from the Legislature to be enacted, Schwarzenegger would ask voters for approval to borrow $15 billion over three years against future profits from the state lottery. The governor wants lawmakers to agree that if the electorate were to reject that idea in November, the state's sales tax would automatically rise by 1 percentage point. The sales tax could remain in effect for as long as three years unless the state's financial balance was restored.
Schwarzenegger backed away from his original proposal to close 48 state parks and let tens of thousands of low-risk prisoners out early. Park users pay fee increases of $1 or $2 instead.
And he is proposing to increase school funding by $1.8 billion, enough to meet the minimum required under law.
Healthcare advocates castigated Schwarzenegger for targeting medical care at the same time he was yielding to groups with more political clout such as teachers unions, park users and anti-crime activists. Some said it was particularly wrong given that Schwarzenegger has made expanding healthcare a priority of his second term.
"We had started the year working with the governor and we all had high hopes of passing healthcare reform and increasing access, and it's a surprise to us that this is the first item that would be on the chopping block," said Annelle Grajeda, president of the California state council of the Service Employees International Union, which helped Schwarzenegger get his healthcare plan through the state Assembly last year, only to see it defeated in the California Senate.
Michael Herald, legislative advocate for the Western Center on Law and Poverty, called the proposed cuts "callous and cynical."
"The governor has declared war on the poor today," Herald said
Q&A: How the lottery proposal would work
By Dan Smith, Sacramento Bee, May 15, 2008
Gov. Arnold Schwarzenegger is proposing to borrow against lottery proceeds to help address the state's budget problems. Here's a quick look at the plan:
Q: How would the borrowing work?
A: The state would seek investors to lend $15 billion secured by future earnings from lottery games the state hopes would be improved and more lucrative. Investors would be repaid from lottery funds over 32 years.
Q: What would the state do with the money?
A: It would go into a rainy day fund the governor hopes to create in a separate ballot measure. About $5.1 billion could be used to help balance the budget for the fiscal year beginning July 1. The rest could be used over the next two years.
Q: How would the games change?
A: The games themselves probably wouldn't change much, but the lottery's current rules would be changed to allow broader promotion, bigger and more frequent prize payouts and other incentives to create more player interest.
Q: What would happen to the money for schools?
A: Under the proposal, the amount schools get would be capped at what they have received in recent years – about $1.2 billion a year of the $3.3 billion in total lottery revenues. The $1.2 billion is not guaranteed, however, as the investors must be paid first from lottery proceeds under the deal. Finance Director Mike Genest acknowledged the schools would have "some risk, but we don't think it's a practical problem."
As for the $1.2 billion-a-year cap, Genest said, "Lottery revenues aren't growing much anyway so (schools) aren't giving up much there. The lottery has never been a boon to schools."
Q: Do I have to vote on it?
A: Yes. Voters will have to approve a November ballot measure to change the state constitution, which currently says 34 percent of lottery revenues – the amount left after paying prizes and overhead – must go to schools.
Q: What would happen if the ballot measure didn't pass?
A: A temporary 1-cent sales tax increase would be triggered in 2009 for up to three years to raise the $15 billion for the rainy day fund.
Q: What would happen after three years?
A: The tax would end. The proposal assumes the economy will have improved enough by then to feed the rainy day fund in good years, as Schwarzenegger has proposed in his budget reform measure. After the tax ends, taxpayers would get a full rebate using a formula yet to be determined.
Q: What if the state couldn't sell the bonds?
A: The administration says it's confident there will be a market on Wall Street for them. Similar bonds have been sold by the state and counties since 2000 that allow governments to raise money now and pay it back with future revenues it collects from the huge settlement between states and the tobacco industry.
Q: How would the "rainy day" fund be used?
A: The administration is still negotiating and may have specifics by next week. But the basic idea is twofold: The governor would have more power to make midyear cuts, and the rainy day fund would accumulate money in good years for use in bad years to even out the ups and downs of the economy. Because the state is experiencing a down period now, the fund would be jump-started with the $15 billion from the lottery transaction.
Q: Who will oppose this on the ballot?
A: It's too early to say for sure, but Indian tribes with casinos may not be thrilled with increased competition from the lottery, and teachers unions fear the budget reform measure would put future school funding at risk. Both groups have a history of spending whatever it takes to have their way on the ballot.
K-12 education funding cut by 8.8%
By Nanette Asimov, San Francisco Chronicle, May 15, 2008
(05-14) 19:18 PDT -- PROPOSAL: Funding would drop by 8.8 percent. The Proposition 98 funding guarantee for schools would remain intact but would be insufficient to make up a $4 billion shortfall. So the governor would cut programs and withhold a cost-of-living increase. Per-pupil funding would rise from $8,521 to $8,610. He is also proposing a ballot measure to end public education's guaranteed 35 percent share of state lottery revenue and freeze its future share at the dollar amount it received this year - $1.2 billion.
WHAT IT MEANS TO YOU: Although fewer teachers would lose their jobs, schools and programs would not escape deep cuts. Elementary class sizes would swell, and many other programs - including class-size reduction, classes for academically gifted students, adult education and professional development for teachers - would be cut. Special education would not be cut, as had been proposed in January. Districts would receive new flexibility in managing their budgets. This would give them access to funds previously locked up in mandated reserves, or capped at certain levels. Educators have not yet analyzed the impact of a lottery ballot measure.
REACTION: Exhausted after months of rallies and protests, educators expressed relief that schools might be shielded from the worst. But they aren't happy. "The failure to fund a cost-of-living adjustment amounts to a serious budget cut," said state schools chief Jack O'Connell. Scott Plotkin, executive director of the California School Boards Association, said: "The bottom line is that schools statewide will still be woefully underfunded."
