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California Budget Crisis for 2004

December 2003 Developments

At the December 9th 2003 BOE Meeting the AUSD CFO presented the first interim budget report. Of note was the one time transfer of $1 million to general fund in order for AUSD to receive cerfication from the Alameda County of Education. Prior to Governor's budget being delivered on Janaury 9th, there were distrubing signs that Prop 98 funding and the entire education funding system were under review. In addition, the overwhelming deficit gave the Governor an opportunity to challenge the status quo in unforeseen ways. There were even indications that a funding mechanism called "weighted student funding" was being considered.

January Developments

Just prior to delivering his first State of the State on Janaury 6th, reports were surfacing of agreement with California's education community on an education deal.

Governor release his State Budget 2004-05. The initial budget spared K-12 education from additional cuts based on the deal with the education community (classified employees excluded) brokered prior to the release of the budget. It remains to be seen if the cities and counties will be able to absorb the $1.3 billion in additional proposed cuts.

A Cailfornia School Board Association's analysis of the K-12 budget reveals the following as of January 16th for AUSD:

Upside Potential

  • No additional cuts to the existing 2003/04 budget
  • New revenue for 2004/05 budget
  • Downside Potential

  • All budget deals and proposals assume passage of both Prop 57 and Prop 58
  • As of January 15th, PPIC survey shows only 35% approval rating for Prop 57 - Economic Recovery Bond Act.
  • The Governor and the Department of Finance have not released any information of what cuts or tax increases would be needed if Prop 57 or Prop 58 fails
  • Funding for new revenue for K-12 education is subject to Legislature approval which will face significant pressure from cities and counties to provide additional funding
  • Here is a Sacramento Bee editorial that explores the potential pitfalls of moving monies from categorical programs to local control of school districts
  • Here is a San Jose Mercury guest editorial written by Jack OConnell, State Superintendent of Public Instruction indicating the impact of budget woes on public education.
  • When the Legislature will debates the merits of taxing the most wealthy, they should consider this.
  • February Developments

    With bipartisan support and over $8 million, an intense campaign is launched to overcome initial negative reaction to Props 57 and 58..

    The Legislative Analyst Office reviews the proposed 2004/05 budget for education and offers a perspective regarding the current $15,000,000,000 deficit and ongoing multi-year billion dollars deficits.

    March Developments

    In a March 26th AP news story, Jackie Goldberg, leading Democrat on the Education Assembly warns of education reductions even though the Governor's budget proposed sparing education from further reductions.

    On March 2 California approve Props 57 (63% approval) and 58 (71% approval). As a result mid year cuts for 2003/04 have been avoided.

    May Developments

    Headlines from around the state continue to paint bleak picture local school districts.

    On May 13, Gov. Arnold Schwarzenegger released the 2004-05 May Revision to his January budget proposal. As expected, the elements of the agreement reached between the governor and the education community last December are reflected in the May Revision. Analysis from CSBA Governmental Relations

    June Developments

    It is relatively quiet in Sacramento as the Legislature and Governor attempt to complete the budget on time.

    July Developments

    In this editorial, Dan Walters highlights Jerry Brown's particpation in the tortured State budget process from Governor during Prop 13 to Mayor in 2004.

    With no budget approved by July 15th, Daniel Weintraub prepared this editorial on the missed opportunity for true finance reform.

    In order to pass a budget city and county want assurances that their revenue sources will be protected from future Legislative raids.

    In a July 9th article, looming problems with the State Teacher Retirement System could cost school districts in future years. In addition, there is a ticking time bomb that will ulitmately impact a significant number of cities and counties are already experiencing severe difficulty making their annual contributions to their respective pension funds. For example, Orange County is one billion dollars short in 2004. For Alameda city, their pension contribution increased by $5 million for 2004/05. Then there is the right out poltical payoff when unions contribute to improve their pension benefits.

    On July 21, CTA President Barbara Kerr issued this statement opposing any measure that provides stronger protections for local governments than those provided to the public school children of California.

    On July 26, the Governor and leading Democrats announced a budget has been agreed to. With the Democratic Convention underway, a vote on the budget was not expected until July 30th.

    On Satuday July 31st the Governor signed the budget. There were no surprises for K-12 education and as a result our recent negotiated settelements with our employee groups will be honored.

    November Developments

    EdSource issued a recap of 2004/05 School Finance Highlights detailing what the Legislature actually passed in July, 2004.

    The California Legislative Analyst Offices offers its outlook for the upcoming 2005/06 budget cycle.

    2003 State Budget Crisis

    2005 State Budget Crisis

    2003 AUSD Budget Issues

    2004 AUSD Budget Issues

    2005 AUSD Budget Issues

    Other Web Resources

    California Budget Project - 2004/05 Summary

    Governor's State Budget 2004-05

    Legislative Analyst Review of Education Budget

    Send mail to mikemcmahonausd@yahoo.com with questions or comments about this web site.
    Last modified: April 2, 2004

    Disclaimer: This website is the sole responsibility of Mike McMahon. It does not represent any official opinions, statement of facts or positions of the Alameda Unified School District. Its sole purpose is to disseminate information to interested individuals in the Alameda community.