California Budget Crisis for 2012

The 2012 Budget crisis has its roots in the 2003 Budget crisis. Or is the 2008 budget crisis? No matter. The State of California has had budget for close to a decade and as a result funding for public education has suffered. With the election of a Democratic Governor and the passage of Prop 25 the budget dynamic for 2011 took a new turn. With the Republicans unable to hold the budget hostage, an on time budget was passed. The Governor took a tough approach and made significant reductions and began realigning services from the State to the counties. Unfortunately, there was not enough revenues to pay the counties so the Governor "borrowed" $2 billion from the K-14 Prop 98 guarantee, which is the subject of lawsuit. 

The Governor released his 2012/13 budget a few days when the budget was mistakenly posted on a governmental website. The major cornerstone of the budget relies passage of a $7 billion tax increase scheduled for the November, 2012 election. If the initiative fails, the K-14 education would see "trigger cuts" of close to $5 billion start in January, 2013. In addition, the Governor is proposing significant changes to how education funds can be used. The Governor is proposing eliminating many of the mandates and eventually moving to "weighted student formula". The devil will be in the details and will emerge over the coming months.

May Update - Since January, the Governor had to pull his initial tax initiative and combine it with a populist "millionaire's tax". Molly Munger invested millions of her own money to get an additional tax initiative for school funding on the November ballot. As tax receipts lagged the Governor's January projections, the $9 billion deficit has grown to $16 billion. The lawsuit challenging the "borrowing" of Prop 98 had an initial ruling in favor of the State.

June Update - With the new majority vote needed for budget approval, a State budget is approved on time for the second year in a row. There is no real surprises in the signed budget as the funding levels for K-14 education will be determined by the outcome of the November election. In a sign of things to come, Molly Munger filed a lawsuit challenging the Legislature ability to create a ballot numbering preference for constitutional amendment on the ballot. After judge ruled in favor of the Legislature, the Secretary of State assigned numbers to the ten initiatives on the November ballot.

November Update - All's well that ends well. Prop 30 the Governor's initiative to reshuffle state finances to fix the funding of realignment started in 2011 was passed. As a result, K-14 education funding was not reduced. However, it was not fixed or increased. The Prop 98 guarantee continues to be manipulated and until the economy recovers K-14 funding languish below 2008-09 levels.

Background Documents

• PPIC's Review of Revised Weighted Student Formula May, 2012
  
• Department of Finance District by District Impact of Weighted Student Formula  May, 2012
  
• Legislative Analyst Office Analysis of May Revise - May, 2012
  
• Legislative Analyst Office Analysis of Weighted Student Formula in Governor's May Revise - May, 2012
  
• Legislative Analyst Office Analysis of School District Finances - May, 2012
  
• Legislative Analyst Office Review of the Teacher Layoff Process - March, 2012
• California Budget Project Analysis of the Three Education Tax Initiatives - March, 2012
  
• California Department of Education Letter on Governor's Budget - February, 2012
  
• District by District Impact of Implementing Weighted Student Formula - February, 2012
  
• Department of Finance Paper on Weighted Student Formula - February, 2012
• Educate Our State Analysis of Three Tax Initiatives - February, 2012
• Legislative Analyst Office Review of the Impact of Closing Redevelopment Agencies - February, 2012
• Legislative Analyst Office Review of Prop 98 and Education Implications of Governor's Budget - February, 2012
  
• California School Board Association Review of Governor's Proposed Budget - January, 2012
  
• California School Board Association Economic Forecast Presentation - January, 2012
  
• Legislative Analyst Office Review of Governor's Proposed Budget - January, 2012
  
• Community College League of California Review of Governor's Proposed Budget - January, 2012
  
• California State Association of Counties Review of Governor's Proposed Budget - January, 2012
• School Services of California Review of Governor's Proposed Budget - January, 2012