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California Budget Crisis for 2005December 2004 DevelopmentsAssembly Leader Fabian Nunez and Senate Leader Don Perata promise to work with the Governor in 2005. With revenues coming in approximately $2 billion above projections, California School Boards Assocation(CSBA) kicked off a campaign to request an "honoring of the deal" made in January, 2004. This December 6th Sacramento Bee article provides additional details. Two weeks the Governor has not responded to calls for funding education in current 2004/05 fiscal year. This Decemeber 16th AP article covers the current postions of the Governor and Legislature. Trustees of the State Teacher Retirements system (STRS) met to discuss the projected $23 billion shortfall if no changes are made in the next three decades. January 2005 DevelopmentsOn the eve of State of the State address on January 5, the Governor and the Legislature are posturing. The Governor wants to reform government. Senate Leader Don Perata is mentioned in January 5th San Francisco article as follows: Senate President Pro Tem Don Perata, D-Oakland, was just as blunt, saying he will challenge the governor to call a special session to deal with education, noting that as many as 30 school districts may be bankrupt before the end of the year. Here is the exact text of Governor Schwarzenegger's State of the State speech related to education as well as the entire text of the speech. In this January 6th Sacramento Bee news article, the Governor's bold agenda to reform goverment is recapped. Education comes under attack both on a funding front and how teachers would be paid. Reaction for the California School Board Assocation and the California Teachers Association President are also documented. In this January 6th Los Angeles Times news article, additional details about the proposed impact of the Governor's proposal on education are revealed. In this January 6th Los Angeles Times news article, details of the Governor's proposal to replace public pensions with 401K style retirement plans. This January 7th Oakland Tribune article reveals details of Wednesday meeting between the administration and education officials about the end of the deal struck last year. As expected the release of Governor's budget on January 10th elicits a wide spectrum of responses from the Governnor and others. The Governor's budget proposes shifting payments into the teacher retirement system from the State to local school districts or teachers. When are cuts to K-12 education actually increases? Well it depends on what side of fence you are on. The education community states that Prop 98 guarantees 40% of general revenues to education. Therefore, any budget where that 40% is not attained, they view that gap as a "cut". From the Governor's perspective, he is increasing the total dollars to K-12 and is doing the best he can given the $22 billion deficit he inherited. Here is an Sacramento Bee editorial on the Governor's proposal on merit pay for teachers. This January 14th San Diego Union article covers the possible initiatives being prepared to fund schools. Changes to Prop 13, expenditures limits and parcel taxes passage are among the areas being looked at. In the first of many media spots, the California Teachers Association began airing this radio spot one week after the Governor's budget was released. In this San Francisco Chronicle OpEd piece a high school teacher comments on California's financing of public education. But, of course there is another side: LA Daily News OpEd piece by State Senator Tom McClintock presented his take on public education spending. In a study published by the Legislative Analyst Office, the effects of revenue volatility on budgeting/funding is examined. This Sacramento Bee Editorial explains the trap the Governor set for himself when made "the deal" with the education community. This Sacramento Bee Editorial compares Califoria's pension system to other states. This Sacramento Bee Editorial examines how Oregon overcame its pension problems. This Sacramento Bee Editorial explores of the reasons for returning the running schools to the local level. February 2005 DevelopmentsResults from the Public Policy Institute of California survey shows the Governor's support fading and desire by the public fix the state's fiscal problems at the ballot box. This Sacramento Bee Editorial explores of the reasons why accountants are the only ones who understand school finances for California. In addition, the Legislative Analyst Offices review school district finances issues for 2005/06. In the second of many media spots, the California Teachers Association is sponsoring this radio spot from the Education Coalition. The Legislative Analyst's Office issues a Prop 98 Primer to remove some of the mystery surrounding the claims about the spending effects of Prop 98 on the state budget. While the war of words escalates surrounding funding of public education, the first signs of compromise emerges as Senator Perata acknowledges the effects of Prop 98 need to be examined. Governor Schwarzenegger starts his battle to reform the State's pension system in San Diego where a $1.4 billion pension debt eats away at government services. Senator Perata delivers a speech at the Sacramento Press Club calling for a return of local control to school districts. Assembly Member Wilma Chan introduced legislation (AB 659) to extend economic reserve requirements of 1.5% for the 2005-06 and 2006-07 fiscal years. California Teachers Association has created materials to protest the Governor's proposals for education in 2005. CTA Let the Governor Know. In response to the California Teachers Association radio ads, Governor Schwarzenegger's supporters have launched their own ads. Go here and click on radio ad to listen to their side of the story. In response to the Governor Schwarzenegger's 2005 Reform Proposals related to public employees pensions, the Legislative Analyst Office prepared an detailed analysis of public employees pensions. This San Francisco Chronicle article explains where property taxes go and their impact financing schools. The challenges related public employees pension plans are not unique to California. In this National School Board Association article, the impacts of pensions plans on state education budgets is examined. March 2005 DevelopmentsGovernor Schwarzenegger's supporters turned up the heat as they announced plans for ballot initiatives related to pension reform and teacher pay. This Sacramento Bee article details what the group plans to do. Governor Schwarzenegger's announcement of plans for ballot initiatives is discussed in this Sacramento Bee editorial. The California Teachers Association fires a warning shot toward Senator Perata for his remarks about reforming Prop 98. Can one person make a difference? Well, a Concord mom has decided to try. Sherry Williams has begun a communications campaign that had targeted every school district in the State. For details go here. Ten labor unions have joined forces as described in this March 9th Los Angeles Daily New article to fight the reforms proposals of the Governor. The new political game is town is Initiative Chicken. Read more about this exciting new game in this March 9th Sacramento Bee Editorial. On March 15th, CTA launches another round of television and radio ads attacking the Governor's lack of support for education. While not directly related to the budget crisis, reform of California public education has two political foes agreeing. Governor Schwarzenegger and State Senate Leader Perata hold very similar views on changing the governance of public schools. This Sacramento Bee Editorial review how State Senate leader Perata's and the Governor agree. Education initiatives start to circulate. This Sacramento Bee Editorial explains the good and bad features of Prop 98. CALPERS takes a proactive step in suggesting changes to its pension plan that would reduce the swings in expenditures for public agencies. CTA announces a proposal to be voted on at State Convention in early April to raise dues in order to generate $54 million to fight the Governor's initiatives. April 2005 DevelopmentsNext Ten is inviting Californians to take the "California Budget Challenge." The California Budget Challenge lets you roll up your sleeves and create your own state budget for the next 10 years. You call the shots on how much to give to schools, health care, prisons and other areas and also on how to pay for these programs. The last days of the tax amensty program produced a $2 Billion Windfall in unexpected revenues. The question is how much of it will the State keep and when the moniess will be made available to the State. The latest ad from CTA shows a teacher and parent discussing how Governor Schwarenegger is failing to keep his promises to the education community. While the focus is on the short term implications of the 2005/06 budget and Prop 98 funding levels, the Governor and State Superintendent have formed alternative panels to develop a long range view for California public education. In anticipation of the release of the Governor's Revised Budget, Senator Perata indicated that funding for education must increase even if it means raising taxes. In this April 27th Sacramento Bee editorial, the Governor's bold agenda to reform goverment is assessed three months after its introduction. May 2005 DevelopmentsIn anticipation of the release of the Governor's Revised Budget on May 13th, this May 4th Sacramento Bee Editorial examines the unwillingness of Sacramento to deal with mounting debt created by the dot com bubble bursting over 5 years ago. The Sacramento Bee News Article covers Governor's release of the May Revise of the 2005/06 Budget. In addition reaction from Senator Perata, the State Superintendent of Education, the Education Coalition and the Legislative Analyst Office is also captured. Move, counter move. After release of the May Revise, the Governor and Legislature make their initial moves in the 2005/06 budget showdown. This May 17th Sacramento Bee Opinion Piece explains how to justify the November Special Election. Have the voters decide on the level of taxes they want to support state government. The Governor claims the unions are lying about "the deal" made last year regarding education funding. Reaction and commentary are included. CalPERS reduces its contribution to the pension fund. Merit pay for legislators? Well not exactly. Despite poor performance with missed budget deadlines and deficit spending galore, the independent commission recommended 12% pay raise for the legislature. Salaries will exceed $100,000. Connecting the dots. Is the Governor using the threat of a special election to attack Prop 98 and teacher's union, the leverage he needs for a compromise on this year's budget? June 2005 DevelopmentsThe Democrats unveiled their own plan to fund public education. The political end game for budget negotiations and the potential special election starts as the more initiatives qualify for the ballot box. With announcement of a special electione expected, the CTA leadership approved increasing dues to raise $50+ million for campaigning against the Governor's reform agenda. Holding true to his pledge to reform government in Sacramento, Governor Schwarzenegger calls a Special Election for November 8th. Secret deals. Override exsiting contracts. Well that is what is happening when a ruling that allows correctional officers to use unlimited hours of release time for union purposes despite contractual limits. Against the backdrop of the Special Election and pending budget negotitaions, this Los Angeles Times article covered what five education experts thought about the state of education funding. With the Democrats supporting the Governor's budget, the Republicans withhold their support on the first vote on passing the budget. July 2005 DevelopmentsOn July 11th, the Governor signed the 2005/06 budget. News accounts attributed that the politics of the Special Election led to the Democrats choosing to fight the initiatives instead fighting for funding of public eduation. The Los Angeles Times issues a primer on Proposition 75, related to teacher tenure.
Even though the Budget has been signed, the California Teachers Association filed a lawsuit over the broken promise from the 2004/05 budget. This Los Angeles Daily News article details the ever growing $100 billion pension liability November 2005 DevelopmentsThe voters reject the Governor's reform measures in the 2005 Special Election. The LAO's new long-term forecast for the state's fiscal picture is here. The bottom line is that her forecast could not be any more favorable for the Schwarzenegger Administration. Revenues are up, significantly, and expenditures are running a bit below forecast. Hill projects that the state will end the current fiscal year with a positive balance of about $5.2 billion. That's $1.3 billion that was already budgeted as a reserve, plus about $1 billion more than had been assumed in higher revenues from prior years, and $2.9 billion in higher revenues in the current year. She also projects that the ongoing, structural shortfall, which hasn't gone away, will shrink to $4 billion in the 2006-07 budget year, for which the governor will propose a budget in January. 2003 State Budget Crisis Other Web ResourcesCA Department of Finance 2005-06 Governor's Budget Home Page Send mail to mikemcmahonausd@yahoo.com with questions or comments about this web site.
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