Where to begin? Is the 2009 California Budget Crisis really a carryover from the 2008 budget crisis? Or is the 2009 budget crisis really the 2003 budget crisis only worse? Certainly a case can be made for a bit of both. Regardless, the 2009/10 State budget development will be painful. Since California is under significant pressure to generate cash flow, prior delaying tactics of the Legislature will not work this time. The process started with an early release of the Governor's budget along with usual. reactions to the Governors budget, The Governor delivered a very short State of the State speech focused on the budget crisis rather any vision for California. Reaction to the speech was not surprising.
In late December, the Governor's staff began using a number of social media tools to attract attention to budget deficit. Along with creating a Twitter account to "follow the Governor" they create a widget for people to share:
On December 31st, Governor Schwarzenegger took the unusual step of releasing his 2009/10 budget early.
In mid-February President Obama signed the $787 billion federal stimulus package. As a result, Alameda Unified School is projected to receive approximately $873,000 of Title 1 funding and $1,923, 000 for Special Education over the next 18 months.
Initial 2009/10 budget projections prepared by staff show ongoing revenues being reduced over $5 million a year BELOW 2007/08 levels. Here a graph of the impact on AUSD base limit revenues:
With the failure of the Legislature and the Governor to agree upon a revised budget to address the $24 billion deficit by June 30th, AUSD does not know what its revenues for 2008/09 will be. The Education Coalition sent a letter to the Legislature opposes any plans to suspend Prop 98. The California Buget Project published a review of the impact on California schools with the infusion of Federal stimulus monies. On July 21, a budget deal was announced. On July 28 the budget deal was signed.
P.S. While the 2009/10 budget was signed do not be surprised if the Governor's Janaury budget proposal for 2010/2011 includes a reduction in funding for 2009/10.
One of the biggest problem facing public edcuation is receiving at least stable funding from the State. The recent economic downturn which reduced State revenues by over $20 billion leads to dramatic reduction in public education funding. One solution is to rework the tax system to improve smooth out peaks and valleys. The Governor appointed a commission that delivered a report to overhaul California's tax system. Here is a CSBA's review of the recommendation in that report. CSBA issued an analysis of 2009/10 State Budget. The LAO issued a forecast of general fund revenues that will be used for bond debt.
Today's announcement represents the sixth budget I have proposed to the legislature this year. The fact that the legislature has failed to reach a compromise between Republicans and Democrats and take action during the last three special sessions is inexcusable.
My proposal today follows the same blueprint of my last two proposals which balance cuts with revenue proposals. And, I will continue to stand by my promise to Californians and only sign a budget that does everything we can as a state to reduce spending, create jobs and keep people in their homes. It's pretty clear from the legislative leaders that they are listening to what they want to hear in the governor's plan.
Reactions from the four legislative leaders:
Senate President Pro Tem Darrell Steinberg, in an interview with The Bee's Kevin Yamamura: If the administration's point today in putting forward a $41 billion solution is to try to impress upon us the urgency of the situation, it's not necessary. We feel the urgency of the situation, and that's why Speaker Bass and I and our staffs have been working diligently throughout the holidays to try to meet the administration halfway or more on their economic stimulus proposals. The fundamental problem, of course, with what the administration laid out today is that they don't bring a single Republican vote to pass the revenue elements of their proposal.
Democratic Asssembly Speaker Karen Bass, in a prepared statement: The governor's proposal released today has one positive message: he may finally be coming around and realizing he needs to approve the responsible package of budget solutions the legislature passed December 18.
That package includes $18 billion in real cuts and new revenues to head off the cash crisis and take a big swipe at the deficit. It includes $3 billion in new funds for transportation projects and $3 billion in expedited projects voters have already approved. That means we'd be creating 367,000 new jobs at a time California needs all the new jobs we can get.
So far, legislative leaders have compromised, but the governor has been holding up these budget solutions and these new jobs. We've compromised by easing environmental restrictions for transportation projects. We've compromised by expanding public private partnerships. We've compromised by putting half a billion dollars in state employee compensation on the table.
The governor's latest proposal assumes the cuts and revenues from the legislative budget solution package. That's progress. So let's get agreement on that package, keep California from going over the financial cliff, and then tackle the next round of hard challenges to find solutions to the rest of the deficit.
There are significant questions about what revenue the lottery can really bring in...there are concerns about whether California can manage the additional borrowing the governor is proposing ... and there are problems with cuts that seriously harm the students in our schools.
All those issues can be addressed as we move through the rest of the budget process. Right now the most important step is for the governor to recognize that all his demands aren't nearly important as the jobs we want created.
I appreciate the governor acknowledging today the necessity of the cuts and revenues the legislature approved and I hope the governor's first act of the new year will be to sign the responsible package we are putting before him.
Republican Assembly leader Mike Villines, in a prepared statement:
Republicans believe the Governor took important steps to address California's growing budget crisis by including budget reform and proposals to streamline government in his latest budget plan. We also join with him in making economic incentives and job creation a top budget priority.
We are also pleased to see the Governor has adopted the Republican's proposal to let voters choose to redirect billions in existing tax dollars to protect the priorities of working families in these tough budget times. However, Republicans cannot support the Governor's proposal to impose $14 billion in higher taxes on Californians. We believe this will devastate an economy already in turmoil and will hurt people who are struggling to make ends meet. Before we should even consider raising taxes on people, we need to take action to reduce government overspending starting with the elimination of all automatic increases, and enact an economic recovery plan to grow our economy and create jobs.
We cannot wait until the summer to enact responsible budget solutions for California. When the Legislature comes on Monday, we should vote immediately to pass the over $6 billion in common solutions that were in the special session budget plans put forth by Democrats, Republicans and the Governor. Taking urgent action to pass these reductions can get us through our immediate cash flow crisis. If we also take action now to get Californians back to work and to help stimulate our economy, we will be in a better position to address our state's budget problem for next year and the years ahead.
Senate Republican leader Dave Cogdill, in a prepared statement:
I applaud the Governor for including elements of the Republican budget plan into the proposal released today. During these tough economic times, it makes sense to go back to the voters and ask them to redirect money for their intended purposes, such as children's health and mental health programs, instead of sitting idly in the bank.
While Republicans have serious concerns about raising taxes during a recession, we appreciate that the Governor's proposal includes difficult, but necessary reductions to bring state spending closer in line with revenues.
Instead of simply asking taxpayers to send more of their hard-earned money to Sacramento we should focus on economic stimulus. Growing and protecting jobs in California has a direct relationship to a robust state treasury. Stimulating our economy should be the Legislature's top priority and it is unfortunate that the majority party has blocked these common-sense reforms to get more Californians back to work.
In addition, we need to ensure the state never again faces a deficit of this size by enacting long term structural reforms such as a spending cap and rainy day fund.
Republicans continue to stand ready to be a part of a responsible budget solution. The Governor's early release of his budget underscores the magnitude of the state's budget problems and the need for urgent action in addressing this crisis.
Schools Chief Jack O'Connell Issues Statement
SACRAMENTO - State Superintendent of Public Instruction Jack O'Connell today issued the following statement in response to the release of Governor Arnold Schwarzenegger's proposed January budget.
"Many families in California are already reeling from the national economic crisis. The cuts to schools and state services proposed in the Governor's budget will exacerbate the challenges faced by families in these tough economic times.
"I recognize that the magnitude of our state's economic crisis leaves the Governor and the Legislature with very few choices to balance our state budget. I applaud the Governor for calling for new revenues to be part of the solution to the budget shortfall. While cuts may have to be part of this equation, we have to recognize the real world consequences of these drastic steps.
"The Governor's proposal to reduce current year funding to public education by over $6 billion will be extremely difficult for school districts to absorb. I am particularly concerned about the proposal to defer $2.8 billion in payments due early in 2009 to the next fiscal year. This will create a cash flow crisis for school districts.
"I also worry about the impact that the cuts and the proposal to reduce the school year by five days will have on students and learning. Steady increases in achievement data show that students are rising to the challenge of our high expectations. But, offering less time in school runs contrary to our goal of closing the achievement gap and increasing proficiency for every student.
"Finally, while flexibility should never be regarded as a replacement for needed funding, I have heard from many school district superintendents in California that added flexibility is an important tool that will help them weather this fiscal crisis. Discretion over added flexibility must be considered carefully and I will work with the education community, the Governor and the Legislature to flesh this concept out in a way that protects students to the maximum extent possible."
Schwarzenegger seeks education cuts
By Jim Sanders, Sacramento Bee, January 2, 2009
California schools could eliminate a week of instruction and increase class sizes next year under Gov. Arnold Schwarzenegger's new plan for solving the state's budget crisis.
Vowing to give schools maximum flexibility to cut costs, the proposal unveiled Wednesday also would allow districts to eliminate one of two science courses required for high school graduation.
Schwarzenegger's plan would provide no teacher salary increases, eliminate a program providing subsidies to overhaul low-performing schools, and suspend participation in a program encouraging teachers to obtain national certification.
"It's got a lot of ugliness to it and something for everyone to hate," said Kevin Gordon, a veteran education lobbyist who said he sympathizes with Schwarzenegger's plight.
Students could see dramatic impacts from the governor's proposed $2.1 billion in education cuts this fiscal year and $3.1 billion from what schools anticipated in 2009-2010.
"What we've done is protect education to the extent possible," said Chief Deputy Director Ana Matosantos of the state Finance Department.
Matosantos said the state's plunging economy could have forced far deeper cuts in education than the ones Schwarzenegger proposed.
"We'll be working with our education partners and with schools to try to make this as workable as possible, but we recognize that difficult choices are required," she said.
Bob Wells, executive director of the Association of California School Administrators, said the possibility of cutting the school calendar from 180 days to 175 sends a terrible signal.
"It sort of sends the message that we're giving up," he said. "One of the contributing factors to what students learn is how much time they spend (in class)."
Debbie Bettencourt, deputy superintendent of the Folsom Cordova Unified School District, said cutting the calendar would only exacerbate the strain on schools to cover mandated instruction.
Bettencourt said a new round of budget cuts could force Folsom Cordova schools to eliminate its class-size reduction program.
Jack O'Connell, state superintendent of public instruction, said through a spokeswoman Wednesday that the proposed cuts could hurt families statewide but that he understands the governor's dilemma.
"Nobody in education wants less education," said Hilary McLean, O'Connell's spokeswoman. "That's the last thing anyone would propose. But how do you swallow billions of dollars in cuts in one fell swoop?"
O'Connell supports the governor's push to give school districts more flexibility in cutting programs. "It's flexibility - with a gun to our head," Wells said.
Schwarzenegger's budget would not require districts to slice five days of instruction, but it assumes that many would, and it projects $1.1 billion in savings next year.
To compensate for cutting the school calendar, some districts potentially could add more minutes of instruction per day.
California faces a projected shortfall of about $40 billion over the next 18 months.
The governor has proposed to ease the pain, in part, by accounting transfers involving state transportation funds and by deferring $2.8 billion in school payments from April to July. Wells said the state, by deferring payments for three months, would place an "awful" new burden on school districts to secure short-term loans.
"Where they would normally borrow the money is from counties and the counties are broke," Wells said.
Tri-City educators decry governor's proposal to shorten school year
By Linh Tat, Fremont Argus, January 12, 2009
KATHY CADENA-GARCIA, 8, a third-grader at Cabrillo Elementary School in Fremont, listens to instruction during class Friday. (MIKE LUCIA/STAFF ) Rather than shorten the academic year, if anything, the state should fund increased classroom time, some educators are saying, as they lash out against Gov. Arnold Schwarzenegger's latest proposal to reduce the school year by five days.
The proposal would save the state $1.1 billion annually, but many educators say Californians can ill afford to shortchange today's youths.
"To close the achievement gap and prepare our students for success in the competitive global economy, we should be talking about making the school year longer, not shorter," state Superintendent of Public Instruction Jack O'Connell said Friday.
Agreeing with O'Connell, Fremont Unified's interim Superintendent Milt Werner who will hold a community meeting Thursday to discuss possible budget cuts called any plan to lessen instructional time "educationally unsound."
"Many students need all the hours we personally have available for instruction. Cutting back on instructional time is something that needs to be put aside. ... I would wholeheartedly support more hours, more days" for instruction, he said.
By law, schools in California must be in session at least 175 days, but the majority of districts offer 180 days of instruction, taking advantage of additional state money available to them if they agree to stretch out the school year.
This arrangement in effect the past 25 years may end, though, if the state Legislature approves the governor's proposal.
California Department of Education spokeswoman Hilary McLean said it's unclear if shortening the academic calendar would mean a constitutional amendment to allow districts already offering the minimum 175 days of school to drop to 170 days. Only eight states offer fewer than 180 days of instruction, and none offer less than 173 days, according to 2002 figures provided by O'Connell's office.
Newark teachers union President Phyllis Grenier said that, between the lack of school funding and ever-increasing demands to raise academic standards, it's become "harder and harder to teach."
"We already have too much to teach in the time that we have to teach it," she said.
Instead of shortening the number of days students receive instruction in class, school leaders should consider eliminating testing days for students, Grenier said.
Another option would be to eliminate staff development days, which amount to three days per year, she added.
"At least that won't affect the students," she said.
New Haven schools chief Kari McVeigh, meanwhile, is concerned how the governor's proposal might hinder the district's goal of having 85 percent of students test proficient in English and math by 2011.
"Kids who are not proficient currently, given enough time, can be brought to proficient levels. "... We have to have the ability to give kids enough time to do the learning," she said.
The new superintendent also is worried how shortening the academic year might affect school districts' relationships with their employee groups.
The New Haven district has multiyear contracts with teachers and classified employees, which specify that they will be paid for 180 days of work. Even if the state were to reduce funding to the district, "we're obligated to honor those contracts," McVeigh said.
"We can't arbitrarily break teachers' contracts, nor should we think that's a good thing," she added.
Lt. Governor Garamendi, Chief Justice George, President pro Tem Steinberg, Speaker Bass, Senate Republican Leader Cogdill, Assembly Republican Leader Villines, Members of the legislature, ladies and gentlemen, we meet in times of great hope for our nation.
Although we hear the drumbeat of news about bailouts, bankruptcies and Ponzi schemes, the nation with great anticipation is also awaiting the inauguration of a new president.
Our nation should be proud of what President-elect Obama's election says to the world about American openness and renewal.
President Reagan used to tell about the letter he got from a man who said that you can go to live in Turkey, but you can't become a Turk. You can go to live in Japan, but you cannot become Japanese. And he went through other countries.
"But," the man said, "anyone from any corner of the world can come to America and become an American."
And now, we know that any American child, no matter what corner of the world his father or mother comes from, can even become President of the United States.
What a wonderful national story for us.
This nation rightfully feels the hope of change.
Californians, of course, desire change here in their own state as well.
Yet they have doubts if that is possible.
For months, in the face of a crisis, we have been unable to reach agreement on the largest budget deficit in our history.
We are in our third special session and we've declared a fiscal emergency - and every day that goes by, makes the budget problem that much harder to solve.
As a result of all this, California, the eighth largest economy in the world, faces insolvency within weeks.
The legislature is currently in the midst of serious and good faith negotiations to resolve the crisis, negotiations that are being conducted in the knowledge we have no alternative but to find agreement.
The importance of the negotiation's success goes far beyond the economic and human impact.
People are asking if California is governable.
They wonder about the need for a constitutional convention.
They don't understand how we could have let political dysfunction paralyze our state for so long.
In recent years, they have seen more gridlock in Sacramento than on our roads, if such a thing is possible.
I will not give the traditional State of the State address today, because the reality is that our state is incapacitated until we resolve the budget crisis.
The truth is that California is in a state of emergency.
Addressing this emergency is the first and greatest thing we must do for the people.
The 42 billion dollar deficit is a rock upon our chest and we cannot breathe until we get it off.
It doesn't make any sense to talk about education, infrastructure, water, health care reform and all these things when we have this huge budget deficit.
I will talk about my vision for all of these things... and more... as soon as we get the budget done.
So, no, I did not come today to deliver the normal list of accomplishments and proposals.
I came to encourage this body to continue the hard work you are doing behind closed doors.
There is a context and a history to the negotiations that are underway.
It is not that California is ungovernable. It's that for too long we have been split by ideology.
Conan's sword could not have cleaved our political system in two as cleanly as our own political parties have done.
Over time, ours has become a system where rigid ideology has been rewarded and pragmatic compromise has been punished.
And where has this led?
I think you would agree that in recent years California's legislature has been engaged in civil war.
Meanwhile, the needs of the people became secondary.
Our citizens do not believe that we in government are in touch with their needs.
These needs are not unreasonable.
At the end of the day, most people do not require a great deal from their government.
They expect the fundamentals.
They want to live in safety.
They want a good education for their children.
They want jobs.
They want to breathe clean air.
They want water when they turn on the faucet and electricity when they turn on the switch.
And they want these things delivered efficiently and economically.
One of the reasonable expectations the public has of government is that it will produce a sound and balanced budget.
That is what the legislative leaders are struggling to do right now.
There is no course left open to us but this: to work together, to sacrifice together, to think of the common good - not our individual good.
No one wants to take money from our gang-fighting programs or from Medi-Cal or from education.
No one wants to pay more in taxes or fees.
But each of us has to give up something because our country is in an economic crisis and our state simply doesn't have the money.
In December, we even had to suspend funding that affects 2,000 infrastructure projects that were already underway.
So, now, the bulldozers are silent. The nail guns are still. The cement trucks are parked. This disruption has stopped work on levees, schools, roads, everything.
It has thrown thousands and thousands of people out of work at a time when our unemployment rate is rising.
How could we let something like that happen?
I know that everyone in this room wants to hear again the sound of construction.
No one wants unemployment checks replacing paychecks.
So, I am encouraged that meaningful negotiations are underway. And, as difficult as the budget will be, good things can come out of it.
Because, in spite of the budget crisis, when we have worked together in the past, we have passed measures that moved this state - and even the nation - forward.
When a budget agreement is reached, when some of the raw emotions have passed, I will send to the legislature the package of legislative goals and proposals that a governor traditionally sends.
These proposals are sitting on my desk. Let me tell you, I have big plans.
They include action on the economy, on water, environment, education, health care reform, government efficiency and reform, job creation.
But, our first order of business is to solve the budget crisis.
And I have an idea going forward.
As you know, in the last 20 years of budgeting, only four budgets have been on time.
So, if you don't mind, let me make a little suggestion.
We should make a commitment that legislators - and the governor, too - lose per diem expenses and our paychecks, for every day the budget goes past the constitutional deadline of June 15th.
You have to admit it is a brilliant idea.
I mean, if you call a taxi and the taxi doesn't come, you don't pay the driver.
If the people's work is not getting done, the people's representatives should not get paid either.
That is common sense in the real world.
And I will send you some other reforms, too.
Let me close by saying something about the fires of 2008.
At one point, I got a phone call that we had 875 wildfires burning all at the same time.
I said to myself, how do we deal with this?
The next morning I get a call, "Governor, there are now 2,014 fires burning all at the same time."
The largest number on record.
Imagine, 2,000 fires, a huge challenge and every one of those fires was put out.
You know why? Because we have the best trained, the most selfless, the toughest firefighters in the nation.
Thirteen of whom lost their lives.
They gave their lives for this state.
Ladies and gentlemen, the courageous examples of those firefighters should not be lost on us.
In our own way, we, too, must show courage in serving the public.
Ladies and gentlemen, let this be a year of political courage.
Let us be courageous for the people.
Let us be courageous for the common good of California.
Let us resolve the budget crisis, so that we can get on with the people's work.
Thank you.
