SACRAMENTO -- Over the first six months of this year, state revenues are about $4.5 billion higher than the governor's January projections. And complicated budget formulas could direct nearly all of that money to public schools and community colleges.
Other interests might even be asked to tighten their belts further despite the windfall.
Most folks with a passing knowledge of the budget are aware that under Proposition 98, a school funding measure passed by voters in 1988, schools would be entitled to roughly 40% of the new revenue -- about $1.8 billion. But this year, it is more complicated than that.
A lesser known measure, passed by voters in 1990, could guarantee even more of the money goes to public education this year. The measure, Proposition 111, was passed by voters in the wake of Proposition 98 as a way to hedge against an economic slowdown. It allows the state, in lean economic years, to temporarily reduce payments to schools.
But there is a catch. In boom years -- when revenues grow faster than personal income -- the state is on the hook to give new money to schools. The state currently owes schools about $8 billion.
With the tax receipts now counted, it appears the growth of revenue has, indeed, significantly outpaced the growth of incomes. That leaves schools positioned to take nearly all of the $4.5 billion. The first $1.8 billion is owed them under Proposition 98. They would get an additional $2.3 billion under Proposition 111.
"When you borrow money, you've got to pay it back," said John Mockler, the author of Proposition 98 who has served as an informal adviser to Brown on education policy.
But there's more.
When voters last year approved Brown's plan to increase income taxes on those earning more than $250,000, Proposition 30, it was retroactive to January 2012. So state officials are now reopening the 2011-12 and 2012-13 budgets to revise the money owed to schools.
Those revisions could require lawmakers to divert yet more money to education this year, sucking up what's left of the $4.5 billion surplus.