Prop. 98 Could Drive State’s Budget Shortfall Even Higher

Share via

The prospect of a budget shortfall of $20 billion or more grew more likely Tuesday with the release of new federal data that suggest the state will owe California schools $830 million more than Gov. Gray Davis has assumed.

The need to increase school funding in tight fiscal times is related to Proposition 98, the 1988 ballot measure that earmarks 35% of the state general fund for public schools.

New data released by the federal government showing a decline in individual personal income levels--a factor used to calculate the amount schools receive from the state under Proposition 98--may force the state to increase school spending in the 2002-03 fiscal year by $830 million more than Davis estimated.


The governor set aside $31.4 billion in general funds for schools in his January spending plan, which he is in the process of revising amid a backdrop of diminishing state revenues. As of Tuesday, personal income and corporate tax receipts for April were down $3 billion from the nearly $8 billion collected through the same date last year.

Dwindling tax receipts combined with an increase in refund claims and rising expenses apparently will result in a budget shortfall of $20billion or more, up from the $17.5-billion shortfall previously forecast. So far, state officials have compensated for about $4.3 billion of that amount through spending cuts, budget changes and by refinancing debt.

In a separate school-related matter, the California teacher’s union is amending a closely watched bill that would give teachers bargaining rights for decisions over textbooks and other curriculum issues. School administrators on Tuesday reiterated their opposition to the bill.

School administrators and teachers, concerned about Proposition 98’s ramifications, also called on Davis and lawmakers to consider opposing approaches toward education spending. Both groups welcome the notion of more education funding, but school administrators say they are open to a one-year suspension of Proposition 98 to help the state deal with its growing budget gap.

A suspension, which would enable state officials to temporarily reduce the amount the state must pay schools, is preferable to accounting changes that might leave schools with less money in the future, the administrators say.

“The state is in a position that requires us to be sensitive to what is now the biggest budget deficit in state history,” said Kevin Gordon, executive director of the California Assn. of School Business Officials. “Our goal is to figure out a way to honor Proposition 98 without being a piggy about it.”


But Wayne Johnson, president of the California Teachers Assn., said his group will fight efforts to suspend Proposition 98.

“For school administrators not to stand up and defend the institution they supposedly administer is baffling,” Johnson said. “Particularly when schools are underfunded to begin with.”

Davis warned last week that he may not be able to meet the funding level for schools required by Proposition 98.

Robert Turnage of the state’s nonpartisan legislative analyst’s office advised lawmakers Tuesday that they could address growing Proposition 98 requirements levels by suspending the funding formula, cutting current-year school spending or tapping an account that holds unspent Proposition 98 funds to the tune of $535 million.

The state could also count certain child-care expenses as part of the schools’ funding to free up another $770 million--an option opposed by school administrators. An $836-million federal funding boost for California schools could also help soften the blow to California coffers if state officials are able to meet federal rules.

The two groups also squared off Tuesday over amendments to the collective bargaining bill being sought by the teacher’s association.


The bill is set for a hearing this evening in the Assembly Education Committee. Davis came out against the bill, AB 2160, sponsored by Assemblywoman Jackie Goldberg (D-Los Angeles), saying he favors local school districts considering teacher input outside of the collective bargaining process.

In an apparent nod to Davis, the California Teachers Assn. floated amendments Tuesday that would establish “academic partnerships” consisting of parents, teachers and school board members.

Partnership members would have three months to agree on items--ranging from textbook selection to other curriculum issues--covered in AB 2160. If they failed, the items would be kicked over to the collective bargaining process.

“This would set up a process to try and deal with these issues without collective bargaining,” Johnson said. “But if you can’t do it, there has to be some teeth to make it happen.”

Gordon, of the school administrators group, said the proposal lacked credibility.

“All the union has to do is stall an issue for three months and then it gets to be bargained, which is exactly what they wanted to begin with,” Gordon said.

Johnson brushed aside that suggestion, noting the negotiations would be done in public.

“If teachers were being arbitrary and capricious, to drag it into collective bargaining, I think that would backfire,” he said.