Capitol Hill
Legislative Update: Gov. Newsom signs his first state budget
Pension relief and investments in special education grabbed headlines throughout the K-12 education world as the 2019–20 state budget took shape, leading up to Gov. Gavin Newsom’s signing of his first budget on June 27.
“This is a strong budget for public schools and an important step on the road toward providing California’s 6.2 million students with the resources needed for a high-quality education,” said CSBA President Dr. Emma Turner, after the Legislative Budget Conference Committee completed its recommendations on June 9 — a budget approved by both the Senate and Assembly on June 14.

“We are pleased that Gov. Newsom’s first budget invests in public education above the minimum Proposition 98 guarantee,” said CSBA CEO & Executive Director Vernon M. Billy. “We also appreciate his attention to providing a much-needed cost-of-living adjustment for the Local Control Funding Formula and increasing special education funding.”

In his May Revision, Gov. Newsom proposed a total of roughly $4 billion above the Proposition 98 minimum guarantee, spread out across several investments in pensions, special education and elsewhere, with the final signed budget investing roughly $3.5 billion over the guarantee. The 2019–20 guarantee comes in at $81.1 billion ($71.6 billion of which goes to K-12), with a $2 billion investment in LCFF that covers a 3.26 percent cost-of-living adjustment.

A total haul of $3.15 billion in non-Proposition 98 money is going toward pension relief — $2.25 billion to CalSTRS and $904 million to CalPERS to relieve both systems’ long-term liabilities. The investment in CalSTRS will reduce the employer contribution rate to the system by 1.03 percentage points in 2019–20 (from 18.13 percent to 17.1 percent), 0.7 percentage points in 2020–21 (from 19.1 percent to 18.4 percent) and an estimated 0.3 percentage point reduction in subsequent years.

For CalPERS, the 2019–20 employer contribution rate (as a percentage of payroll) will reduce by 1.01 percentage points, from 20.733 percent to 19.721 percent. Rates are projected to fall by 0.9 percentage points in 2020–21 and by 0.3 percentage points each year thereafter through 2025–26.

Nearly $650 million dollars is invested in special education (of which nearly $500 million is devoted to grants for local educational agencies serving 3- and 4-year-old pupils with Individualized Education Programs and nearly $153 million to equalize per-pupil special education funding up to the statewide base rate of $557 per average daily attendance) and $300 million goes into full-day kindergarten.

“For his first budget, Gov. Newsom held true to his priorities to fund LCFF, special education and pension relief — all areas where more money is needed,” said Dennis Meyers, CSBA’s assistant executive director for Governmental Relations.

For the first time since its inception in 2014, the Public School System Stabilization Account (or Proposition 98 “rainy day fund”) will see a deposit, in the amount of $389 million. Prior to the signing of the CSBA-sponsored Senate Bill 751 (Hill & Glazer) in 2017, this deposit would have triggered a cap on the amount that individual school districts would be allowed to hold in reserve funding (commonly known as the reserve cap). With the passage of SB 751, this approved deposit will not trigger the cap — for the cap to become active, the PSSSA would need a balance equivalent to 3 percent of the K-12 portion of the Proposition 98 guarantee, or approximately $2.15 billion.

The 2019–20 budget also amends a provision in the 2018–19 budget that would have allowed for a downward adjustment in the Proposition 98 minimum guarantee, which could be made if the prior year calculation changes after the fiscal year ends. CSBA filed a lawsuit challenging this 2018–19 budget provision in August of 2018 (read more about the lawsuit on page 2). With the 2019–20 budget signed, such downward adjustments would no longer be allowed.

Legislative Update
Three key CSBA co-sponsored bills are, as of this publication, awaiting hearing in Senate Appropriations: Assembly Bill 428 (Medina, O’Donnell et al), a special education funding bill; AB 751 (O’Donnell, D-Long Beach), which would allow LEAs to administer an alternate assessment (i.e. SAT or ACT) in place of the Smarter Balanced test; and AB 39 (Muratsuchi, D-Torrance), which proposes legislative intent to increase the LCFF base grant targets equivalent to the national average in per-pupil funding.

AB 48 (O’Donnell), which would place a $13 billion school facilities bond on the March 2020 ballot and an additional bond on the November 2022 ballot, also awaits hearing in Senate Appropriations.

Policy committees in both houses have until July 12 to hear bills, while appropriations committees will take up their suspense files in August.

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