State budget
May Revision boosts Prop 98 with mostly one-time funds
Concerns remain over long-term funding for California schools
Teenaged students wearing backpacks walk toward school building
On May 14, Gov. Gavin Newsom presented the May Revision of the budget and a sweeping “California for All Kids” plan. The proposal contains significant one-time money for programs addressing pressing student needs but does little to address the continuing long-term financial pressures inhibiting schools’ ability to provide students with the resources needed for success in college, career and civic life.
Proposition 98 grows, but $2.6 billion deferral remains
Soaring revenues have increased the 2021–22 Proposition 98 guarantee to $93.7 billion, requiring a $4.6 billion payment to the Proposition 98 reserve and triggering school district reserve caps in 2022–23. The plan proposes a total 5.07 percent cost-of-living adjustment (COLA) to the Local Control Funding Formula, as well as a 4.05 percent COLA for special education and 1.7 percent for most categorical programs. Per-pupil spending will rise to $21,152 including all funding sources.

Given the increase in funding, the May Revision eliminates the $2.3 billion supplemental payment proposed in January. While two-thirds of the deferrals established in the 2020 budget will be fully paid off, a $2.6 billion deferral will remain in the June apportionment. With billions in additional revenues available, CSBA is advocating to prioritize retiring all deferrals in the current year.

In-person learning and changes to independent study
The Governor reiterated that distance learning statutes will expire after June 30. To support full-time, in-person education this fall, his proposal provides an additional $2 billion in health and safety funding. For students who wish to remain remote, the Governor proposed allowing local educational agencies to generate state funding using existing independent study models, with additional requirements to ensure access to technology and rigorous curricula, promote meaningful student engagement, and track student participation and teacher interaction. CSBA has concerns that these changes could interfere with plans LEAs have already put in place using independent study to provide virtual learning programs and is working to ensure LEAs will not need to significantly change or restart plans for the coming school year.
Broadband for all
Gov. Newsom announced $7 billion in new broadband investments over three years, including state and federal funds to build out the “middle-mile” network and federal California Advanced Services Funds for “last-mile” service for unserved households. $500 million will help local governments, tribes and nonprofits secure financing for municipal fiber networks and another $500 million in federal funds will expand rural telephone access programs to include broadband.
Universal transitional kindergarten
The Governor proposes expanding transitional kindergarten to provide at least three hours of instructional time for all 4-year-olds and rebenching the Proposition 98 guarantee to accommodate additional students, beginning with $900 million in 2022–23 and increasing to $2.7 billion in 2024–25. LEAs would use 2021–22 for planning and infrastructure development and TK would expand in increments of three months of age from 2022–23 through 2024–25. $380 million in Proposition 98 General Fund in 2022–23 (growing to $740 million in 2024–25) would fund additional staff to reduce the TK adult-to-child ratio to 1:12.

The proposed Proposition 98 rebenching addresses a main fiscal concern raised by CSBA; as negotiations continue, CSBA will advocate for funding to address facilities impacts, transportation costs and recruitment and retention of teachers to meet increased demand.

Year-round enrichment activities and accelerated learning
Over five years, $5 billion is proposed for no-cost before- and after-school and summer programs for all elementary students in LEAs with the highest concentrations of low-income students, English learners and foster youth. It remains to be seen how schools will be identified based on that criteria. The proposed plan provides nine hours of instruction and enrichment activities each school day and six weeks over summer. After full implementation, funds would be incorporated into the LCFF concentration grant.

An additional $2 billion in federal funds and $623 million one-time Proposition 98 General fund will support interventions addressing COVID-19’s impact on learning, including intensive tutoring. These funds build on the $4.6 billion allocated in Assembly Bill 86, the “Safe Schools for All Plan.”

$3 billion in grants over three years will support LEAs in converting school campuses into community schools. An ongoing $1.1 billion increase to the LCFF concentration grant will fund increased staff providing direct services on campus; grantees will be required to detail how they will use funds in their Local Control and Accountability Plan.

Educator pipeline
Gov. Newsom originally proposed $540 million for eight teacher pipeline and training grant programs. The May Revision increases that to $3.3 billion. Among other programs, the proposal includes $500 million in grants for teachers who commit to high-need schools and $250 million to attract teachers to high-poverty schools.
Boost for nutrition programs and behavioral health
Recognizing the challenges students face, the proposal allocates $150 million in ongoing Proposition 98 General Fund to encourage participation in federal universal meal programs, resulting in a $0.25 per-pupil increase in school nutrition funding. $100 million in one-time Proposition 98 funds is proposed for school kitchen infrastructure upgrades and cafeteria staff training, and $30 million one-time General Fund for the Farm-to-School initiative.

The May Revision also includes $4 billion over four years to support behavioral health in Californians ages 0-25. Funds will support screenings, connecting people to services, and developing virtual, interactive tools.

Action needed on long-term financial pressures
The proposal does not address the increase in LEA’s Unemployment Insurance (UI) rates from .05 percent of payroll to 1.23 percent — a 2,400 percent increase. The state must provide funds covering this nearly $600 million in increased costs. Furthermore, despite large gains in one-time funds, LEAs lose approximately $350–500 million annually due to improper guidance from the State Controller’s Office allowing Excess Educational Revenue Augmentation Fund (ERAF) counties to exclude charter school average daily attendance in calculating school property tax revenues. This mistake, which has long-term ramifications for Proposition 98 and school budget stability, must be corrected.

With these pressures and others looming, the budget must address structural funding issues. The creation of new programs with one-time funding, worthy as they may be, cannot come at the expense of undermining schools’ long-term stability.