Budget season is in full swing in Sacramento as the Legislature works its way through Gov. Gavin Newsom’s revised spending plan for the state. The Governor’s May Budget Revision, released on May 12, revealed a shortfall that has grown by $9.5 billion from the proposed January Budget to $31.5 billion, with a corresponding $2 billion drop in the Proposition 98 Guarantee, to $106.8 billion.

The proposal attempts to insulate schools from the fallout by protecting recent investments and providing an 8.22 percent cost-of-living adjustment (COLA). This seemingly good news, however, was dampened by $4.3 billion in cuts to critical one-time grant programs that threaten to overshadow the $3.4 billion COLA increase in the coming 2023–24 school year. These proposals and more are on the table as the Legislature and Newsom Administration hammer out the final budget agreement.

At a time when school districts and county offices of education need funding and flexibility to adapt programs and services to the specific needs of their students and local communities, it’s difficult to learn that schools may lose critical funding sources after the budget development cycle has already started,” said CSBA President Susan Markarian.

Despite underperforming revenues and uncertainty caused by the ongoing standoff over the federal debt limit and the state’s delayed tax filing deadline, the May Revision did include some good news for TK-12 education. The Governor’s proposed plan insulates some critical education programs from the impact of the state’s declining revenue projections and protects many of the investments needed to accelerate learning recovery. This focus is evident in the investment in ongoing funding, especially the 8.22 percent COLA (increased from 8.13 percent in January). With the presence of persistent inflationary pressures on the day-to-day operations of school districts, costs continue to rise and fully funding the COLA is critical. Also appreciated is the continuation of funding for many of the the major program expansions in recent years, such as universal transitional kindergarten implementation, universal school meals and more.

CSBA advocacy also secured a major win in Gov. Newsom’s inclusion of provisions from CSBA-sponsored Assembly Bill 906, which would provide $80 million in additional ongoing funds to support some of California’s most vulnerable students in juvenile court and county community schools. This funding will help stabilize and provide greater budget consistency for these schools, especially as the state continues its efforts to realign the Division of Juvenile Justice to the local level. This proposal reflects a significant win for CSBA advocacy and its county board membership, especially in a time of declining revenues.

The Governor’s proposed plan also makes $4.3 billion in cuts to critical one-time grant programs that threaten to overshadow the $3.4 billion COLA increase in the coming 2023–24 school year. The May Revision would reduce the amount of one-time Proposition 98 General Fund provided for the Arts, Music & Instructional Materials (AMIM) Discretionary Block Grant by an additional $607 million, building on a January Budget that had already reduced the funding for the AMIM by $1.2 billion. This additional reduction will bring the total cut to $1.8 billion, a 50 percent reduction to the program overall and almost twice what voter-approved Proposition 28 is expected to generate for art in schools over the next fiscal year.

Further, the May Revision proposes a $2.5 billion decrease in one-time Proposition 98 General Fund for the Learning Recovery Emergency (LRE) Block Grant, taking support for the block grant from $7.9 billion in January to $5.4 billion in the May Revision. This equates to a 30 percent reduction.

While difficult decisions are necessary in a time of declining revenues, the proposed reductions to the AMIM and LRE Block Grants are substantial and come at a time when many, if not all, school districts have received and spent or made plans to spend these funds. Clawing back these funds at this time will be painful and logistically difficult. As budget negotiations move forward, CSBA will be advocating that the Legislature and Governor look at other one-time moneys, both existing and proposed, as alternatives to reduce the size and scope of the proposed cuts to these two block grants.

Negotiations between the Newsom Administration and the Legislature, along with budget hearings in the Senate and Assembly, will continue until the June 15 deadline to pass an initial budget bill. With final revenues still highly uncertain, it is likely that the bulk of education issues will be resolved in budget trailer bills hammered out over the summer.

CSBA will continue to advocate for restoration of critical grant funding in the final budget as well as additional resources for academic interventions, supplemental services, mental health supports and infrastructure to help students rebound from the pandemic, and provide members with further updates and opportunities for advocacy.