Monday, June 12, 2006 | Conversations about budgets are usually a certain cure for insomniacs. Especially education budgets, which are massive, confusing and murky.

“Make it fun and relevant,” I said, with some trepidation, to California’s Deputy Secretary of Education Scott Himelstein when we met recently to discuss Gov. Arnold Schwarzenegger’s education budget for 2006-2007.

He rose to the challenge and gamely gave it his best shot, speaking excitedly about how favorably the latest revision of the budget was received by the education coalition – including the California Teachers Association.

“Overall, they have warmly embraced the May revision,” said Himelstein, who also serves as Education Secretary Alan Bersin’s Chief of Staff. “The governor and the CTA have set a very positive tone for education this year. Of course, it obviously helps that we have incredible revenues this year. The governor always said that when the revenues are up, we should treat education as a priority.

“It hasn’t gone through the legislative process yet, so anything can happen. But we view it as a very positive step by CTA. Chances are very good.”

Remarkably, Schwarzenegger and the CTA have agreed “that funds should be targeted to low-performing schools most in need – and not necessarily teachers’ salaries,” Himelstein said. “It’s a big step, and they should be commended for that.”

The frosty relationship between the education establishment and the governor stems from the start of the 2004-2005 budget process, after Schwarzenegger “borrowed” money from the education pot during lean times and then refused to pay it back. But the big bump in state revenues this year that the governor is passing along to schools is thawing the ice.

“Things have amazingly turned around,” said Scott Patterson, former Chief Financial Officer for San Diego City Schools who moved to the Grossmont Union High School District Monday to be Deputy Superintendent of Business Services.

“They’ve indicated they’re coming together a bit,” he said. “There’s certainly a lot of money coming in, and the budget has a good chance of passing.”

Analysts at EdSource – an independent, nonpartisan, nonprofit organization that helps clarify California’s complex education issues – also see a positive trend, saying, “As new budget talks get underway, the state’s brightened fiscal outlook may help blunt hostilities…Adding to the optimism is the tempering influence of Alan Bersin, the governor’s new Secretary of Education, who was not part of last year’s antagonisms.”

For the 2006-2007 fiscal year, which begins July 1, the governor has proposed a total state budget of $131.1 billion, of which about $40.7 billion (or 31 percent of the total) is earmarked for kindergarten through 12th-grade education. Another $14.8 billion is allocated for higher education, bringing the total education budget up to $55.5 billion (or 42 percent of the total).

Of the $40.7 billion allocated for K-12 education, about $37.7 billion goes to the California Department of Education, which oversees all aspects of curriculum and instruction, including salaries and benefits. The other big pieces of the $40.7 billion are $1.9 billion for general obligation bonds and just under $1 billion for teachers’ retirement system contributions.

With 6.4 million K-12 students in California public schools (about 490,000 students, more or less, for each of the 13 grades), this $40.7 billion figure comes to about $6,359 per pupil.

The governor’s office likes to point out that the increase in education funding brings the per-pupil number up to $11,268 – a long way from $6,359. But this higher number includes all other sources of revenue.

According to EdSource, 2005-2006 sources of revenue for California’s K-12 public schools were: 58.2 percent from the state, 21.9 percent from property taxes, 12.1 percent from the federal government, 6.3 percent from other local sources and 1.6 percent from state lottery money.

When all this other revenue is included in the budget, the total allocated for education comes to $60.8 billion, $57.8 billion of which is assigned to the CDE. Using the $60.8 billion figure, the amount per pupil reaches $9,500.

We’re still not getting to the governor’s number. But it’s conceivable that, adding in every single source of revenue, including higher education, you might get to $11,268 per pupil. A bit deceptive, but technically truthful.

Despite the fuzzy per-pupil numbers, education funding is the biggest slice of the state budget pie, with money allocated for Health and Human Services a close second, at $36 billion.

The big news is that Schwarzenegger and the CTA settled their three-year-long dispute when the governor agreed this year to pay about $3 billion extra to schools over the next seven years. According to EdSource, “The teachers union and co-plaintiffs claimed that the state had not provided K-12 schools and community colleges with a total of about $3 billion for 2004-2005 and 2005-2006 that was due to them under state law. Under the settlement, the state will appropriate to these school agencies an additional $300 million in 2007-2008 and $450 million each year for the following six years.”

Besides this $3 billion owed for past sins, the governor has added another $2 billion, bringing the total increase in education spending this year to about $5 billion, according to Himelstein.

Although there is dancing in the streets over this huge boost, the impartial Legislative Analyst’s Office advises caution. According to EdSource, the LAO has concluded that “spending at the proposed level this year would – in 2007-2008 and beyond – worsen the state’s ongoing imbalance of revenues and expenditures.” The LAO suggests “reducing the proposed amount to increase the state’s reserve and reduce the ongoing deficit.”

EdSource researchers say direct benefits to K-12 programs “may prove elusive due to spikes in other costs. With the strain on finances since 2001, many districts have cut programs in order to address rising costs for utilities, health benefits and salaries. The funding increases may do little more than bring them back to even.”

As nearly all districts in the county struggle with declining enrollment, state funding based on per-pupil average daily classroom attendance means less money than in previous years, with no way to offset rising costs for salaries and health care.

“I’m disappointed that there wasn’t money in there for declining enrollment,” said Lora Duzyk, Assistant Superintendent of Business Services for the San Diego County Office of Education.

Duzyk said the county is experiencing declining enrollment and has lost .5 percent a year for the past three years, mostly due to families moving out of the county. “A lot has to do with the cost of living here,” she said.

Only 13 of the 42 county school districts are growing, Duzyk said. Those include Chula Vista, Sweetwater, Carlsbad and San Dieguito – but even those are growing only slightly.

Patterson shared Duzyk’s disappointment. “Over half the districts in the state are in declining enrollment,” he said. “It would have been better to provide a soft landing, but the governor didn’t put any money into that bucket.”

However, Schwarzenegger did put a bundle of money into a number of other buckets. “Overall, it’s hard to criticize this budget,” Patterson added.

In Part Two, tomorrow, we get to the fun and exciting part: How much money is allocated for particular programs, including arts, music, P.E. and counselors?

Marsha Sutton writes about education and children’s issues. She can be reached at Or send a letter to the editor.

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