California’s budget deficit is gone after years of fiscal woes, Gov. Jerry Brown announced Thursday morning.
Though a significant “wall of debt” amounting to more than $40 billion remains, Brown foresees at least four years of balanced budgets, and said in a speech that the state can finally start increasing funding to schools and colleges after five years of cuts.
“The budget cuts made in the last two years and the passage of Proposition 30 make it possible to both live within our means and to increase funding for education,” Brown said. “This is new, this is a breakthrough.”
The San Diego Unified School District will be watching the budget process very closely as it unfurls. The district faces a budget deficit in 2013-14 estimated at about $84 million, and it is counting on an increase to education funding in the coming year to help bail it out.
Here are five takeaways from Brown’s big speech as it relates to San Diego Unified:
Next Year’s Still a Problem
San Diego Unified is facing an immediate budget deficit. The increased education spending Brown announced Thursday morning is all well and good, but he only announced total increases over the next four years.
The district needs to know how much more money it will be getting next year. It doesn’t know that yet.
“It will take us days to figure that out,” said district Chief of Staff Bernie Rhinerson.
Over the next few months, San Diego Unified will have to put together a patchwork of solutions to close its projected $84 million deficit. Some of that money will come from cash carried over from last year, more will come from proposed property sales and some will come from increased state funding.
At San Diego Unified, the 2013-14 budget is all about preventing further cuts or layoffs. There almost certainly won’t be any new money or investment in the school system.
The big news from Brown’s speech was its optimism.
A few weeks ago, the state was still projecting a deficit of almost $2 billion. Now Brown is talking about a possible surplus and building up a state reserve of about $1 billion to help cope with future crises.
Brown’s presentation was short on detail, and Rhinerson said the district hasn’t received any additional information about how much more money will be sent to California schools. But Brown did offer one helpful number: a projected $2,681 increase in per-student spending by the 2016-17 school year.
“If we get $2,600 over the next four years, that makes us happy,” Rhinerson said.
As I outlined here, San Diego Unified’s leaders are hoping for a period of fiscal calm and are looking forward to possibly investing in local schools over the next few years, rather than making constant cuts.
If the governor’s numbers are right, the district could be in for a fairly smooth ride going forward.
The Governor’s Numbers Could Be Off
State budgets have a way of swinging around wildly.
The governor has two main sources for state revenue projections: the independent Legislative Analyst’s Office and the Department of Finance. These two bodies rarely agree on the numbers, and tax revenues in the state can vary dramatically from the projections.
While things look relatively peachy now, Brown acknowledged in his speech that there are a host of factors that could spoil the party. The federal government’s debt negotiations could lead to spending cuts that would rain down on California, he said. And economic uncertainly in Europe and elsewhere could also negatively impact the state.
California won’t know how much money it will have in 2013-14 until that money is in its coffers. A lot could happen between now and then.
The Governor’s Talking About More Than Numbers
When it comes to education, Brown’s speech wasn’t just about dollars and cents.
The governor spent a portion of his speech outlining plans for school and community college districts to take better responsibility for, and more control of, their spending.
Without offering much detail, Brown said the people closest to the classroom should have the most control over solving problems.
“As you go up the line, you lose control and you add bureaucracy and unending oversight,” Brown said. “That’s why we want to put the money into local schools but create greater control.”
That ‘Wall of Debt’ Could Hamper Education Spending
While Brown announced a possible budget surplus, the state remains more than $40 billion in debt.
As I detailed here, a good portion of the new tax revenue raised by Proposition 30 will be earmarked for paying down more than $10 billion in debts to school districts known as “deferrals.” (See a full explanation of the deferrals issue here.)
It’s unclear whether that $10 billion was included in Brown’s $40 billion “wall of debt,” but either way it remains an obstacle to greater education spending.
A big reason why Proposition 30 isn’t having an impact on the 2012-13 school year budget is that much of the money it is bringing in is being used to pay down those deferrals. In future years, the legislature will have to decide whether to pay down even more of those debts or leave them intact. That could cut into extra spending on schools.
Brown’s speech was just the first taste of what will be another important budget season for local schools.
While the district may be able to sneak through next year without issuing pink slips, how exactly it does that that is going to be very interesting to watch.
As I learn more about the details of the state budget and how it impacts San Diego, I’ll keep following this narrative.
Update: San Diego Unified Superintendent Bill Kowba just sent out a press release with his reaction to Gov. Jerry Brown’s budget proposal:
The Governor’s proposal seems like a good starting point for restoring funding to public education, although it will take us time to analyze its impacts for our District. We are committed to providing stability for our schools in the 2013-14 year. As we study the details of the Governor’s proposal, we are hopeful we can maintain stable school staffing in the next budget year.
After five years of cuts to education, it is a relief to see that trend reversed, but as the Governor stated, it will take time to return education funding to the adequate levels that we saw in 2008. This is a step forward but at first look we believe that that there will be enhancements that we and others in the education community will be urging the Legislature to make as they begin to refine this preliminary proposal from the governor.
As we go through our own budget process over the coming weeks, we will make clear to both the Governor’s office and to the Legislature where the proposal needs to be improved in order to achieve the goal of stability for our schools in the coming year.
“Where the proposal needs to be improved” is a funny way of saying “how you can give us more money.”
District officials will learn a lot more about the proposed budget at a seminar being put on next week by School Services of California, a well-respected financial consultancy that works with districts across the state. I’m hoping to attend the seminar too, and will share whatever I learn about this rather archaic budget process.
Will Carless is an investigative reporter at Voice of San Diego currently focused on local education. You can reach him at firstname.lastname@example.org or 619.550.5670.
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