California Revenues Up, Schools Get The Cash

It's exactly what voters said they wanted when they amended the California Constitution in 1988: When the state's coffers fill up with tax dollars, public schools should be guaranteed the single-largest portion of the cash.

And so consider it good news from the Legislature's independent fiscal watchdogs that tax revenues in the current fiscal year are beating expectations to the tune of $2 billion, and that K-12 schools and community colleges get all of the money.  Plus a tad more.

"Schools are the big winner," said Legislative Analyst Mac Taylor after a meeting with Capitol reporters to discuss his team's new projections, part of an annual fiscal forecast.

Those projections show school funding, controlled by 1988's Proposition 98, will grow by $2.3 billon in the budget year that ends next summer.  Most of that will come from the state's general fund, with a small portion, by law, chipped in from local property tax revenues.

The new analysis projects even more school money in the years to come -- another $2.6 billion in the fiscal year beginning next July, and another $2.2 billion on top of that in 2016-17.  All told, that's close to a $5 billion boost in funding by the time this year's high school freshmen finish their junior year.

Even under the most pessimistic assumptions released Wednesday by the Legislative Analyst's Office, public schools would see more money over the next few years, though a housing and real estate slowdown could come close to flattening that growth.  Under their most optimistic projections, it could grow by as much as an additional $1 billion.  The LAO team says it is advising lawmakers to use their middle-of-the-road guess, which is the $2.3 billion short-term increase.

Still, though,  a flatter growth rate is a far cry from the early years of the decade, where multbillion-dollar state deficits meant an automatic shrinking of the school funding guarantee -- to say nothing of billions of dollars in IOUs incurred by the state under the Prop. 98 formulas.

And it's those debts, or deferrals, that may make for one of the more fascinating parts of the budget debate in Sacramento in the new year.  The existing state spending plan mandates that some of these unexpected tax revenues (assuming they actually materialize) go immediately to debts owed to schools from the recession years.  But legislators and Gov. Jerry Brown may want to earmark more of the expected tax surplus toward these kinds of expenses.  As the LAO report makes clear, the school year is already under way and there's probably merit to using a good chunk of the cash for one-time expenses.

That certainly would fall in line with Brown's main political push during his soon-to-conclude term as governor, and all signs are that he'll do more of the same after taking the oath of office for an unprecedented fourth time in January.