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Governor Releases State Budget Revise

Governor Edmund G. Brown Jr. released a revised and balanced state budget today that strengthens California’s fiscal integrity by investing in California’s schools, chipping away billions from the “Wall of Debt” and maintaining a prudent reserve.

“This budget builds a solid foundation for California’s future by investing in our schools, continuing to pay down our debts and establishing a prudent reserve,” said Governor Brown. “But California’s fiscal stability will be short-lived unless we continue to exercise the discipline that got us out of the mess we inherited.”

When Governor Brown took office, the state faced a $26.6 billion budget deficit, estimated annual gaps of roughly $20 billion and a $35 billion “Wall of Debt.” The revised budget plan unveiled today is balanced and on track to lower the state’s debt to $4.7 billion by 2017—a reduction of over 86 percent. This was achieved through billions of dollars in permanent cuts in the 2011-12 and 2012-13 budgets as well as temporary revenues passed by voters last year.

At the center of the May Revision is a significant investment in the state’s public schools. From 2011-12 to 2016-17, the Proposition 98 guarantee will increase more than $19 billion from $47.3 billion to $66.5 billion. The plan provides $1,046 more per K-12 student in 2013-14 than was provided in 2011-12 and funding levels will increase by $2,754 per student through 2016-17.

In addition to the higher ongoing funding, the May Revision proposes to invest $1 billion in one-time revenues to fund professional development, instructional materials and enhancements to technology to support implementation of new national standards for evaluating student achievement in English-language, arts and math (known as Common Core Standards).

The May Revision also adds $240 million in first-year funding for the Governor’s Local Control Funding Formula (LCFF), for a total of $1.9 billion. It gives all districts the chance to improve with new ongoing funding based on the number of students served, directs additional resources to the state’s neediest students and restores local control over how money is spent in schools.

When fully implemented, it is projected that the formula will spend 80 cents of every dollar on base grants for every district, 16 cents in supplemental funding for every English learner, student from a low income family or foster child in a district and 4 cents for those districts who have a particularly high concentration of these students. While the concentration funds represent only a small portion of the total dollars, they are critically important to those districts with the greatest challenges. Additionally, the May Revision strengthens the proposal’s accountability measures to ensure that the targeted student populations benefit from the funds.

The May Revision also proposes:

A state-based approach to the optional expansion of subsidized medical care allowed under federal law. This expansion will significantly increase health care coverage and access to new federal dollars.

A revenue-neutral revamping of the state’s enterprise zone and hiring credit programs to encourage manufacturing investment and increase employment in high-poverty areas.

An additional $48 million in CalWORKs job training and subsidized employment opportunities.

To maintain a $500 million increase to the University of California and California State University systems with additional increases in each of the next four years to make higher education more affordable, more efficient and to maintain quality.

While the budget is projected to remain in balance for the foreseeable future, the May Revision also recognizes the risks posed to the budget – including the uncertain economic recovery, court rulings and actions from the federal government – which underscore the need to maintain fiscal discipline.

Further information on the May Revision can be found at www.ebudget.ca.gov.

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