Governor Brown releases 2018-19 budget proposals State Budget Governor Brown released his 2018-19 Budget proposals for the next fiscal year. This will be his final budget in office. Reflecting a strong economic outlook, Governor Brown continues to increase investment in education and other program areas, while leaving behind a very healthy surplus. The Governor proposed a total state budget plan of $190.3 billion, that includes full funding for the Local Control Funding Formula (LCFF) in K-12 education, with significant increases for other spending priorities. The proposed budget also set aside $13.5 billion in the Rainy Day Reserve Fund, which is an increase of $3.5 billion more than required by law. Proposition 98 Funding for K-12 Education and Colleges The Proposition 98 guarantee which funds K-14 education requires that a portion of state revenues to be set aside for all K-12 education and community college expenditures, under three complicated formulas. The proposed 2018-19 Proposition 98 funding level is $78.3 billion, which is a record high. When combined with other settle-up payments, the Governor is essentially making an increased investment of $4.6 billion in K-14 education over 2017-18. The Governor should be commended for a continued strong investment in education. Even higher funding for Prop 98? Interestingly, at a special briefing to the Education Coalition, the Department of Finance (DOF), the state agency that puts the budget together, acknowledged that they are assuming lower-than expected revenues for the state, which results in a calculation of the Prop 98 formula using the "Test 3b" formula. This is typically used for a 'bad' budget year. The difference in funding levels seems to be relatively small (around $92 million), and the use of this formula was intended only for special circumstances in a downturned economy. In the months ahead, the Legislature will be holding hearings on the entire budget, and this proposed use of lower revenues will likely be a special topic of review and debate. Highlights of key K-12 Budget Issues Local Control Funding Formula (LCFF): The budget provides $3 billion to fully fund the LCFF for K-12 school districts and County Offices of Education (COE). This includes a 2.51% cost-of-living adjustment (COLA). This is a significant investment, and comes two years ahead of schedule. (Caution: The LCFF calculation is unique to each district. The overall discretionary funding at specific district may be higher or lower than the statewide average.) Special Education: The budget proposes $100 million to increase and retain special education teachers; $167 million to increase the availability of inclusive early education and care for children aged 0 to 5 years old; and $10 million ongoing for Special Education Local Plan Areas (SELPAs) to work with COEs to provide technical assistance to LEAs to improve student outcomes as part of the statewide system of support. Career Technical Education: The budget proposes an ongoing increase of $200 million to establish a K-12 specific component of the California Community College's Strong Workforce Program to encourage the establishment and support of K-12 Career Technical Education (CTE) programs that are aligned with needed industry skills. Details remain to be seen on how this will be distributed. County Offices of Education: The budget provides $59.2 million for COEs to provide more technical assistance to local districts, with $6.2 million for a 2.51% COLA. Child Care: The budget provides $31.6 million in Prop 98 funding, and $16.1 million in non-Prop 98 to increase the Standards Reimbursement Rate by about 2.8%. There's also $60.7 million in funding to fully implement the current year costs associated with an update of the Regional Market Reimbursement Rate to the 75th percentile, and an increase of nearly 3,000 slots for full-day State Preschool (beginning on April 1, 2018). Highlights of key Community College Budget Issues Prop 98 funding Level: Overall, the budget provides $780 million in new Proposition 98 general fund spending for the California Community Colleges (CCCs). The state general fund is estimated to increase by approximately $5.8 billion, or approximately 4% in 2018-19. New Funding/Apportionment Formula: Governor Brown proposes $175 million support the community colleges transition to a new funding formula for general purpose apportionments. The proposed formula is composed of a Base Grant (based on enrollment), a Supplemental Grant (based on number of low-income students that the district enrolls), and a Student Success Initiative Grant that would rewards colleges' progress on improving student success metrics. The formula also includes a hold harmless provision that ensures that no district receives less funding than is currently allocated. Growth and COLA: The budget proposes an increase of $60 million in general purpose apportionments for enrollment growth, and $161.2 million for a 2.51% COLA. New Online Community College:The budget includes $120 million ($20 million ongoing) to create a fully online community college that would focus on vocational training, career advancement opportunities, and credentialing for careers in child development, the service sector, advanced manufacturing, healthcare, in-home supportive services, and other areas. The enrollment focus would be on working adults who are not currently accessing higher education. This is intended to serve up 2.5 million adults, who are not currently accessing higher education. California College Promise (AB 19): The budget proposal includes $46 million to support the implementation of the California College Promise (as enacted by AB 19), which rescinds the $46 per unit fee for all first-time resident students enrolled in 12 or more units per semester during their first year. AB 19 waives fees for those students enrolled for the first time in the community college system and who take at least 12 units per semester. What's Next: Now that the Governor has introduced his budget, the Legislature will begin their review and analysis of those proposals over the next several months to craft a legislative budget. In May, the Governor will issue a revision to these proposals with a better estimate of state revenues. The Legislature has until June 15th to present their budget to the Governor. Under the requirements of Proposition 25, the Governor must sign the budget by June 30th. CSEA will continue reviewing the details of the budget to analyze the impact on schools and community colleges.