Approved by California voters in 1988, Proposition 98 provides schools with a constitutionally guaranteed share of the state budget. This ballot measure was created and passed in part as a response to Proposition 13, which had passed 10 years earlier. Prop. 13 limits property taxes and therefore limits the amount of money schools receive from local sources.
The state uses one of three “tests” (formulas) to determine how much funding education will receive during any particular budget year.
Test 1 mandates that K-12 education and community colleges receive about 39 percent of the General Fund, the percentage education got in 1986-87.
Test 2 requires that education get the same amount of funding it received the previous year with adjustments for per capita personal income growth.
Test 3 provides adjustments for enrollment growth and General Fund revenue growth.
Proposition 98 also contains a feature known as the “maintenance factor.” When the state’s economy is in terrible shape, the Proposition 98 guarantee may be suspended, but the gap between how much schools receive and how much they were supposed to receive under Proposition 98 has to be restored in the following years. The Proposition 98 guarantee has only been suspended once during its 20-year history (in 2004–2005).