For kids, January is the start of a new semester, the end of the school year seemingly forever away. For teachers, it starts the ignition countdown to testing time.
But for administrators, January means a first peek at the state budget that almost completely determines what schools will have to spend for the following year.
For another year, most schools will face the double-edged sword of one-time money, predicted experts assembled for a School Services of California workshop Jan. 13. The coming year could be a high-water mark, a great thing for one-time buys and quick fixes but quicksand at the bargaining table.
“Have a plan for one-time dollars,” company President John Gray told the group. “Use these funds strategically on one-time things. Don’t spend them on things that eat.”
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The panel ticked off a list of 2016-17 fiscal pluses and future minuses:
▪ State repayment of education dollars withheld during the recession will be completed this year. That is faster than expected, which means some will likely be sitting on reserves on July 1.
▪ Higher taxes for schools under Proposition 30 are in full swing, but the sales tax portion expires Dec. 31.
▪ Basic per-child revenue, with extra dollars for poor children, English learners and foster kids, will rise again before leveling off as the state’s new funding formula reaches full implementation.
▪ The coast is booming, meaning more state tax revenue and more money for schools. But just as the Central Valley’s fortunes are finally looking up, China’s financial markets have plummeted, the price of oil has fallen to less than $30 a barrel and economists have started talking recession.
Whether or not California’s champagne bubbles will burst before we get to taste them, education is no longer the top priority in Gov. Jerry Brown’s budget, the School Services panel pointed out. Next year, overall school funding would increase 2 percent while other areas of the budget would get 8 percent more under Brown’s initial budget.
School Services is predicting that once the funding formula is fully in place, schools will get only inflationary cost bumps of 2 percent to 3 percent each year for the foreseeable future, barely enough to cover increases in retirement contributions.
“It’s going to be tough sledding at the bargaining table,” Gray predicted.
Employee raises are a permanent commitment under current bargaining practices. Unlike private companies, where recession-era pay cuts meant a clean slice off base salary, reductions for teachers and support staff were done as a percent subtracted from the existing salary schedule. At the end of the two- or three-year contract, salaries bounced back to their pre-recession highs automatically.
Because about 80 percent of school operating budgets typically go to labor costs, raises are the elephant in the room in any school budget discussion. There are lots of one-year bargaining chips, however, such as extra help, teacher training and stipends for extended days, tutoring or after-school programs.
Such extras have found favor with community-driven budgeting under the Local Control Accountability Plan, or LCAP (pronounced el-cap). The LCAP starts its third year in 2016-17, the year of reckoning, the school fiscal experts said.
All the spending allocated to help high-needs students succeed came with markers to show it was working, markers county overseers will have to say have been met or the plans reworked starting next year. How each district fares under its own criteria will be something for parents and community members to watch.
Education got 90 percent of all new state revenues this year, but with borrowed money repaid returns to 40 percent (set by Proposition 98) going forward.
Here are some other takeaways from the workshop:
With increasing research showing early learning is key to reducing achievement gaps, preschool funding is getting attention. The state is talking about lumping all the different pockets of preschool funding into one chunk to allow districts to spend less on overhead and paperwork. This would not affect Head Start, a federal program.
Despite predictions it would not apply for years to come, the cap on school reserves has only one test left to pass. It would slash reserves to about 6 percent of one year’s obligations.
By School Services figures, the average unified school district (kindergarten through high school) has a 13 percent reserve right now. The typical elementary district has a whopping 21 percent in the bank, and high school districts average 17 percent.
Large reserves, however, create their own problem, according to the experts. In a perverse turn written into the funding formula, money not spent during these years of ramp-up to full funding will lower a district’s base rate going forward, they explained.
There were some intriguing sidelights at the workshop, among them the theory that Proposition 98, long seen as the savior of education funding, has become an albatross. Meant to be a base guarantee, Proposition 98 in practice defines what the state owes schools, period.
“Over the long run it does not provide investment,” Robert Miyashiro told the crowd of school administrators and business officials. “I think you’ll find it’s held us back,” said Miyashiro, a School Services vice president.
Next up in the budget wrangling will be the mid-May revision, with legislators weighing in before the budget is signed.