Reflecting a further erosion in state revenues, Gov. Gavin Newsom is budgeting $2 billion less for TK-12 and community colleges for the coming fiscal year than he proposed five months ago.
In his May budget revision for 2023-24, which Newsom presented Friday, school districts and community colleges would receive $106.8 billion through Proposition 98, the formula that determines the portion of the state’s general fund that goes to education. That’s nearly $4 billion less than the record $110.4 billion the Legislature approved two years ago.
Despite an overall $31 billion shortfall in the general fund, Newsom also committed to the state’s four-year universities that they would still receive promised funding increases. Both systems, the University of California and California State University, would get 5% bumps to their base funding. That equates to about $215 million for UC and $227 million for CSU for next year.
Responding to a top priority of school districts and community colleges, Newsom said he would fund the full 8.2% cost of living adjustment, fulfilling a promise he made in January. But the tradeoff to TK-12 for balancing the budget with less revenue would be to claw back billions of dollars from multiyear one-time funding that the Legislature approved last June.
These include an additional $2.5 billion from a learning recovery block grant and $607 million more from the Arts, Music, and Instructional Materials Block Grant, which districts can use for other purposes, too. Newsom noted that the nearly $1 billion dedicated to arts instruction, which voters approved by passing Proposition 28 in November, will offset that cut.
Newsom said his advisers recommended the cut to the learning recovery grant in order to maintain funding for other initiatives, including $4 billion to establish community schools and to provide universal school lunches and breakfasts. The latter will receive an additional $100 million in response to rising needs. School districts also have billions of dollars in uncommitted federal COVID assistance, which they can use through September 2024.
Newsom does not propose using the state’s rainy day fund to fix the deficit. Paradoxically, the separate state Public School System Stabilization Account for TK-12 and community colleges is projected to rise $2 billion to $10.5 billion because of projected increases in capital gains receipts.
Newsom’s budget, which includes a $31 billion shortfall in the $224 billion general fund, is a best-case scenario in a period of economic uncertainty.
It does not predict a recession, and could quickly deteriorate if Congress does not reach a compromise to raise the ceiling on the national debt. A moderate recession could lead to a decrease in revenues by $40 billion in 2023-24 and $100 billion over three years, driven largely by losses in personal income tax, the budget summary said. Further complicating planning for the next 14 months is the suspension of the deadline for 2022 income taxes payments until October, because of the impact of winter storms and flooding.
“We’re going into a budget the way we’ve never gone into a budget before,” Newsom said.
Initial reactions to the budget were positive.
“We are thrilled to see the Governor’s continued commitment to transforming education, specifically in the ways that county offices of education provide support to districts and their own students,” said Derick Lennox, senior director of governmental relations and legal affairs for the California County Superintendents. “More broadly, this budget is all about protecting the whole child programs targeted towards our lowest performing and most vulnerable students. We give the Governor full credit, and our appreciation, for that effort.”
“This was the best bad year for a May revision I have seen for public schools,” Kevin Gordon, president of Capitol Advisors Group, an education consulting company based in Sacramento.
“The governor is making an extended effort to protect education. The midyear cuts in one-time money could be rough for those that have counted on them, but the alternatives could be uglier. The governor is not undermining COLA or permanent programs. Given difficult choices, it’s a good budget.”
Other proposals in the budget include:
Dyslexia screening: Newsom’s revised budget also appears to strike a compromise on the debate over whether to screen children for dyslexia, a reading disorder with which the governor himself struggles. The budget includes $1 million for a panel to choose a dyslexia screening tool that school districts would be required to give to children in kindergarten through second grade, beginning in 2025-26. Senate Bill 691, currently winding its way through the Legislature, would require dyslexia screening a year earlier.
California is one of a handful of states that has not required screening children for potential learning disabilities. Newsom had been criticized for not making it mandatory.
“I’m not just interested in this subject, but deeply engaged in it, because of my own struggles in this space,” Newsom said Friday. “What I’ve found is often people are screened in a way that they’re unnecessarily identified and stigmatized. What I didn’t want to do is rush to do something without being prepared to do it right.”
The governor also said he plans to fund professional development for teachers to improve identification of students with reading difficulties.
“Equity multiplier”: Newsom plans to move ahead with $300 million in additional funding to address learning needs in the highest poverty schools. Funding for the “equity multiplier” would be part of a wider reform of the Local Control Funding Formula that would require all schools and school districts to address learning disparities of each low-performing student group in their three-year planning document, the Local Control and Accountability Plan. They would use their existing $13.6 billion in “supplemental” and “concentration” funding under LCFF for this purpose.
During a news conference, Newsom brushed aside criticism from the Legislative Analyst’s Office, which called on increasing transparency rather than spending: “I think we do need more money in this space.”
Some critics claim that Newsom’s plan doesn’t specifically address the needs of Black students in California. Newsom points to the support his plan has in both the Black Legislative Caucus and with Assemblymember Akilah Weber (D-La Mesa), who originally proposed funding targeted at Black students.
“I take [these systemic issues] very seriously, and I’m very mindful of the totality of the need, which far exceeds this current proposal,” he said.
The budget noted that while 47% of all students met standards in English language arts in 2021-22, only 30.3% of African American students met or exceeded standards; in math the disparity was equally wide: 33.4% of students overall met standards compared with only 15.9% of Black students.
“We were pleased to see the ongoing commitment to improving the equity promise of LCFF with a $300 million equity multiplier and a greater focus on low-student performance and teacher quality disparities at school sites,” said John Affeldt, managing attorney and director of education equity at Public Advocates, a nonprofit law firm. “We look forward to working with the Administration to more effectively target the equity multiplier funds to the lowest-performing students.”
Child care: Amid the ongoing child care crisis, a long-standing problem worsened by the pandemic, many families can’t afford the skyrocketing cost of care, while many child care workers can’t survive on their pay. In response, the governor is proposing extending the existing waiver on family fees, the money that low-income families pay toward the cost of subsidized care, until Sept. 30. Many child advocates, however, were hoping for a more permanent fix on saddling struggling families with fees.
“We are pleased that “family fees” — the money that families who receive child care subsidies must pay out of pocket — have been waived,” said Gina Fromer, president and CEO of Children’s Council of San Francisco. “But we need to work towards the goal of eliminating these fees altogether.”
The governor is also proposing an 8.33% cost-of-living adjustment to bump up the money that child care centers are paid to care for low-income families. The Legislature, meanwhile, has proposed a roughly 25% raise in the reimbursement rate, which is currently pegged to the 2016 market cost, as part of an ongoing plan to fund the actual cost of child care.
Transitional kindergarten: Parents have been slow to respond to enroll in TK, which serves 4-year-olds who turn 5. The state is rolling out the program over four years, starting this year. Because of declining projections, the state is cutting funding for the current year from $609 million to $337 million and paring back next year’s funding by $100 million, to about $600 million.
EdSource reporters Karen D’Souza, Carolyn Jones, Ali Tadayon, Emma Gallegos and Michael Burke contributed to this article.