Please ensure Javascript is enabled for purposes of website accessibility
Walters: School Budgets Squeezed Despite 'Extraordinary' State Surplus
By admin
Published 6 years ago on
November 22, 2018

Share

Mac Taylor, the Legislature’s soon-to-retire budget analyst, generally takes a very conservative, glass-half-empty approach to the state’s finances.

Opinion

by Dan Walters
CALmatters Commentary

“It is difficult to overstate how good the budget’s condition is today. Under our estimates of revenues and spending, the state’s constitutional reserve would reach $14.5 billion by the end of 2019-20.” – Mac Taylor, the Legislature’s soon-to-retire budget analyst

However, the report his office issued this month was downright exuberant, citing California’s strong economy, growing revenues and a historically large “rainy day fund” created by outgoing Gov. Jerry Brown.

“It is difficult to overstate how good the budget’s condition is today,” Taylor said. “Under our estimates of revenues and spending, the state’s constitutional reserve would reach $14.5 billion by the end of 2019-20. In addition, we project the Legislature will have an additional $14.8 billion in resources available to allocate in the 2019-20 budget process.

“The Legislature can use these funds to build more budget reserves or make new one-time and/or ongoing budget commitments. By historical standards, this surplus is extraordinary.”

Taylor’s optimism assumes, as he cautions, that the state’s economy does not drift into recession. Nevertheless, the report is very good news for Gov.-elect Gavin Newsom as he and Brown’s budget staff work on a proposed 2019-20 budget that he must deliver to the Legislature just three days after his Jan. 7 inauguration.

Assuring Newsom’s Left-of-Center Voter Base

It would be surprising if Newsom doesn’t propose some initial spending on the priorities he stated during his campaign, such as expanding early childhood education, thereby assuring his left-of-center voter base that he means what he said.

In addition to his overall review of state finances, Taylor also issued a special report on K-12 schools and community colleges, which are dependent on the state budget, and it contained a not-so-rosy projection of their finances.

Enrollment in both systems has been declining, thanks to interrelated demographic and economic factors, while their costs have been rising, thanks to higher salaries for their teachers and employees and, most disturbingly, fast-growing pension costs.

State aid to both is largely tied to enrollment, which means that their revenues are flattening as their costs spike upwards, leading to severe income/outgo squeezes.

Taylor estimates that the “minimum guarantee” of K-12 and community college revenues under state law will increase by $2.4 billion in 2019-20 over the current year. However, mandatory payments to the California State Teachers Retirement System and the California Public Retirement System will increase by $1.35 billion, thus consuming more than half of the revenue boost.

The numbers confirm what Jessica Calefati, a writer for CALmatters, reported last July in a lengthy article about the financial dilemma facing school districts, even with a healthy economy. And, as Calefati wrote, “The situation could become even more bleak if California’s economy doesn’t keep growing.”

Enrollment Will Continue to Drift Downwards

School enrollment will continue to drift downwards, due to California’s declining immigration and birth rates, but pension costs will continue to increase as retirement systems shore up their shaky finances.

School enrollment will continue to drift downwards, due to California’s declining immigration and birth rates, but pension costs will continue to increase as retirement systems shore up their shaky finances.

School districts are required by law to increase their contributions to CalSTRS from 8.3 percent of payrolls of teachers and other certificated employees prior to 2014 to 19.1 percent by 2020. CalPERS is boosting payments for other school staff, as it is for workers in cities and other local governments.

More money for pensions means less for salary increases, building maintenance and other operating costs and as the squeeze intensifies, school officials and school unions will be pressing Newsom and the Legislature to allocate more state aid.

Brown has not been receptive to a state pension fix for schools. Were Newsom to bail schools out of their pension problem, other local governments facing similar squeezes, especially cities, will demand relief as well.

CALmatters is a public interest journalism venture committed to explaining how California’s state Capitol works and why it matters. For more stories by Dan Walters, go to calmatters.org/commentary.

DON'T MISS

Wired Wednesday: CEMEX’s New Mining Plan for the San Joaquin River

DON'T MISS

Trump Fires NSC Officials a Day After Far-Right Activist Raises Concerns to Him

DON'T MISS

China Halts Approvals for New US Investment Projects

DON'T MISS

Measles Spreads to Central Texas; 5 States Have Active Outbreaks

DON'T MISS

Trump Tariff Fears Erase $2 Trillion From US Stocks

DON'T MISS

Startup Offers Controversial Microplastic Blood Cleansing Treatment

DON'T MISS

Senate Confirms Mehmet Oz to Take Lead of Medicare and Medicaid Agency

DON'T MISS

First California EV Mandates Hit Automakers This Year. Most Are Not Even Close

DON'T MISS

Pence Will Receive the Profile in Courage Award From the JFK Library for His Actions on Jan. 6

DON'T MISS

Politics Turns Ugly for a Conservative Running for Fresno State Student Body President

UP NEXT

Trump Fires NSC Officials a Day After Far-Right Activist Raises Concerns to Him

UP NEXT

China Halts Approvals for New US Investment Projects

UP NEXT

Measles Spreads to Central Texas; 5 States Have Active Outbreaks

UP NEXT

Trump Tariff Fears Erase $2 Trillion From US Stocks

UP NEXT

Startup Offers Controversial Microplastic Blood Cleansing Treatment

UP NEXT

Senate Confirms Mehmet Oz to Take Lead of Medicare and Medicaid Agency

UP NEXT

First California EV Mandates Hit Automakers This Year. Most Are Not Even Close

UP NEXT

Pence Will Receive the Profile in Courage Award From the JFK Library for His Actions on Jan. 6

UP NEXT

Pentagon’s Watchdog to Review Hegseth’s Use of Signal App to Convey Plans for Houthi Strike

UP NEXT

President Trump’s Tariffs Could Be the Political Tipping Point

Measles Spreads to Central Texas; 5 States Have Active Outbreaks

13 hours ago

Trump Tariff Fears Erase $2 Trillion From US Stocks

13 hours ago

Startup Offers Controversial Microplastic Blood Cleansing Treatment

13 hours ago

Senate Confirms Mehmet Oz to Take Lead of Medicare and Medicaid Agency

14 hours ago

First California EV Mandates Hit Automakers This Year. Most Are Not Even Close

16 hours ago

Pence Will Receive the Profile in Courage Award From the JFK Library for His Actions on Jan. 6

16 hours ago

Politics Turns Ugly for a Conservative Running for Fresno State Student Body President

16 hours ago

Pentagon’s Watchdog to Review Hegseth’s Use of Signal App to Convey Plans for Houthi Strike

16 hours ago

President Trump’s Tariffs Could Be the Political Tipping Point

17 hours ago

Order That Kept Water in the Kern River Reversed by 5th District Court of Appeal

17 hours ago

Wired Wednesday: CEMEX’s New Mining Plan for the San Joaquin River

GV Wire’s Edward Smith talks with KMPH Fox 26 “Great Day” anchor Christina Rodriguez about the possibility of CEMEX digging a 600-foot hole ...

11 hours ago

11 hours ago

Wired Wednesday: CEMEX’s New Mining Plan for the San Joaquin River

President Donald Trump speaks during an event to announce new tariffs in the Rose Garden at the White House, Wednesday, April 2, 2025, in Washington. (AP/Mark Schiefelbein)
11 hours ago

Trump Fires NSC Officials a Day After Far-Right Activist Raises Concerns to Him

12 hours ago

China Halts Approvals for New US Investment Projects

13 hours ago

Measles Spreads to Central Texas; 5 States Have Active Outbreaks

13 hours ago

Trump Tariff Fears Erase $2 Trillion From US Stocks

13 hours ago

Startup Offers Controversial Microplastic Blood Cleansing Treatment

Dr. Mehmet Oz, President Donald Trump's pick to lead the Centers for Medicare and Medicaid Services, seated right, gives a thumbs-up alongside his wife Lisa Oz, seated left, with friends and family after he testified at his confirmation hearing before the Senate Finance Committee, on Capitol Hill in Washington, Friday, March 14, 2025. (AP/Ben Curtis)
14 hours ago

Senate Confirms Mehmet Oz to Take Lead of Medicare and Medicaid Agency

16 hours ago

First California EV Mandates Hit Automakers This Year. Most Are Not Even Close

Help continue the work that gets you the news that matters most.

Search

Send this to a friend