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Fourth District PTA Advocacy Roundtable Presented by Ron Bennett President and CEO Ron Bennett President and CEO.

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Presentation on theme: "Fourth District PTA Advocacy Roundtable Presented by Ron Bennett President and CEO Ron Bennett President and CEO."— Presentation transcript:

1 Fourth District PTA Advocacy Roundtable Presented by Ron Bennett President and CEO Ron Bennett President and CEO

2 Funding Per ADA – Actual vs. Statutory Level Loss due to midyear cut $4,911 1

3 Money Matters in Student Performance 2

4 California’s Education Spending Continues to Lag 3

5 California’s Spending Lags the Nation California’s Schools Lag Behind Other States on a Number of Measures California RankCaliforniaRest of U.S. K-12 Spending Per Student ( )* 44$8,826$11,372 K-12 Spending as a Percentage of Personal Income ( )* %4.25% Number of K-12 Students Per Teacher ( )* Number of K-12 Students Per Administrator ( ) Number of K-12 Students Per Guidance Counselor ( ) Number of K-12 Students Per Librarian ( ) 505, * and data are estimated. Note: “California Rank” and “Rest of U.S.” exclude the District of Columbia. Spending per student and number of students per teacher are based on Average Daily Attendance (ADA). Number of students per administrator, guidance counselor, and librarian are based on statewide enrollment. Source: National Education Association, National Center for Education Statistics, and U.S. Bureau of Economic Analysis 4

6 Historic IDEA Funding 5

7 Governor Brown’s Budget Revenues vs. LAO Forecast Governor Brown’s Budget assumes revenues and transfers of $95.4 billion in , a 7.7% increase The LAO forecasts a two-year shortfall of $6.5 billion, including $2 billion in additional tax revenues related to the Facebook initial public offering $3.0 billion attributable to ; $3.5 billion to The LAO forecast assumes passage of Governor Brown’s original tax proposal 6

8 Reasons for the LAO’s Pessimism Economic Outlook The LAO forecasts stronger U.S. and California economic growth than the DOF Revenue Forecast The LAO disagrees with the DOF’s assumption about capital gains income; the DOF is too optimistic Average home price appreciation for was 18% annually; forecast of 1.2% Capital gains income between of $88 billion annually; $90 billion a year forecast by the DOF for Recent shortfalls have been attributed to weak capital gains income 7

9 Competing Tax Initiatives Governor Brown’s Budget assumes passage of $6.9 billion in new taxes, but other measures could be on the ballot Conventional wisdom says that if more than one tax initiative is on the ballot, they all fail What’s in play? Governor Brown’s initiative – ½ cent sales tax and higher income tax rates for $250,000 and above California Federation of Teacher’s (CFT) millionaires tax Molly Munger/Parent Teacher Association’s broad based income tax Latest entry: Governor Brown’s compromise with CFT ¼ sales tax and higher income tax rates at $250,000 and above 8

10 How Do the Tax Initiatives Compare? Governor/CFT Compromise Proposal Governor’s ProposalCFT “Millionaires Tax”Munger Education/ECE What is taxed? 10.3% $250,000 to $300, % $300,000 to $500, % Over $500,000 Increases the sales tax rate by a quarter cent 10.3 % $500,000 to $600, % $600,000 to $1 million 11.3 % Over $1 million Increases the sales tax rate by one-half cent 3% $1 million and $2 million 5 % Over $2 million Rate increase would range from 0.4% on taxable incomes between $14,632 and $34,692 and 2.2 % on taxable incomes over $3,402,994. Estimated Revenues (DOF est.) $7.9 billion$6.9 billion$9.5 billion$5.5 billion Estimated Revenues in First Full Year of Implementation (DOF est.) DOF: $9.9 billionDOF: $6.9 billionDOF: $6.0 billionDOF: $11.0 billion Revenue Allocation K-12 (89%) and CCCs (11%) The new revenues would increase the Proposition 98 guarantee by an estimated $2.5 billion, leaving $4.4 billion to close the Budget gap. K-12 (36%); Social and health services (25%); UC, CSU, and CCCs (8% each); county public safety (10%); county maintenance (4.9%); and administrative costs (up to 0.1%) through : K-12 (60%); repayment of state bond debt (30%); and child care and preschool (10%) and beyond: K-12 (85%) and child care and preschool (15%). 9

11 How Do the Tax Initiatives Compare? Governor/CFT Compromise Proposal Governor’s Proposal CFT “Millionaires Tax” Munger Education/ECE Does Measure Address Realignment Revenue Shift? Yes No Relationship to Proposition 98 Counts toward the Proposition 98 Temporary or Permanent? Income tax: Sales tax: Income tax Sales tax: Permanent2013 through 2024 Revenues Available To Close Budget Gap $4.4 billion None$1.5 billion Revenues Available To Close Budget Gap in First Full Year of Implementation Approximately $4.4 billion None$3.0 billion SponsorGovernor Brown CFTMolly Munger 10

12 Political and Logistical Challenges A Field Poll in February placed CFT’s millionaire’s tax first (63% support), then Governor Brown’s (58%), finally Munger’s (43%) A March 7 Public Policy Institute of California (PPIC) poll placed Governor Brown’s at 52% Signature gathering to qualify About 500,000 valid signatures for Munger’s and CFT’s About 800,000 for Governor Brown’s (constitutional amendment) About six weeks remaining to submit signatures 11

13 Weighted Student Funding Governor Brown has proposed a major change to California’s school finance system Revenue limits and over 40 categorical programs would be replaced with a weighted student funding (WSF) formula $4,920 per-ADA base rate, plus 37% additional for English Learners and free and reduced-price lunch students Six-year phase-in, with 5% phase-in in ; hold harmless in budget year Major categorical programs added to flexibility Economic Impact Aid Class-Size Reduction Transportation 12

14 Weighted Student Funding The WSF proposal has evolved since January and other changes are expected Grade span weights, similar to the charter school block grant Major challenges and shortcomings Eliminates deficit factor Redistributes base funding ($5,244 per ADA vs. $4,920 per ADA) Nothing “magical” about 37% weights Disregards cost factors unrelated to disadvantaged students Each Legislator will have winners and losers in his/her district 13

15 Transitional Kindergarten Proposal in Senate Bill 1381 (Chapter 705/2010): Changed eligible birth dates for kindergarten and 1st grade Established “Transitional Kindergarten (TK)” According to current law, TK is to start in Districts offer TK to students who otherwise do not qualify for traditional kindergarten due to change in age eligibility dates Must offer TK to students turning five between December 2 and November 2 in Can offer TK to students with birthdays between September 2 and December 2 Not required at every school site – whatever works best for the district Not compulsory – students are not required to attend kindergarten 14

16 Transitional Kindergarten Proposal in Governor’s Proposal: Eliminates all statutes associated with TK TK would be an optional local decision Allows students turning five at any time during the school year to: Enroll in kindergarten, fully funded, at the beginning of the school year On a case-by-case basis, upon local board approval Legislature has been generally unfavorable – future of proposal uncertain Resources will be available for TK in either current law or Governor’s Proposal 15

17 K-12 Deferrals Nearly $10 billion in payments of state aid for K-12 schools is deferred into the next year Equates to more than 38% of the principal apportionment Districts receiving most of their funding from local sources: Have always had to borrow to meet cash flow – mostly within year Borrowing needs are less affected by deferrals of state aid Districts receiving most of their funding from the state: Historically, cash flow more closely matches spending Operating cash needs often met without borrowing Therefore, deferrals of state aid have a significant impact Imposes new borrowing requirements to match cash needs Requires borrowing across fiscal years May require two Tax Revenue Anticipation Notes, with the associated costs 16

18 Basic Aid Budget Reductions Fair Share Revenue limit districts have been impacted by a deficit of % in as an ongoing deficit beyond The comparable impact on basic aid districts includes a fair share reduction of 9.57% for the fiscal year The reduction of the fair share will be based on the P-2 revenue limit subject to the deficit factor for each of the respective districts identified as “basic aid” in the The reduction is taken from categorical program funds apportioned in the fiscal year 17

19 Thank you


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