1. LAO State Budget Update Jennifer Kuhn Legislative Analyst’s Office October 4, 2007 www.lao.ca.gov

2. LAO 2007-08 State Budget

3. LAO State’s General Fund Condition In Millions

4. LAO Major Actions Taken to Balance Budget: Proposition 98 Prop. 98 Funding Level Assumes Lower State Revenues

5. LAO Major Actions Taken to Balance Budget: Relies Heavily on Special Funds  Uses almost $1.3 billion in transportation funds to relieve General Fund  Uses about $1.3 billion in tobacco securitization funds to relieve General Fund

6. LAO Major Actions Taken to Balance Budget: Scores New General Fund Revenue  Scores $1 billion in one-time revenue from sale of EdFund  Scores almost $300 million in new revenue from amended tribal gambling compacts

7. LAO Major Actions Taken to Balance Budget: Achieves Some Savings  Achieves almost $250 million in social services savings  Achieves about $330 million in Medi-Cal savings

8. LAO Major Risks to State Budget  Volatility of General Fund revenues  Transportation lawsuit  Sale of EdFund  Amount of tribal gambling revenue  Court-ordered CalSTRS payment

9. LAO General Fund Spending by Major Program Area Dollars in Millions

10. LAO 2007-08 K-12 Budget

11. LAO Funding From All Sources Dollars in Millions

12. LAO Ongoing Proposition 98 In Millions

13. LAO Ongoing Proposition 98: Major Actions In Millions

14. LAO One-Time And Special Funds: Major Actions In Millions

15. LAO Governor’s Vetoes In Thousands

16. LAO K-12 Proposition 98 Spending Per Pupil In Billions

17. LAO Balance on Education Credit Card Grows In Millions

18. LAO A Look at the Coming Year

19. LAO 2008-09 Budget Outlook  Heavy reliance on one-time monies for ongoing costs means large operating shortfall in 2008-09  2008-09 looks to be tight for K-12 education

20. LAO Year of Reform?  State Budget Reform?  Year of Education Reform?

21. LAO State Budget: Considerable Volatility in General Fund Revenues Year-to-Year Percent Change in General Fund Revenues

22. LAO State Budget: Considerable Volatility in Annual Allocations Year-to-Year Change in General Fund Revenues ( In Billions)

23. LAO K-12 Education: Possible Finance Reform  Adequacy initiative or lawsuit  Weighted student formula  Categorical block grants

24. LAO LAO Work-in-Progress Relating to K-12 Finance Reform  Overview of programs serving economically disadvantaged students  Analysis of how districts use EL funds  Response to “Getting Down to Facts” studies