California lawmakers want to restore governor's deficit-reducing cuts

The major sticking points between what California lawmakers want and cuts proposed in Gov. Gavin Newsom’s for K-14 education.

Newsom already made a concession to educators on Monday after the California Teachers Association began airing online and television ads last week criticizing cuts to the education budget.

The plan he outlined in his May budget revisions would have lowered the amount guaranteed to schools by nearly $12 billion over two years. The new deal alters the calculus on the Proposition 98 guarantee to add $5.5 billion over the next three fiscal years.

It would use $8.4 billion in Proposition 98 reserves, including $2.6 billion to pay off 2022-23 deferrals.

“This agreement is a smart and balanced policy solution that incorporates feedback from California’s educators,” Newsom said in a statement. “Working together, we are protecting California’s students, families, and educators and putting the state on a fiscally sound and sustainable path.”

There is a lot of angst over some of the governor’s proposed cuts, Legislative Analyst Gabriel Petek said. But his advice to lawmakers is “if they can try to hold on to the general architectural features (of the governor’s proposed budget) it will put the state in a better position.”

David Goldberg, CTA’s president, called the agreement “a critical step forward for California’s schools and communities.”

“It ensures that students, educators and families aren’t impacted by cuts to the classroom and includes protection against additional layoffs of educators,” Goldberg said.

The agreement is “fiscally neutral” over the budget period, Goldberg said, because it will not negatively impact other areas of the budget such as healthcare and social services.

“As we grapple with a massive deficit in our state, it’s vital for allies to work together to protect fundamental public services that our communities deserve,” Goldberg said.

Prop. 98 requires the state to fund K-12 schools and community colleges at a minimum percentage of the state’s general fund budget each year.

The state overpaid its Proposition 98 funding percentage in fiscal 2023 when projected revenues failed to materialize. Rather than clawing back the $8 billion overpayment, the governor had proposed providing lower funding levels to schools in the fiscal 2024-25 and fiscal 2025-25 budgets.

The agreement reintroduces funding deferrals, an accounting maneuver the state used in the aftermath of the 2008 global financial crisis to shift spending to future years, rather than suspending funding. It reflects a $2.4 billion budget year deferral, which based on current Department of Finance projections could be retired in 2025-26, according to details of the agreement provided by DOF spokesman H.D. Palmer.

It also enables the state to maintain school funding in the event of a future economic downturn using deferrals, provides statutory flexibility to avoid future disputes by including statute to address situations in which significant tax revenue is not available to determine the Proposition 98 minimum guarantee and provides stability for schools both in the short and long term, Palmer said.

Despite the agreement, the union plans to continue airing the ads while it lobbies lawmakers “to protect public school funding in the budget,” Goldberg said.

A coalition of 13 mayors in the state’s largest cities have protested elimination of $260 million in funding to the Homeless Housing Assistance and Prevention Program, which offers grants to cities.

The mayors released a report in April saying funding from the program has created 15,722 emergency shelter beds, served 149,851 people and 42,215 people were placed in housing.

“Without HHAP, homeless shelters will be shuttered, safe parking lots will close, outreach workers will be gone and unsafe and unsanitary tent encampments will proliferate on our sidewalks and in our parks,” San Diego Mayor Todd Gloria, chair of the coalition, said during the May 22 press conference.

Both Newsom in his May revise and Petek during his briefing Friday noted that the Newsom administration is the first one to dedicate state funding of any significance to solving the housing crisis, as the onus had largely been on local governments previously. Newsom added during his May 15 revision briefing that his focus this year will be on more accountability as to how well the money already dispersed is being used.

The lawmakers’ proposal would provide $1 billion to round 6 of HHAP, plus the $500 million for the low income housing tax credit program, also in the governor’s budget. It would also reject cuts to the multifamily housing, regional early action planning REAP 2.0 and housing navigation and maintenance program.