Special State Budget Update: What You Should Know Since the May Revise (And What You Can Do)

Catch up quickly on the latest California state budget news with CASBO’s governmental relations team, Sara Bachez and Elizabeth Esquival. They highlight recent legislative reactions and deliberations since the May Revise was released on May 14, as California grapples with closing a massive state budget deficit.

Sara and Elizabeth review key elements of the Governor's proposal, which called for, among other things, a 10 percent cut to the Local Control Funding Formula. 

They describe some initial, positive momentum with regard to special education funding and the state providing more flexibility to school districts; plus, they share top concerns raised by CASBO and the state's Education Coalition.

For a detailed description of CASBO's position in response to the May Revise, read CASBO's May Revise Position Letter, released on May 21, 2020. This letter notes that "the proposed state funding for public education will create new barriers to safety, educational attainment and access; yet, schools are critical to reopening the economy that has been severely impacted by COVID-19. In that spirit, CASBO will continue to emphasize that we prioritize the health and safety of our 6 million students and their families, educational staff, and communities."

A recently released Education Coalition letter stated, "Schools cannot physically reopen safely with the funding level that has been proposed in the May Revision."

Sara and Elizabeth also explain next steps in the state budget process and -- importantly -- they set out a call to action for the next two weeks to ensure that the voices and expertise of those who serve in local school districts inform the state's ultimate policy and fiscal decisions surrounding the budget. Be sure to visit the CASBO's Advocacy Page.

PLUS: We premier a new musical piece created especially for this unique moment by Tommy Dunbar. We call it The Coronavirus State Budget Blues. You'll want to turn it up.

About Our Guests

Sara Bachez serves as Chief Governmental Relations Officer for CASBO. Contact her at sbachez@csabo.org.

Elizabeth Esquivel serves as Senior Director, Policy & Governance for CASBO. Contact her at eesquivel@casbo.org.

Tommy Dunbar is a professional musician, songwriter and producer. Since the 1970s he has been playing guitar all over the world with his band, The Rubinoos. Tommy handles all all of our sound, mixing and music for the podcast.

About CASBO

The California Association of School Business Officials (CASBO) is the premier resource for professional development and business best practices for California's school business leaders. CASBO is dedicated to promoting excellence and professionalism in all aspects of school business. Founded in 1928, CASBO serves more than 23,000 members by providing certifications and training, promoting business best practices and creating opportunities for professional collaboration. CASBO members represent every facet of school business management and operations. The association offers public school leaders an entire career's worth of growth opportunities.

About your series guide

Paul Richman is a public education advocate and consultant. Contact him at edfundingca@gmail.com. We value your feedback and ideas!

Transcript

California State Budget Update (and Blues) 
with Sara Bachez and Elizabeth Esquivel 

[Opening blues music.]

Paul:

Welcome to this special episode of Adventures in Ed Funding, the series presented by CASBO, the California Association of School Business Officials. I’m Paul Richman, your series guide. My show colleague Tommy Dunbar created all-new theme music for us this time because, well, we’ve all sort of got those Coronavirus School Budget Blues. 

[Music.]

Last week, as you know, Governor Newsom released his revised budget, which proposed devastating cuts to schools. And while it’s still just a proposal, it’s hard not to be alarmed at what the future could hold for school funding and students as a result of the COVID-19 pandemic. To help us get caught up on the latest budget news and developments, we’re joined once again by CASBO’s dynamic governmental relations team of Sara Bachez and Elizabeth Esquivel. Great to have both of you back on the line. 

So, Elizabeth, right before we started recording, you said you woke up in the middle of the night last night in a panic about school funding?

Elizabeth:

Yeah, I feel like it literally hit me last night: How our schools supposed to reopen without additional resources and the budget being cut by 10%? How?  I just feel like we're really setting up an unrealistic scenario. I know that we've had these conversations and Sarah and I have been doing this for the past few weeks, but I think it literally just hit me last night. 

Paul:

Wow. So, um, obviously so much is happening every single day and it seems like we have several major things going on at the same time and intersecting. There's the ongoing public health threat from the pandemic. There's the economic fallout and this major state budget deficit to close. And of course, last but not least, there's the conversations now around reopening schools in ways that will be safe, uh, and that reflect the budget reality. Sarah, can you share with us what have been some of the most significant developments related to budget and schools reopening just in this past week or so?

Sara:

Well, as we all saw on May 7, Governor Newsom released the Department of Finance updated fiscal analysis, where it stated that in the course of three fiscal years, school districts will experience an $18.3 billion funding reduction due to the impacts to the economy because of COVID-19. I think he did that in order to send the signal to the federal government that without their assistance and support, we all face very daunting realities of what the future can hold and how do we reopen the economy safely – and that requires school districts being part of the equation. Then, following week, uh, on another Thursday, we all held our breath and reviewed the governor's May Revision, which came out with a 10% reduction to the local control funding formula and then additional reductions to all the supplemental and concentration grant funding and add-ons.On top of that, we're facing cash deferrals once again in order to assist the state in weathering its fiscal situation. 

We saw that the legislature returned on Monday. The Assembly Subcommittee on Education held their first May Revision discussions. We were able to testify (remotely of course) in one minute, jamming 200-and-something words of what all of these scenarios and realities mean. We're facing conversations of how do we safely reopen schools. Recognizing that this is not the same environment we found ourselves in 2008 during the Great Recession, we can't make the same fiscal decisions given today's reality. 

And then as you saw yesterday, the Education Coalition, which is made up of management and labor organizations and the parent teacher association boldly came out with the statement that it will require additional resources to safely reopen schools and that these proposed reductions, despite the recognition that Governor Newsom is redirecting $4.4 billion in federal funds is still not sufficient to provide the necessary support to reopen.

Paul:

And that Education Coalition letter, basically it said, “Schools cannot physically reopen safely with the funding level that has been proposed in the May Revision.” Is that right?

Sara:

Correct. The letter lists out the impact these cuts will have on the number of staff we have available. And in an environment of social distancing, it will actually require more staff for sanitation and screening procedures as well as staff and educators who will be needed if we are to stagger our educational structures, provide hybrid models of learning and incorporating distance learning in the event of resurgence in the fall or closures due to the continued, um,events of COVID-19. 

Paul:

So, the legislative budget committees were back in action this past week. What were some of the comments that you were hearing or reactions from legislators?

Elizabeth:

As Sara mentioned, the Assembly Subcommittee on Education Finance hosted their first May Revise hearing this past Monday, which to be honest, as advocates and staff who are following education, it was a sprint. We got the May Revise language on Thursday, we got trailer bill language Friday night. So it was a full 48 hours of just trying to digest hundreds of pages, you know, and not just us in the education advocate world, but also the staff who have to brief their members on this. I feel that the initial reaction from the committee was that this financial downturn is real and we're seeing how and which specific programs are being cut. For example, we saw ACES funding proposed to be cut by $100 million, which the chair of this committee, Assemblymember McCarty is very passionate about. 

Paul:

And ACES, that’s for after school?

Elizabeth:

After school funding, correct. We also saw the career technical education (CTE) funding could be cut by 52%, which the chair of the Assembly Education Committee, Assemblymember O'Donnell, who is also a member of this committee, is passionate about. So I think these two situations really help make it real to the members who are having to engage in these discussions. Uh, some of the concerns that were expressed were surrounding the $2.9 billion in federal funds that non-concentration grant school districts would be ineligible for, based on the proposed formula. There's also conversation about another federal stimulus package. But the repeated question that stuck was, What is plan B? What happens if we don't get the federal dollars? How is our current financial situation going to be different? And that was a repeated question over and over again: What's our plan B? What's our plan C -- the realities of what happens if we don't get additional federal dollars. And there was even a possibility of a ballot initiative for November to help increase education funding that was brought up during this conversation. 

But on a positive note, the commitment to special education funding was kept and there was support for that. As you know, CASBO has been advocating for special education funding for a number of years and Assemblymember Medina, who was our champion and author of our co-sponsored bill these past two years, expressed his appreciation. There was also an agreement that the State needs to provide LEAs (Local Education Agencies) certain flexibility in terms of the number of school days and instructional minutes without being penalized. But the one I personally appreciate was raised by Assemblymember O'Donnell who expressed the need to protect districts from legal liability if students or staff contract the virus when school schools reopen. So, those were just some takeaways. The Senate Subcommittee on Education Finance will be hosting their May Revise hearing this upcoming Monday, May 25, and I look forward to seeing what the priorities are for both houses.

Paul:

And in terms of some of the next steps too, um, can you tell us a bit about the, the trailer bills that get introduced along with the budget? 

Sara:

The Department of Finance is required to release what is known as the trailer bill language -- and those are all the statutory and legislative changes that are needed in order to conform to the proposed budget. And let me tell you, Elizabeth and I spent maybe three or four hours on Saturday just printing before reviewing the trailer bill. And it is in those that statutory sections that we see all of the changes that would be necessary to enact this budget. And in that we saw the implications of the LCFF reductions and the deferral language as well as some flexibilities that we had been urging the legislature and the governor to consider, given the dynamics of the economy and recognizing that the State would be experiencing a huge fiscal cliff. Organizations such as CASBO, the Riverside County Office of Education and various other management groups had sent a letter late in April stating to please allow us as much flexibility around resources so that we can mitigate many of these reductions. Some of those flexibility proposals are: authorizing LEAs to exclude their state pension payments on behalf of the LEA that are calculated as part of the required contribution for the routine restricted maintenance account; as well as allowing LEAs to do an internal interfund borrowing to mitigate the deferrals; and authorizing to use proceeds from the sale of surplus property for one-time general fund purposes. So those are things that we had been advocating prior to the May Revision, which were included. 

So clearly, I believe both the legislature and the administration are seeking opportunities to provide relief. It is up to us, uh, as, as the body that knows and understands the fiscal realities we're in to continue to advocate for those additional measures and tools that will provide us the opportunities to try our best to mitigate all of these reductions and to steer it as far away from our students as possible.

Paul:

So, it sounds like at least some of the proposals for flexibility have resonated. Elizabeth, are there some other positive parts in the May Revise language that you’re seeing so far?

Elizabeth:

So it's not all sad. There are things that we are very much supporting in here and first is the federal funding, and we acknowledged that the governor is allocating more to schools than what was expected, and so we want to make sure that we're doing what we can to support this funding and keeping it in education. The commitment that he [the Governor] has made in allocating more federal dollars to education really shows that the governor is dedicated to funding us during these times. We also appreciate the redirecting of the $2.3 billion that was originally intended for our long-term unfunded liability, but we'll now go to CalSTRS and CalPERS to reduce the school employer contribution rates for the next two years. And I mentioned the special education proposal earlier and we also support increasing the special education base grant rates to $645 per ADA (Average Daily Attendance), which will still be based on a three-year rolling average ADA. And the last two I’ll mention are: to suspend business incentive tax credits for three years, which would generate about $1.8 billion in benefits to Proposition 98; and the release of the $1.5 billion in Proposition 51 funds.

What are some top concerns with the May Revise?

Paul:

Thanks, Elizabeth, for going over several of those parts in the May Revise that CASBO and the many education groups support. And, just to make sure we’re clear, the parts that raise the biggest concerns are, I mean the size of the cuts obviously, and?

Sara:

So, the parts that we have the most concerns really are in recognizing the implications of the LCFF reductions – the reductions that take place to all of the add-ons and the supplemental/concentration grant and the constraints without additional flexibilities. 

And what we mean by additional flexibilities is flexing our instructional time requirements, both the minutes and the longevity of the year, reducing it down from 180 days will be critical in order to mitigate these reductions. during the Great Recession when we had these high hit, um, reductions before us, the State scaled back by five days, which allows LEAs to then collectively negotiate with their bargaining units on how to implement furloughs. And at least in the furlough environment, you're able to retain staff. But the reality is we have to align then our expenditures with the available resources. And so recognizing that the State is looking to impose a 10% reduction to LCFF, it'll be critical to ensure that we have all the tools, which means flexing the grade span requirements, addressing what can be “swept” as part of outstanding fund balances and various programs that are still available – um, there are requirements to expend these resources by June 30th at the end of the fiscal year. If we still have any available dollars, those dollars need to be allowed to be flexed. And then to retain and address some of our staffing shortages and reductions that we have to do. 

We're also going to be seeking flexibilities in newly enacted legislation and suspensions of newly enacted legislation that are causing, uh, extreme concerns of how do we move forward when we have new mandated costs that were not part of last year budget allocation. 

We still have concerns in the deferral language. There is not a specified date of when the $5.3 billion in the 2021-2022 fiscal year would be repaid. Schools need stability and predictability. So the more information we have ahead of time, the better it'll make it to manage cashflow and to manage how much then to borrow. So those are all dynamics that we're indicating in our CASBO budget position paper that should be posted prior to this podcast going live. People will be able to find our budget position document under our advocacy web page under budget center. 

Paul:

And we’ll also link to all those in the podcast show notes. So, you’ve helped set out the many concerns with the proposed budget. Elizabeth, what are some things that people can do right now or in the next week to engage in the process and to advocate? 

What can people do to engage in the process and advocate? What are the "calls to action?"

Elizabeth:

I think the most important thing right now…because between now and June 15, the legislature is going to have to figure out what their priorities are by statutory deadline; they have to pass the budget come June 15th, and so, first and foremost, communicate with your state legislators. Most importantly, share the impact of these proposed cuts. There's a bigger impact that can be made by translating what these cuts actually mean to a local school district. So, we talk about there being a 10% statewide cut, but what does it actually mean to your district? What kind of cuts does it equivalate to per student? Per class? Potential layoffs? And those are just some examples of how to really put this into context so that your state legislators can better understand. 

In addition, you know, including what those additional costs are involved in safely reopening schools. One of the asks from the State is to calculate how much is it going to cost to reopen, including cleaning supplies and instructional materials, more staff to sanitize? And there's costs that come with providing school meals in a social distance environment. What do those real numbers look like? I know it's hard to put all these costs together, but I think the more we can do that, the better picture legislators will have of the realities of the cost to reopen schools. 

Another one is to advocate for more federal relief money. There's another $3 trillion stimulus package that the House passed and we will have to wait and see what the Senate will do, but we ask that you also reach out to your Congressional representatives to the extent that you can, and lastly communicate any additional flexibilities that are needed, which have not already been mentioned. Like I said, this is the window of opportunity where we can play a role with the administration and legislators, so please don't be afraid to speak up on what your needs are.

Paul:

Thanks Elizabeth. And so those are the calls to action for this coming week or two. Sarah, what can we expect to happen next too, in the process? 

Sara:

So the Senate Subcommittee on Budget is meeting next Monday, and something that we have not seen since 1995 is the entire Assembly will also be convening to have a budget discussion. So, all 80 Assembly members; we’re intrigued to see the logistics for next week. They will be all convening to hear together instead of being broken up by topic or by committee. Speaker Rendon wants to ensure that every legislator understands the fiscal conditions before them; I think that's a great approach given that time is of the essence and to have every single one of them understand in one sitting what we're all facing. 

This is why now is the time to really get ahead and start those, um, picking up the phone and start talking and communicating to your legislators. They then have until June 15 to pass a budget, but because of changes in statute, um, through the voter process, they have to have all the bills in print, uh, within so many days, which really means it reduces their ability to make further changes to I think four to six days before the June 15 deadline. So for us, it's getting ahead as early as possible. It's letting us know if you have any other flexibility measures that need to be considered so that Elizabeth and I can advocate on your behalf. The time is going to be challenging. And then we know that even though they'll pass a June 15 budget, because revenues have been delayed until July 15, there’ll have to be more deliberations in the fall when the legislature reconvenes in July and August. 

Paul:

One last quick question before we wrap up: Let’s say I’m a newer school business official, or maybe I’m a parent or an educator listening to this show, and maybe I’ve never emailed or picked up the phone to contact my state legislators before – it’s easy, right? It’s not painful?

Sara:

It's not painful. They're real life human beings. Both Elizabeth and I used to work in the Capitol, so you're always welcome to email us directly and we're more than happy to help you set up those calls. If possible, we're more than happy to sit in on the calls with you so that it's not a daunting task. We have materials available on the advocacy page on how to make the request. We've added as the quick five digit sip code search engine where you type that in and it gives you your state and federal legislators and elected officials. If you click on their name, it gives you their contact information and their home website, where you can see how best to reach them. As we said, we're here for you if you're interested in setting up one of those calls or interested in just doing a quick role play of how to set up those calls, Both Elizabeth and I, having been former Capitol staffers are more than happy to help.

Paul:

Awesome. So you have the direct support of CASBO’s amazing advocates to help you in contacting your legislators…

Sara:

Yes. 

Elizabeth:

There’s no better time to start than now.

Paul:

Well, Elizabeth Esquivel and Sara Bachez, many thanks to you both. We’re all truly grateful for the work you do as education advocates in Sacramento! And we’ll look forward to talking with you again soon to hear how the state budget is progressing and…I’m going to hold my breath -- maybe next time when we talk Elizabeth, you won’t be waking up in the middle of the night with budget tremors – and maybe, there could be more promising news to report…Maybe?

Until then, a very sincere thanks to you for, our listeners, for journeying along with us on Adventures in Ed Funding. We hope this additional insight about the budget has been helpful. Be sure to check out the resources and links that Sara and Elizabeth mentioned on the CASBO website. Also, feel free to send us an email with comments or suggestions for the show to edfundingca@gmail.com.

[Music starts.]

Paul:

You know, since our series launched, we’ve benefitted greatly from the sound mixing, editing and of course musical talents of Tommy Dunbar. It’s been a pleasure working alongside (and remotely) with you, Tommy, and I and we appreciate all you do!  This week, as part of our bonus episode, Tommy put together new music, too, to reflect these Coronovirus State Budget Blues we’re all experiencing. We’ll leave you with the music. Turn it up.

[Blues Music]