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Governor signs 2014-15 budget

6/23/14

Governor Brown signed the 2014-15 state budget on June 20. The balanced, on-time state budget plan pays down debt, directs additional funding for local schools and health care, shores up the teachers' retirement system and builds a solid Rainy Day Fund.

This is the fourth year that the Legislature has passed a budget by the constitutional deadline since the voters passed Proposition 25. This is also one of the earliest budgets to be enacted in recent history with the budget being signed five days after it was passed by the Legislature and ten days before the beginning of the 2014-15 fiscal year. Indicative of the process between the Governor and the Legislature on reaching the budget agreement, there were very few line item vetoes as part of the final budget and the vetoes that were included were mostly technical in nature.

This is a good budget for CSEA. The enacted budget provides additional funding for K-12, county offices of education and community colleges. The budget also includes language that requires school districts to document and justify local reserves that exceed the state's recommended levels. In the event that the Rainy Day Initiative passes in November and a Proposition 98 reserve is established, any time a deposit is made into the Proposition 98 reserve, local reserves are capped for one year.

When Governor Brown took office, the state faced a massive $26.6 billion budget deficit and estimated annual shortfalls of roughly $20 billion. These deficits, built up over a decade, have now been eliminated primarily through the passage of Proposition 30, measured budget reductions, and the recovering economy.

Highlights of the 2014-15 Enacted Budget include:

Major K-12 Education Highlights

  • Increases funding for the implementation of the Local Control Funding Formula (LCFF) to $4.77 billion. This is $250 million above the Governor's January proposal ($4.5 billion) provided to close the LCFF funding gap. The budget proposal also provides $26 million for County Offices of Education to reach full implementation of the LCFF (in 2014-15 the target levels will be increased by a 0.85 percent cost-of-living adjustment).
  • Provides $5.1 billion to pay down the K-14 deferrals. In the event that revenues come in higher than projected, an additional $991 million payment would be triggered to eliminate education deferrals in the 2014-15 fiscal year.
  • Provides $450 million for reimbursement of K-12 education mandates with the intent that funding freed up from this payment be dedicated to the implementation of Common Core.
  • Dedicates $250 million in one-time funding for career technical education (CTE).
  • Adopts education trailer bill language requiring school districts to document and justify local reserves that exceed the state's recommended levels.      
  • Specifically, the education trailer bill included language, contingent on approval of the Rainy Day Fund initiative on the November ballot, that would cap local district reserves. If passed in November, the Rainy Day Fund initiative would require that excess capital gains revenues be deposited in a General Fund reserve and a Proposition 98 reserve. In any year following a deposit to the Proposition 98 reserve, local district reserves would be capped for one year. The local cap would be either two times or three times the state's recommended reserve level, depending on the size of the school district.

Major Community College Highlights

  • Provides $140.4 million to allow for a 2.75 percent increase in enrollment growth and adopts trailer bill language requiring the Chancellor's Office to develop a new enrollment growth formula that directs more funding with districts with high poverty rates and low college access rates.
  • Provides $148 million (an increase of $60.5 million) for deferred maintenance - no matching funds will be required for the deferred maintenance funds.
  • Provides $170 million for student success programs, including $100 million for the Student Success categorical program and $70 million to support activities outlined in colleges' Student Equity Plans.
  • Adds $50 million in one-time funds to support the Economic and Workforce Development program at the Chancellor's Office. These funds will provide resources for community colleges to develop, enhance, and expand career technical education programs that build upon existing regional capacity to better meet regional labor market demands.
  • Provides $47.3 million for a 0.85-percent cost-of-living adjustment.
  • Provides $498 million to pay down the Community College deferrals. In the event that revenues come in higher than projected, an additional $94 million payment would be triggered to eliminate education deferrals in the 2014-15 fiscal year.

Major Early Childhood Education Highlights

Provides $155 million for the State Preschool Program to expand access, increase preschool provider rates, reduce family fees and improve quality. Including:

  • 7,500 additional full-year, part-day preschool slots
  • 500 additional alternative payment slots
  • 1,000 general slots
  • An increase in the standard reimbursement rate of 5 percent
  • $50 million for quality grants to LEAs
  • $35 million in one-time money targeted to professional development and facilities
  • Teachers must have a minimum of 24 units of Early Childhood Education (ECE). There are no new qualifications requirements for paraprofessionals.

Other Major Budget Highlights

  • Approximately $450 million to address the STRS funding shortfall. The Administration proposes a plan which would include increased contributions from the state, school districts and teachers. This represents the first year contribution coming from all three entities and would increase in subsequent years.
  • Approves $437 million for Medi-Cal to support implementation of the Affordable Care Act.
  • Provides a Child Nutrition Cost-of-Living Adjustment (COLA) to update reimbursement rates for meals served through the state child nutrition programs.