CA: School nightmare looms (facing mid-year spending cuts of $1 billion or more)

San Diego Union - Tribune ^ | 12/20/07 | Ed Mendel

[NormsRevenge]

SACRAMENTO -- California schools could face painful mid-year spending cuts of a $1 billion or more as a weakening economy lowers tax revenue forecasts, reducing the Proposition 98 school-funding guarantee.

Non-partisan Legislative Analyst Liz Hill said last month that school funding in the current year was about $400 million above the Proposition 98 guarantee.

She suggested that lawmakers look at cutting the "over-appropriation" as one way to begin closing a huge budget shortfall now reportedly estimated by Gov. Arnold Schwarzenegger to be about $14 billion over the next 18 months.

Hill's estimate was made when the shortfall was believed to be $10 billion. Although no details have been released, Schwarzenegger's $14 billion shortfall is presumed to be based in large part on lower revenue forecasts.

"I heard this morning that it could be $1.4 billion ... It's getting worse by the day," Scott Plotkin, executive director of the California School Boards Association, said of rumors of a ballooning Proposition 98 over-appropriation.

"I have been through two of these mid-year reductions, and it's a nightmare," he said.

Plotkin said there is a possibility that a prompt cut of $400 million might be possible before some school districts have received the funds or spent it on teachers and other ongoing expenses.

"The bigger this number gets the more we are talking about definitely having impact on schools, and we are halfway through the school year," he said.

In the state budget for the fiscal year that began in July, a $102 billion general fund allocates $42 billion for kindergarten through high school. Proposition 98, approved by voters in 1988, guarantees schools roughly 40 percent of the general fund.

Through a complicated formula, Proposition 98 is intended to make sure that school funding keeps pace with enrollment growth and inflation. A suspension of Proposition 98 requires a two-thirds vote of the Legislature.

School groups led by the powerful California Teachers Association have formed a coalition that has zealously protected Proposition 98. The Education Coalition also contends that per-pupil funding in California is below the national average.

"I can tell you that until everybody puts all of their cards on the table, we are not agreeing to anything," Plotkin said of the current budget situation.

[PapaBear3625]

Worst thing that could happen is the state declaring bankruptcy. At that point either a precedent would be established with the federal government bailing out the state with borrowed money from China, or bankruptcy proceeding would take place with one judge deciding the fate of the state.

Or, option 3, the state's executive branch would simply not be able to spend money that did not exist, without regard for the legislature's notions of "mandates" and "entitlements". If there's no money, the welfare checks don't come. Period.

[purpleraine]

$14 bill deficit, $10 bill in services to illegals.