Budget Act for 2019–20: Information

On June 27, 2019, Governor Gavin Newsom signed the Budget Act of 2019 to put in place a spending plan for 2019–20 and a revised spending plan for 2018–19. He signed several education trailer bills on July 1, 2019. This letter, prepared by the California Department of Education (CDE) fiscal policy staff, provides information on the budget actions that affect Transitional Kindergarten through grade twelve (TK–12), adult education, and early education programs.

Copies of this document, as well as other budget-related documents, are available on the CDE Education Budget web page. Official state budget documents are available through the California Department of Finance (DOF) website .

Overview

The budget package demonstrates strong and ongoing support of high-quality public education in California. Total state expenditures for 2019–20 from all sources are projected to be $214.8 billion, including General Fund expenditures of $147.8 billion. The budget projects a Rainy Day Fund balance of $16.5 billion and a reserve for economic uncertainties of $1.4 billion. When all funding sources are accounted for (federal, state and local), the budget package projects spending of $103.4 billion for TK–12 education programs, with per-pupil spending of $17,423 in 2019–20, compared to $16,991 in 2018–19.

Proposition 98

The budget package fully funds the Proposition (Prop) 98 minimum funding guarantee at $81.1 billion for TK–12 education and community colleges (TK–14). This amount includes state funding of $55.9 billion and local funding of $25.2 billion. The Prop 98 funding level is a 3.4 percent increase compared to the 2018–19 Budget Act level. These numbers reflect action to “rebench” the Prop 98 guarantee to reflect the transfer of $309.3 million for preschool services provided by non-local educational agencies from Prop 98 funding to non-Prop 98 funding.

The TK–12 portion of Prop 98 funding represents TK–12 per-pupil funding of $11,993. The per-pupil funding level is a 3.1 percent increase compared to the 2018–19 Budget Act level.

The budget projects that a deposit estimated at $376.5 million will be required into the Public School System Stabilization Account. This account was established in 2014 by Proposition 2, and the conditions for a deposit have never been met before now. Under certain conditions, the same measure triggers restrictions on reserve levels at the local level. The conditions will not be met in 2019–20, so the restrictions on local reserve levels will not be in effect.

The budget includes $686.6 million to pay amounts owed from past years under Prop 98. With this payment, all Prop 98 settle-up obligations for years through 2017–18 will have been paid. The funds are specifically allocated for Local Control Funding Formula (LCFF) fund swaps, community college deferred maintenance, the Classified School Employee Summer Assistance Program (CSESAP), and a property tax shortfall affecting the San Francisco Unified School District.

Finally, the Prop 98 trailer bill changes processes established in 2018 to account for any revisions in the minimum funding guarantee after the fiscal year closes. Under the new provisions, after a fiscal year closes the state may not make downward adjustments to the funding level if the guarantee amount falls and the state must make an upward adjustment if the guarantee amount rises.

The Prop 98 trailer bill also allows the DOF to reduce cost-of-living adjustments (COLAs) applying to specified programs for an upcoming fiscal year in situations where funding increases for those programs are projected to be greater than the increase in the guarantee amount.

Local Control Funding Formula

The LCFF has been fully funded beginning in 2018–19, two years earlier than originally expected. Over the six years of LCFF implementation, the amount of funding provided to cover the gap between the starting point and full implementation has totaled $18.5 billion. Original DOF estimates in 2013–14 projected state costs of $18 billion and eight years to fully phase in the new funding formula.

The 2019–20 budget package includes a statutory COLA of 3.26 percent and projects a decline in Prop 98 average daily attendance (ADA) of 0.18 percent.

Categorical Programs, Cost-of-Living Adjustment and Growth

The budget package includes $180 million to fund the statutory COLA of 3.26 percent for the following categorical programs outside of LCFF: Mandate Block Grant; Special Education; Child Nutrition; Foster Youth; Preschool; American Indian Education Centers; American Indian Early Childhood Education; Adults in Correctional Facilities, and the Adult Education Block Grant.

The budget package reflects a reduction of $12 million in funding for Special Education, Preschool, and Child Nutrition, due to projected declines in ADA.

Early Education and Child Care

The budget continues to build on early education and child care programs. Total early education and child care funding for 2019–20 is $4.2 billion, including $1.4 billion for California State Preschool Program (CSPP), $521.5 million for General Child Care, and $535.9 million for Alternative Payment Programs (AP), for a net increase of $204.9 million among the three programs in 2019–20. The budget package comprises of a mix of funding and policy changes as described below:

Facilities

• Provides $300 million in one-time General Fund for the Full-Day Kindergarten Facilities Grant Program.
• Provides $263 million total (over four years: 2019–2023) in one-time non-Prop 98 General Fund for Early Learning and Care Infrastructure Grant Program to expand access to Early Learning and Care (ELC) opportunities for children up to 5 years of age by providing resources to build new facilities or retrofit, renovate, or expand existing facilities, as provided.
• Increase of $10 million for the Inclusive Early Education Expansion Program, authorized in 2018-19.

Slots

• Increase of $124.9 million ongoing non-Prop 98 General Fund to add 10,000 CSPP slots for community-based organizations (CBOs), starting April 1, 2020.
• Increase of $93.3 million in ongoing non-Prop 98 funding for 9,460 additional AP slots ($80.5 million Prop 64 funding for 8,158 slots and $12.8 million federal funding for 1,302 slots).
• Provides $50 million in one-time non-Prop 98 GF to support 3,086 ongoing General Child Care slots.

Workforce

• Provides $195 million total (over four years: 2019-2023) in one-time non-Prop 98 General Fund for the Early Learning and Care Workforce Development Grants Program to expand the number of qualified ELC professionals and increase the educational credentials of existing ELC professionals.

Data and Other System Changes

• Provides $10 million for the California Department of Education, Department of Social Services, and Public Employment Relations Board for data collection and policy implementation related to ELC provider unionization.
• Provides $5 million one-time non-Prop 98 General Fund for administration of the Master Plan for ELC.
• Provides $2.2 million one-time non-Prop General Fund for the Early Childhood Policy Council.

State Preschool

• Allows enrollment of families without a demonstrated need for full-day CSPP, but continues to prioritize families with need for full-day CSPP services.
• Expands eligibility to all families in school attendance areas where 80 percent or more students qualify for free or reduced price meals, effective January 1, 2020.
• Allows adjustment to rates for children with exceptional needs in part-day state preschool programs. Costs are expected to be absorbed by savings in CSPP.

Family Child Care Home Providers

• Requires the CDE and the DSS to submit family child care home provider contact information to provider organizations at specific intervals.

Alternative Payment Programs

• Delays the implementation of a 14-day notice requirement for APPs regarding family eligibility changes. Families will continue to be able to immediately access care based on changes in need, while related policy and funding solutions are contemplated.

CalWORKs

• Increase of $157.5 million non-Prop 98 General fund to reflect increased CalWORKs case load.

Pension Relief

The pension relief trailer bill appropriates non-Prop 98 funds to make payments on behalf of LEAs to reduce the amount the LEAs must pay to fund employee pensions. The amounts are:

• $2.2 billion for the State Teachers’ Retirement System. These funds will reduce contributions by 1.03 percentage points in 2019–20 and 0.70 percentage points in 2020–21. Any remaining funds will offset unfunded liabilities.
• $904 million for the Public Employees’ Retirement System. Of this amount, $144 million will offset 2019–20 contributions, $100 million will offset 2020–21 contributions, and $660 million will offset unfunded liabilities. CalPERS estimates that the contribution rates will be reduced by 1.012 percentage points in 2019–20 and 0.9 percentage points in 2020–21.

Special Education

The budget package includes $152.6 million to increase base funding per ADA for all Special Education Local Plan Areas (SELPAs) to the existing statewide target amount, about $557 per ADA, and $492.7 million for early intervention preschool grants. The new preschool grants will be provided to school districts serving children ages 3 to 5 years with exceptional needs.

Further, the budget requires the CDE to convene workgroups to improve transition of three-year-olds from regional centers to LEAs and improve access to Med-Cal funds. It also includes language for early intervention preschool grants contingent on future legislation designed to improve academic outcomes of individuals with exceptional needs.

Professional Development

In an effort to recruit and retain qualified teachers and paraprofessionals in school districts, the budget package provides $43.8 million one-time non-Prop 98 General Fund for professional development and providing additional resources to teachers.

The funds include:

• $37.1 million for the Educator Workforce Investment Grant ($10 million to deliver English Learner Roadmap-related professional development, $5 million for Special Education-related professional development and the remainder of $22.1 million? for other areas, including professional development related to social emotional learning, computer science, restorative practices, and ethnic studies).
• $6.7 million for the California Subject Matter Projects.

Additionally, the budget provides $13.8 million in ongoing federal funds for the 21st Century California School Leadership Academy for professional development for school administrators and leaders to acquire the necessary skills and competencies to support the diverse student population served in California schools. The training and resources developed are in alignment with the statewide system of support.

Finally, $89.8 million is included in the budget to establish the Golden State Teacher Grant Program for 4,500 loan repayments of up to $20,000 for newly credentialed teachers that commit to teach in a high-need field at school sites with the highest rates of non-credentialed or waiver teachers for at least four years.

Charter Schools

The budget trailer bill includes provisions for charter schools to better align the governance, transparency, and accountability requirements of school districts and charter schools. The trailer bill language does the following:

• Requires the Department of Education to examine the feasibility of using data from the California Longitudinal Pupil Assessment Data System to identify charter school enrollment disparities that may warrant inquiry and intervention by corresponding authorizers.
• Prohibits charter schools from requesting a pupil’s academic records or requiring that a pupil’s records be submitted to the charter school prior to enrollment.
• Creates a process for families of prospective and current charter school students to report concerns to the relevant authorizer.
• Prohibits charter schools from discouraging students from enrolling in a charter school or encouraging students to disenroll from a charter school based on academic performance or student characteristic, such as special education status.
• Requires charter schools to hold a public hearing or meeting as part of its adoption, update, or revision of a local control and accountability plan.
• Requires charter schools to provide certain notices, reports, statements, or records to be written in English and a primary language other than English, if 15 percent or more of the pupils enrolled in the charter school that provides instruction in kindergarten or any of grades 1 to 12, inclusive, speak a single primary language other than English.
• Requires the superintendent of a school district, county superintendent of schools, and State Superintendent to post or link to the local control and accountability plans of charter schools on the internet website of the school district and county office of education.

After School Education and Safety Program (ASES)

The budget provides an increase of $50 million in Prop 98 General Fund for rate increases for the ASES program. The increase provides approximately 8.3 percent to the per-pupil daily rate for ASES.

Relief for LEAs Affected by Wildfires

The budget package also contains provisions designed to provide additional funding relief to LEAs affected by the November 2018 wildfires. Among other things, it backfills certain ADA losses and property tax losses affecting basic aid districts.

Other One-Time Appropriations

Data Infrastructure

• $10 million non-Prop 98 General Fund for the initial development of a statewide Cradle to Career Data System connecting information from early education, K–12 schools, higher education institutions, employers, other workforce entities, and health and human services agencies.
• $7.5 million in non-Prop 98 General Fund to fund the Broadband Infrastructure Grant Program. The funds will be used to update broadband infrastructure to meet the needs due to the growth in digital learning.

Classified School Employee Summer Assistance Program

• Additional $36 million Prop 98 General Fund to provide an additional year of funding for the CSESAP, a state matched program for classified school employee savings used to provide income during summer months.

Special Olympics

• $4 million one-time non-Prop 98 General Fund for the Special Olympics of Northern and Southern California.

Breakfast After the Bell

• $500,000 Prop 98 General Fund to increase participation in the After the Bell school nutrition program.

Homeless Youth Education

• $500,000 Prop 98 General Fund for the San Diego Unified School District to support the education of homeless youth.

Budget and Trailer Bills

The Budget Act and Trailer Bills are as follows:

• Budget Act: Assembly Bill 74, Chapter 23, signed June 27, 2019
• Budget Bill Junior #1: Senate Bill 106, Chapter 55, signed July 1, 2019
• Budget Bill Junior #2: Senate Bill 109, Chapter 363, signed September 27, 2019
• Education Omnibus Trailer Bill: Senate Bill 75, Chapter 51, signed July 1, 2019
• Education Omnibus Trailer Clean-up: Assembly Bill 114, Chapter 114, signed October 2, 2019
• Prop 98 Certification Trailer Bill: Senate Bill 76, Chapter 52, signed July 1, 2019
• Higher Education Trailer Bill: Senate Bill 77, Chapter 53, signed July 1, 2019
• Pension Relief Trailer Bill: Senate Bill 90, Chapter 33, signed June 27, 2019
• Housing development and financing: Assembly Bill 101, Chapter 159, signed July 31, 2019