Budget Act for 2020–21: Information

On June 29, 2020, Governor Gavin Newsom signed the Budget Act of 2020 to put in place a spending plan for 2020–21 and a revised spending plan for 2019–20. Additionally, he signed several education trailer bills as part of the budget package for 2020–21. This letter, prepared by the California Department of Education (CDE) fiscal policy staff, provides information on the budget actions that affect Kindergarten through grade twelve (K–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

During the release of his budget in January, Governor Newsom stated that California’s economy was stronger than ever, the rainy-day fund was at its all-time high while achieving the state’s highest credit ratings in nearly two decades. However, in a matter of two months, the Novel Coronavirus Disease 2019 (COVID-19) pandemic hit, and the increases to the K–12, adult education, and early education programs reflected in the Governor’s Budget quickly diminished.

In the May Revision, the Governor announced that the state faced a revenue shortfall of well over $50 billion, and deep cuts across all state programs, including education, were necessary in order to balance the budget.

The Legislature and the Governor came together to ultimately enact a budget package that avoids deep cuts to K–12 education and layoffs to school personnel. The budget package avoids deep cuts by increasing state’s revenues by suspending certain tax credits for businesses, generating $4.3 billion in General Fund (GF) revenues, of which approximately $1.6 billion benefits Proposition 98 (Prop 98) programs. The budget also defers Local Control Funding Formula (LCFF) apportionments in 2019–20 and 2020–21 to later years.

The 2020–21 budget package maintains the LCFF, categorical, and child care funding at FY 2019–20 levels, but does not provide a statutory cost-of-living adjustment (COLA). The total overall funding (federal, state, and local) for all K–12 education programs is $98.8 billion, with per-pupil spending of $16,881 in 2020–21, a decrease of $542 per pupil compared to the 2019–20 Budget Act amount of $17,423.

Proposition 98

In January, the Governor’s Budget projected the Prop 98 minimum funding guarantee to be $78.4 billion, $81.6 billion, and $84.0 billion for 2018–19, 2019–20, and 2020–21, respectively. However, due to the downturn in the economy as a result of the COVID-19 and the resulting impact on state revenues, the Budget Act of 2020 estimates Prop 98 levels of $78.5 billion, $77.7 billion, and $70.9 billion over the same time period. The amounts include funds available as a result of the temporary suspension of several tax credits, which will generate approximately $1.6 billion for Prop 98 programs.

The K–12 portion of Prop 98 funding represents K–12 per-pupil funding of $10,654. The per-pupil funding level is a $1,339 decrease compared to the 2019–20 Budget Act level. This amount does not include the funds deferred to later years. The budget package also provides for supplemental appropriations above the Prop 98 minimum guarantee in future years, in an amount equal to 1.5 percent of the GF revenues per year. This will continue until a total of $12.4 billion has been appropriated, an amount equal to what Local Educational Agencies (LEAs) and community colleges would have received had Test 2 been operative in 2020–21. In addition, the budget package increases the Prop 98 share of GF revenues during Test 1 years, from the current 38 percent to 40 percent, by 2023–24. This will result in additional funding for education in future Test 1 years.

Local Control Funding Formula & Deferrals

Due to the unanticipated revenue shortfall and the impact to the Prop 98 minimum guarantee, there is a corresponding decrease in LCFF funding levels. However, the budget package maintains LCFF funding levels in 2019–20 despite the drop State revenue, and continues to hold funding at those levels in 2020–21, with no COLA provided. In order to do this, the budget includes apportionment deferrals (from one FY to the next), as follows:

• 2019–20: $1.9 billion
• 2020–21: $11 billion

The budget package would also allow a portion of the 2020–21 deferrals to be restored if sufficient federal funding is made available for this purpose by October 15, 2020. Furthermore, the budget includes a process whereby a set amount of deferrals may be waived, on a month to month basis, if an LEA can document a hardship resulting from the deferral.

Categorical Programs, Cost-of-Living Adjustment and Growth

As with LCFF, the budget package holds funding for most categorical programs to 2019–20 levels, with no COLA provided for the 2020–21 year.
The budget package does include a one-time increase in funding for nutrition programs to reimburse LEAs for school meals by up to an additional $0.75 per meal. The increased reimbursement is only available for LEAS that served meals during school closures between March 2020, and August 2020. This funding consists of $112.2 million in federal funds and $80 million in state funds.

Attendance

In an effort to stabilize school funding, the budget package provides a hold-harmless clause for calculating LCFF funding for the 2020–21 year by allowing 2020–21 funding to be based on 2019–20 ADA rather than 2020–21 ADA which is expected to decline as a result of COVID-19. However, Senate Bill (SB) 820 amended the Budget Act of 2020–21 to provide 2020-21 growth funding if the LEA anticipated enrollment or ADA growth in its original 2020–21 budget or its 2019–20 second interim report.

The 2020–21 budget package also waives the annual instructional minute requirements for the 2020–21 school year, and maintains statutory minimum daily instructional minute requirements. In addition, LEAs are to meet the minimum instructional minute requirements for which students are scheduled during a school day and for instructional days offered in the 2020–21 school year through in-person instruction or a combination of in-person instruction and distance learning. The budget package also provides the following as it relates to attendance and distance learning:

• Distance learning required services such as daily live interaction and access to nutrition programs. Other distance learning requirements include the provision of devices and connectivity and supports for students with exceptional needs, English language learner students, youth in foster care, and youth experiencing homelessness.
• Distance learning attendance requirements, including documentation of daily student participation, weekly engagement records, attendance reporting for purposes of chronic absenteeism tracking, and written procedures for tiered reengagement strategies.
• Fiscal penalties for LEAs offering distance learning that do not meet instructional day requirements or the attendance-related requirements.
• $750,000 one-time Prop 98 GF for the Sacramento County Office of Education (COE) to develop distance learning curriculum and instructional guidance for mathematics, English language arts, and English language development, for adoption by the State Board of Education (SBE) by May 31, 2021.

Learning Continuity and Attendance Plan

The budget package replaces the annual Local Control Accountability Plan requirement with a Learning Continuity and Attendance Plan for 2020–21. The CDE, in consultation with the SBE, is required to develop the template for the Learning Continuity and Attendance Plan by August 1, 2020. The template is to include the following:

• A description of how the LEA will provide continuity of learning during the COVID-19 pandemic, including distance learning, learning loss, mental health and social-emotional well-being, professional development, pupil engagement and outreach, and school nutrition.
• LEA expenditures related to addressing the impacts of the COVID-19 pandemic.
• A description on how LEAs are increasing or improving services in proportion to funds generated based on the number and concentration of English learners, youth in foster care, and low-income students pursuant to the LCFF.

Assessment

The 2020–21 budget package suspends the Physical Performance Test for the 2020–21 school year and requires the State Superintendent of Public Instruction (SSPI) to consult with experts and other stakeholders and provide recommendations on the purpose and administration of the test to the appropriate Legislative fiscal and policy committees, the DOF, and the SBE by November 1, 2022.

The budget package also allows the SSPI to designate alternatives for students who would graduate in 2020-21 school year to earn the State Seal of Biliteracy and waives the assessment requirement for the State Seal of Biliteracy in 2019–20 and 2020–21.

The 2020-21 Budget Act also postpones the state’s development of an observation protocol for teaching English Language Learners to December 31, 2022.

Special Education

• The budget package increases special education base rates to $625 per average daily attendance through a new funding formula, apportions the funds using the existing hold harmless methodology, and provides $100 million to increase funding for students with low-incidence disabilities. Additionally, the budget package provides the following:
• $15 million federal Individuals with Disabilities Education Act (IDEA) funds for the Golden State Teacher Scholarship Program to increase the special education teacher pipeline.
• $8.6 million federal IDEA funds to assist LEAs with developing regional alternative dispute resolution services and statewide mediation services.
• $1.1 million federal IDEA funds for a study of the current special education governance and accountability structure, as well as three workgroups to create a statewide Individualized Education Program template, provide recommendations on alternative pathways to a diploma for students with disabilities, and study the costs of out-of-home care.
• $4 million ($2 million in one-time Prop 98 GF and $2 million in one-time federal funds) for the California Dyslexia Initiative.

School Personnel

The 2020–21 budget package suspends the August 15, 2020, layoff window for teachers and other non-administrative certificated staff. The budget provides language that suspends the layoffs of teachers and staff working in transportation, nutrition, and custodial services from July 1, 2020 through June 30, 2021.

The budget also provides $60 million Prop 98 GF for the Classified School Employee Summer Assistance Program (CSESAP). The CSESA provides a match of state funds, up to one dollar for each one dollar withheld from the LEA’s participating classified school employees’ monthly paychecks during the 2021–22 school year, to be paid to LEAs during the summer recess period.

Williams Act

The budget package allows all COEs to meet statutory requirement as outlined in the Williams Act to annually visit, examine, and report on a school’s sufficient textbook, facility, and School Accountability Report Card data conditions, if the school is on a decile 1-3 Academic Performance Index list provided by the State Superintendent, in the 2019–20 and 2020–21 school years, through a combination of site visits and staff surveys; allows surveys in lieu of site visits with COVID-19 closure justifications; waives on-site visits during the pandemic closure period, and waives unannounced visit requirements.

Young People’s Task Force

The budget package includes $200,000 one-time non-Prop 98 GF for the creation of the Young People’s Task Force. The task force will be co-chaired by the SSPI and the SBE and will be made up of 15 gubernatorial youth appointees. The task force will conduct an evaluation of the presence of peace officers and other law enforcement personnel on school campuses, identify and consider possible alternative options to ensure pupil safety, and develop recommended guidance to ensure pupil safety during interactions between law enforcement and young people on school campuses.

A written report is due to the SSPI, SBE, Legislature, Director of Finance, and the Governor no later than October 1, 2021.

Early Learning and Care

Major features of the early learning and care program included in the 2020–21 budget plan are as follows:

• Maintains early learning and care provider reimbursement rates at 2019–20 levels.
  
• Eliminates the negative statutory growth adjustments for early learning and care programs.
  
• Provides a hold harmless provision in 2020–21 for providers that contract directly with the CDE and are open by September 8 or closed due to a public health order or guidance.
  
• Provides funds to extend the waiver of family fees for child care services to all families through August 31, 2020.
  
• Waives family fees for the 2020–21 FY, for any enrolled family not receiving in-person care services, either due to site closure, Distance Learning, or a family’s need to shelter-in-place.
  
• Allows the SSPI to provide guidance and not require parent signatures for CDE-administered child care programs during the COVID-19 pandemic, under certain circumstances.
  
• $6 million decrease in new federal Child Care and Development Block Grant funding for child care vouchers, bringing the total Alternative Payment (AP) Program from $53.3 million to $47.2 million, with first priority for these funds to extend subsidized care for income-eligible essential worker families and at-risk children from a limited-term to an ongoing basis.
  
• $9.3 million one-time federal funds to develop and implement an early learning and care data system.

Federal Funds

In response to COVID-19 the U.S. Congress passed the CARES Act, which was signed into law on March 27, 2020.

This relief package provides states with both funding and streamlined waivers to give State educational agencies necessary flexibilities to respond to the COVID-19 pandemic.

The two main funding sources administered by the United States Department of Education are the Elementary and Secondary School Emergency Relief Fund (ESSER Fund), and the Governor's Emergency Education Relief Fund (GEER Fund). Additional funds are available from the Coronavirus Relief Fund (CR Fund) which is administered by the United States Department of the Treasury. This funding will provide LEAs with emergency relief funds to address the impact COVID-19.

ESSER

The budget package appropriates a total of $1.6 billion federal ESSER Funds for the following purposes:

• $1.5 billion in ESSER funds to LEAs for activities authorized by the Elementary and Secondary Education Act of 1965 (ESEA) as amended by the Every Student Succeeds Act (ESSA), IDEA, the Adult Education and Family Literacy Act, the Perkins CTE Act, or the McKinney-Vento Homeless Assistance Act and other activities outlined in the CARES Act.
  
• $45 million in ESSER Funds to LEAs, including COEs, for Community Schools efforts. The funds are to be used to increase access to health, mental health, and social service supports for high-needs students during the COVID-19 pandemic.
  
• $112.2 million in ESSER Funds to LEAs for school meal reimbursement during summer break and COVID-19 school closures, at a rate of up to 75 cents per meal. Additionally, SB 820 appropriates an additional $80 million one-time Prop 98 GF for school meal reimbursement.
  
• $6 million for the UC Subject Matter Projects to provide educator professional development for providing high-quality distance learning and addressing learning loss in mathematics, science, and English language arts due to the COVID-19 pandemic.

Learning Loss Mitigation Fund

The budget package appropriates $5.3 billion to Learning Loss Mitigation Funding (LLMF). The LLMF is made up of three different fund sources: federal GEER Fund ($355.2 million), federal Coronavirus Relief (CR) Fund ($4.4 billion), and GF ($539.9 million). The LLMF will be allocated to LEAs as follows:

• $355.2 million one-time GEER Fund and $1.1 billion one-time CR Fund, for a total of $1.5 billion, to be allocated to LEAs based on special education count, pupils age 3–22 by district of service.
  
• $2.9 billion one-time CR Fund to be allocated to LEAs proportionally based on supplemental and concentration grant funding.
  
• $539.9 million one-time GF and $439.8 million one-time CR Fund for a total of $979 million to be allocated to LEAs proportionally based on the LCFF entitlement.
  

LLMF funds are to be used for activities that directly support pupil academic achievement and mitigate learning loss related to COVID-19 school closures.

CARES ACT for Child Care

California received $350.3 million through the federal CARES Act for COVID-19 related child care activities. The Budget includes the following:

• $152.3 million for state costs associated with SB 89 expenditures, family fee waivers, and provider payment protection.
  
• $125 million for voucher provider hold harmless and stipends.
  
• Up to $62.5 million to fund providers accepting vouchers at the maximum certified level of need.
  
• $31.25 million for one-time stipends for providers accepting vouchers that offer care during the COVID-19 pandemic.
  
• $31.25 million to reimburse state-subsidized childcare providers for providing short-term childcare, for up to 14 days, to eligible children when the primary provider is closed due to the COVID-19.
  
• $73 million to continue care for at-risk children and essential workers.
  

The Budget includes language allowing up to $300 million of any possible future federal funds to be allocated by the following schedule:

• $30 million to waive family fees for families not attending in-person care from September 1, 2020 to June 30, 2021, or until funds are exhausted.
  
• $35 million to support payments to providers providing short-term childcare to children receiving childcare vouchers, for up to 14 days when a provider is closed.
  
• $100 million for AP payment programs to extend access for families being served through limited-term subsidies and expand access for unserved, eligible families.
  
• $30 million to California State Preschool (CSPP) and General Childcare Programs (CCTR) to increase capacity for up to two years.
  
• $90 million to provide limited-term stipends for state-subsidized child care providers offering care during the COVID-19 pandemic.
  
• $15 million to assist licensed child care providers with costs to re-open child care facilities closed due to the COVID-19, and to supplement unfunded costs caused by low attendance or temporary closures due to the COVID-19 pandemic.

Other Significant Adjustments

• Shifts child care programs from CDE to Department of Social Services. The budget includes $2.3 million GF in 2020–21 to transition the existing child care and child development programs from the CDE to the California Department of Social Services.
  
• Delays deadline for Transitional Kindergarten teachers to meet certain requirements to August 2021.
  
• Includes intent language for the Legislature to evaluate the presence of law enforcement on school campuses and consider reforms informed by local needs to improve student safety.

Budget and Trailer Bills

The Budget Act and Trailer Bills (TB) are as follows:

• Budget Act: Senate Bill 74, Chapter 6, signed June 29, 2020
  
• Budget Bill Jr., Assembly Bill 89, Chapter 7, signed June 29, 2020
  
• Budget Bill Jr #2: Senate Bill 115, Chapter 40, signed September 9, 2020
  
• Education Omnibus TB: Senate Bill 98, Chapter 24, signed June 29, 2020
  
• Education Omnibus TB #2: Senate Bill 820, Chapter 110, September 18, 2020
  
• 2019-20 Deferrals: Assembly Bill 76, Chapter 5, signed June 26, 2020
  
• State Taxes and Charges (Revenue) TB: Assembly Bill 85, Chapter 8, signed June 29, 2020
  
• Higher Education TB: Senate Bill 116, Chapter 25, signed June 30, 2020