lao state budget update jennifer kuhn legislative analyst’s office october 4, 2007

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State Budget Update

Jennifer Kuhn Legislative Analyst’s Office October

4, 2007

www.lao.ca.gov

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2007-08 State Budget

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State’s General Fund ConditionIn Millions

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Major Actions Taken to Balance Budget: Proposition 98Prop. 98 Funding Level Assumes Lower State Revenues

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Major Actions Taken to Balance Budget: Relies Heavily on Special Funds

Uses almost $1.3 billion in transportation funds to relieve General Fund

Uses about $1.3 billion in tobacco securitization funds to relieve General Fund

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Major Actions Taken to Balance Budget: Scores New General Fund Revenue

Scores $1 billion in one-time revenue from sale of EdFund

Scores almost $300 million in new revenue from amended tribal gambling compacts

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Major Actions Taken to Balance Budget: Achieves Some Savings

Achieves almost $250 million in social services savings

Achieves about $330 million in Medi-Cal savings

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Major Risks to State Budget

Volatility of General Fund revenues Transportation lawsuit Sale of EdFund Amount of tribal gambling revenue Court-ordered CalSTRS payment

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General Fund Spending by Major Program AreaDollars in Millions

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2007-08 K-12 Budget

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Funding From All SourcesDollars in Millions

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Ongoing Proposition 98In Millions

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Ongoing Proposition 98: Major ActionsIn Millions

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One-Time And Special Funds: Major ActionsIn Millions

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Governor’s VetoesIn Thousands

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K-12 Proposition 98Spending Per PupilIn Billions

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Balance on Education Credit Card GrowsIn Millions

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A Look at the Coming Year

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2008-09 Budget Outlook

Heavy reliance on one-time monies for ongoing costs means large operating shortfall in 2008-09

2008-09 looks to be tight for K-12 education

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Year of Reform?

State Budget Reform?

Year of Education Reform?

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State Budget: Considerable Volatility in General Fund Revenues

Year-to-Year Percent Change in General Fund Revenues

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State Budget: Considerable Volatility in Annual Allocations

Year-to-Year Change in General Fund Revenues (In Billions)

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K-12 Education:Possible Finance Reform

Adequacy initiative or lawsuit

Weighted student formula

Categorical block grants

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LAO Work-in-Progress Relating to K-12 Finance Reform

Overview of programs serving economically disadvantaged students

Analysis of how districts use EL funds

Response to “Getting Down to Facts” studies