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Budget Conference Committee approves 2019-20 budget with an increase in Proposition 98 funding and investments in PERS/STRS

On Sunday, the Legislative Budget Conference Committee agreed upon its 2019-20 state budget, with $81.07 billion in Proposition 98 spending, matching the Governor’s May Revision proposal with an amount exceeding the minimum guarantee. Overall, the committee’s recommended budget is strong for public education with investments in special education and in CalPERS and CalSTRS to pay down pension liabilities.

While the exact impact on employer contribution rates to PERS and STRS is not yet known, the proposed investments could lower the expected contribution rates by approximately 1.5 to 1.75 percentage points in 2019-20 and 2020-21.

The investment in special education endeavors to move all local educational agencies up to the “statewide base rate,” and further seeks legislation in 2020-21 to reform the state’s special education system to improve outcomes for students who receive special education services.

The budget also recommends elimination of a provision in the prior year’s budget that could result in a deflation of future Proposition 98 minimum guarantees if certain calculations of the guarantee change after a fiscal year ends – CSBA is highly supportive of the proposal to eliminate this provision.

The budget bill and various trailer bills reflecting the Conference Committee’s recommended budget will likely be in print early this week. The bills will be sent to the floor of both houses later this week and, on approval, sent to Gov. Gavin Newsom, who will have until July 1 to act on the legislation.

Key elements of Conference Committee’s budget:

Proposition 98:
$81.069 billion

Proposition 98 certification:
Approves proposal to no longer adjust the guarantee level down if the prior year calculation changes after the fiscal year is over (amending the language of budget trailer bill Assembly Bill 1825 from 2018-19, over which
CSBA filed a 2018 lawsuit). 

LCFF:
$1.959 billion reflects a 3.26 percent cost-of-living adjustment.

LCFF base grant increase:
The budget trailer bills are not expected to include intent language (pursuant to
CSBA sponsored AB 39 Muratuschi) to raise the base grant targets to a level reflecting the national average in per-pupil funding. However, AB 39 remains an active bill (slated for hearing in the Senate Education Committee on Wednesday, June 12) and can still be passed and signed into law in 2019.

Public School System Stabilization Account (PSSSA):
Approves deposit of $389 million into PSSSA, also known as the Proposition 98 rainy day fund – this deposit will not trigger the cap on school district reserves.

Pensions:
$2.246 billion total to CalSTRS and $904 million to CalPERS to reduce long-term liabilities (both investments are one-time non-Proposition 98 money).
  • $144 million in 2019-20 and $100 million in 2020-21 to reduce the CalPERS school employer contribution rates.
  • $356 million in 2019-20 and $250 million in 2020-21 to reduce the CalSTRS school employer contribution rates.
  • $660 million in 2018-19 to address the CalPERS school pool unfunded liability.
  • $1.64 billion to reduce the school employer share of the CalSTRS unfunded liability.

Special education: 
  • $152.6 million to bring LEAs up to the “statewide base rate,” an estimated $557 per ADA.
  • $493.2 million in grants to LEAs serving three- and four-year-olds with IEPs. 
The trailer bill language is expected to “require ongoing funding to be contingent upon the passage of legislation in the 2020-21 budget to reform the special education system to improve outcomes for students.”

Career Technical Education/Strong Workforce Program:
Provides $248 million in Proposition 98 funding to the Strong Workforce Program that is run through the California Community Colleges.

Other budget actions include:
  • Full Day Kindergarten Facilities: $300 million one-time
  • Mental Health Student Services: $50 million in Proposition 63 funding ($10 million ongoing, $40 million one-time)
  • Statewide System of Support to COEs: $20.2 million ongoing Proposition 98
  • Broadband Infrastructure Grant Program: $7.5 million one-time non-Proposition 98
  • After-School Education and Safety Program: $50 million ongoing Proposition 98 funding
  • Classified Employee Summer Assistance Program: $36 million one-time Proposition 98
  • Educator Workforce Investment Grants: $38.1 million one-time Proposition 98

CSBA will report details on the final 2019-20 state budget once it has been signed by Gov. Newsom. 

Click here to register for a free 2019-20 Budget Perspectives Workshop.
 

Questions? Email our Governmental Relations team.