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Talking Points

Major Points
The year 2007-08 was the year right before the current fiscal crisis. It is the year with
the State’s highest revenues and expenditures.
The 2010-11 budget was signed by the Governor on October 8, 2010. It is called the
enacted budget. In November, less than two months after the enactment of the 2010-11
budget, the Legislative Analyst (LAO) has already stated that the 2010-11 expenditures
projections will be $6 billion higher than the enacted budget. The talking points below
are based on the LAO’s 2010-11 California Spending Plan – enacted budget – and the
LAO’ s Fiscal Outlook, which contains the revised forecast for the 2010-11 budget and
the new forecast for 2011-12.
The following are the three most important talking points:

• The 2010-11 Level of Funding Compared to 2007-08:

K-14 education (Prop. 98) has been cut by $6.9 billion or
-12%.
All the other state programs have only been cut by $.6
billion or -.7%
Our schools, our school children, our child development
centers, and our community colleges have been cut 11 times
more than the other state programs.
In addition, K-14 education is having revenue deferrals of
$8.2 billion (the deferrals started in 2003-04). The state’s
cash flow problems are transferred to our students.

• The 2010-11 Level of Funding Compared 2009-10

K-14 education (Prop 98) received a decrease of .3% or
-$141 million.
Even under the enacted budget all the other state programs
would have received an increase of $7 billion or 9.4%.
Under the real budget, all the other state programs will
receive an increase of $12.9 billion or 17.4%.

• Conclusion: K-14 Education (Prop 98) was not even close

to being the Number One Priority of this Legislature or of this
Governor.
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2010-11 Budget

1. “We estimate that well over two-thirds of the 2010-11 budget

solutions are one-time or temporary in nature” LAO

2. The state will be unable to secure $3.5 billion of federal funds.

3. Higher prison cost and other programs.

4. The passage of Proposition 22 will cost the state at least $800

million.

5. The 2010-11 budget is already projecting a $6 billion deficit that will

be carried into 2011-12.

6. That means when the LAO produced their 2010 State Plan, the
2010-11 (current year) General Fund Expenditures were estimated to be
$86.6 billion. Now in their Fiscal Outlook the 2010 GF Expenditures have
increased to $92.5 billion in less than a month or two.

7. The 2011-12 deficit is $19 billion. The total deficit is $25 billion.

8. According to the LAO, the 2011-12 deficit of $19 billion is $2 billion

less that they projected a year ago. Education cuts are that major
contributor to this decline (read improvement) of $2 billion – Why aren’t we
surprised! Evidently, no one else got cut.

Education Funding

9. The 2010-11 (current year) level of funding for Proposition 98 is

equal to the level of funding six years ago in 2004-5

10. The highest level of funding was in 2007-08, just prior to this latest
fiscal crisis. In 2010-11 the level K-12 education funding has dropped by
$6.6 billion or 13% compared to 2007-08 (see Table 2). The K-14 Total
Proposition 98 funding level has dropped by $6.9 billion or 12%.

11. That is equivalent to cutting the funding for ever K-12 child by
$1,100.

12. The LAO is estimating that we may just barely reach our 2007-08
level of funding in 2014-15, four years from now and seven years from
2007-08.

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13. Our educational funds for our K-12 needy students (categorical
programs) were cut by 20% compared to a general aid cut of 10%

14. In 2008-09 the K-12 cut from 2007-08 was $7.3 billion. In 2009-10
the cut was $6.6 compared to 2007-08. In 2010-11, the cut from the
2007-08 funding levels was $6.6 billion.

15. The total three year K-12 cut is $20.5 billion from the 2007-08
funding levels (please note, this is not a cumulative cut). That is how
much was taken away from us over those three years to fund other
programs. This is equivalent to a cut of $3,400 per student. Our students
did not receive $3,400 per student during the three year time period. This
does not include the increases from 2007-08 that we should have
received.

16. This does not include $7.4 billion of deferrals for K-12 education
and $832 million of deferrals for the Community Colleges. The total
deferrals is $8.2 billion. The state is transferring its cash flow problems to
our children!

17. This year the FIRST $8.2 billion or 23% of our Proposition 98
state funds must be used to pay for services that we have already
provided in the prior year. There are already threats that things will get
worse in 2011-12 and that the deferrals will increase by at least $2.5
billion perhaps as early as this year!

18. The LAO is projecting that K-12 Proposition 98 will decrease by

another $1.9 billion in 2011-12. That is a total decrease of $8.5 billion
or 17% from the 2007-08 levels.

19. On the other hand, the LAO is projecting that non K-14 state
programs will INCREASE BY 20.5%. (see Figure 1 on page 6)

20. Once again it looks like we are the only program that will get
cut.

Comparing the 2010-11 Level of Funding to 2007-08

It is extremely distressing to compare the decrease of K-14 funding from
2007-08 to the funding change for the other state programs.

21. For the enacted 2010-11 Budget Totals, our K-14 Proposition 98
amount decrease from 2007-08 was 12%, the decrease for other state
programs was only 7.5%.

22. For the actual or real 2010-11 Budget Totals, our K-14 decrease
was once again 12%, however, the decrease for other state programs was
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only .7%. We got cut by $6.9 billion. The other state budget programs
got cut by $.6 billion ($632 million) when compared to 2007-08 levels.

23. Between 2007-08 and now, our schools, school children, child
development centers, and our community colleges will be cut 11 times
more than the cuts to the other state programs ($6.9 billion
compared to $632 million).

24. According to the LAO, for 2011-12 under the base budget if no
corrective action is taken, K-14 education will be cut by $9.1 billion (16%
decline) from their 2007-08 levels while the rest of the budget will
actually increase by $11.7 billion or 13.3% from their 2007-08 levels.

Comparing the 2010-11 Level of Funding to 2009-10

It is also distressing to compare the 2010-11 level of funding to the prior
year’s (2009-10) levels.

25. K-14 education (Proposition 98) will received at the most a

decrease of .3% or a decrease of $141 million. (see page 19 of the
2010-11 State Plan, Figure 2 and footnote a when compared to the prior
year. This is true for the enacted 2010-11 budget and the real or actually
2010-11 budget.

26. Even under the enacted budget for 2010-11, which is fantasy land,
all the other state programs would have received an increase of $7 billion
or a 9.4% increase.

27. Under the real budget for 2010-11, the one that we have to deal
with right now, all the other state programs will receive an
exceptionally large increase of $12.9 billion or 17.4%. Prop. 98 will still
receive a decrease of .3% or minus $141 million.

28. Conclusion: K-14 Education (Prop.98) was never

even close to being the Number One Priority of this
Legislature or of this Governor.

29. We in K-14 education have been had!

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State Expenditures
2007-08 to 2011-12
Table 2
State Expenditures
(in millions)
No No
Enacted Corrective Corrective
2007-08 2010-11 Action Action
2010-11 2011-12
General Fund $103,000 $86,551 $92,505 $102,756
Special Funds $26,674 $30,851 $30,851 est. $30,851 est.
Budget Totals $129,659 $117,403 $123,356 $133,607
-9.4% -4.9% 3%
GF – Prop 98 $61,106 $50,328 $56,282 $68,572
% Change -17.6% -7.9% 2.2%

Bud Totals – Prop 98 $87,765 $81,180 $87,133 $99,423

% Change -7.2% -.7% 13.3%

Prop 98 Data
K-12 Education $50,344 $43,778 $43,778 $41,837
-13.0% -13.04% -16.9%
Community Colleges $6,112 $5,792 $5,792 $5,535
-5.2% -5.2% -9.44
Total, Prop 98 $56,577 $49,658 $49,658 $47,456
-12.2% -12.2 -16.1%
General Fund $41,894 $36,223 $36,223 $34,184
Property Tax $14,563 $13,435 $13,435 $13,272
% Prop 98 GF change -13.5% -13.5% -18.4%
LAO:
2009-10 California Spending Plan, Figure 1, page 1 and Figure 4, page 28
2010-11 California Spending Plan, Figure 1, page1, and Figure 2, page 19
2011-12 Budget: California’s Fiscal Outlook, Figure 1, Page 3 and Figure 5, page 17
The split for K-12 Education and Community Colleges in 2011-12 is assumed to be the
same split as in 2010-11. Therefore, in 2011-12 1) K-12 Proposition 98 will decline by
$1,941 million or 4.4% and 2) CCC Proposition 98 will decline by $257 million or 4.4%.
The LAO is estimating that in 2011-12, K-14 Proposition 98 will decline by 4.4% or $2.2
billion.

The LAO notes that special funds in 2010-11 increase from $23.3 billion to $30.8 billion.
This is an increase of $7.5 billion or 32.2%. This was according to the LAO “driven
mainly by recent changes in Medi-Cal and transportation funding that were enacted in
part to off set costs in the General Fund”. Therefore, in comparing changes between
2007-08 and 2010-11, it is more appropriate to compare Budget Totals, which includes
both General Fund and Special Fund dollars.

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Figure 1
LAO's Projected General Fund Spending for Major Programs
(Dollars in Millions)

2010-11 2011-12 % Growth

K-14 Education
K-14 Proposition 98 $36,209 $34,184 -5.6%
Proposition 98 QEIA and Settle-Up $0 $750 -

Higher Education
CSU $2,433 $2,646 8.8%
UC $2,711 $2,815 3.8%
Student Aid Commission $1,079 $1,258 16.6%

Health and Social Services

Medi-Cal $12,595 $17,642 40.1%
CalWORKs $2,143 $3,041 41.9%
SSI/SSP $2,954 $3,033 2.7%
IHSS $1,419 $1,732 22.1%
Developmental Services $2,541 $3,124 22.9%
Mental Health $1,837 $2,142 16.6%
Other major programs $2,823 $3,327 17.9%

Corrections and Rehabilitation $9,281 $9,034 -2.7%

Judiciary $1,649 $2,016 22.3%
Proposition 1A Loan Costs $91 $91 0.0%
Infrastructure Debt Service $5,752 $6,926 20.4%
Other programs/costs $6,988 $8,995 28.7%

Totals $92,505 $102,756 11.1%

Totals minus K-14 Education $56,296 $67,822 20.5%

Difference Between 2010-11and 2011-12: $11,526

Source:
LAO's The 2011-12 Budget: California's Fiscal Outlook
Figure 1, page 24