May Budget Revise: Governor Brown Proposes $1B For New School Standards
May 14, 2013 1:15 p.m.
Katie Orr, State Government Reporter for Capital Public Radio
Thad Kousser, UC San Diego professor of Political Science
CAVANAUGH: Today governor Jerry Brown announced a may revise for his budget. The state now has more money than anticipated earlier this year. But what to do with the extra is shaping up as an issue for a new battle in Sacramento. Joining me, Katie Orr, state government reporter for capital public radio. Welcome to the show.
ORR: Happy to be here.
CAVANAUGH: And Thad Kousser joins us, UC San Diego professor of political science.
CAVANAUGH: How much more money does Governor Brown say the state has with this increased revenue?
ORR: Well, the governor is counting on about an additional $3 billion for next year. That's not as much as the controller said the state had at the end of April. He said he would have an additional $4.5 billion, but the governor is taking a reserved approach because he's trying to get the state out of this boom and bust cycle that it's been in for many years.
CAVANAUGH: Now, where did most of this money come from?
KOUSSER: Well, we got back to a surplus for the first time in years for four reasons, and each of them was important in this debate about how to spend the money. We got there because of cuts that state lawmakers have made to social services, to education, higher education, prisons. And still this new optimistic budget proposes to spend less than we did in 2007 and 2008. Second, we got there because voters proposed a $6 billion tax, Prop 30 last year. 3rd, the people who are paying most of that tax, the wealthiest Californian, elected to take a lot of their income in 2012 rather than waiting to count on it in their taxes in 2013. And finally the economy, which has been growing although it's still sluggish, the economic turnaround is a big part of why we have this surplus.
CAVANAUGH: For all those reasons, is this boost in revenue something that was pretty much expected by the state?
ORR: They have been seeing a boost in revenue coming down the line. People have been asking the governor about it for the past couple of weeks while I have been here, anyway. I think it is something that they expected, however, there is some disagreement over what to do with this money. Some of the Republicans would like to see the creation of a rainy day fund which hasn't officially been created in the state yet. But they did see this revenue coming. And now it's just a matter of how to divide it up.
MAUREEN CAVANAUGH: And if my understanding of what the governor said earlier today is correct, the bulk of it, the governor wants to see go to education.
ORR: That's right. And not only does he want to put more money into education, he wants to change the way that schools are funded. He wants to give them more local control over the money that they receive from the state. But in addition to that, he wants to target more of the dollars toward low income and nonEnglish speaking students. So he had a chart at his press conference today. And he said basically for every dollar that is spent on a student, $0.80 would be a base grant. Every school would get 80% to put toward the student. Schools with nonEnglish speaking and low income students would get 60% on those students. And schools with the concentration of minority and nonEnglish speaker students would get an additional $0.06 on top of that to focus more resources toward them. He says this is a social justice issue thing for him. He's trying to raise the level of education that he feels the state has overlooked a bit.
CAVANAUGH: What's your overall impression of this may revise announcement by the governor?
KOUSSER: Well, I think it's cautious. We don't see the economy out of the woods yet. And the governor is spending this on 1-time expenditures, like having schools buy new textbooks. And it also is a budget that finally addresses policy debates. We've been stopping the bleeding with the budgets in California. But this is where the governor has laid out his biggest policy agenda. And the biggest philosophical policy debate that anyone in the state is having, how to change the education funding formula. And how much extra money should go to the school districts that have the largest shares of low income and nonEnglish speaking students. The governor's proposal over the long-term would lead to thousands of dollars in differences per student between Palo Alto, Marin and some San Diego school districts and other districts that are poorer, Compton, Watts, and certainly many San Diego school districts. They would get thousands of dollars more per student. That's a big fight they think will spread out across the state.
CAVANAUGH: It's the governor's local control funding initiative. And it sends extra money to school districts with a majority of nonEnglish speaking, very low income students. Some people are calling this proposal unfair. But here's what Governor Brown had to say.
NEW SPEAKER: Some have huge amounts of money. So they're already doing pretty well. This is giving more. Everybody is going to do better. But some are going to do considerably better. By the way, if you ask somebody in Beverly hills or Palo Alto, or Piedmont, would you like to move to Compton? Would you like that move to Watts? If they say, yeah, let's do it because I want to get the extra money, then I'll believe it. But I don't think so.
CAVANAUGH: Thad, state Senate Democrats have plans of their own. They'd like to modify this education reform and see everybody get an absolutely equal share of this extra funding. How big a political battle do you expect this will be?
KOUSSER: It's my understanding that the legislative Democrats are proposing having a larger share go to districts of low income students but having the redistribution not be as dramatic as the governor's. So no one is proposing an exactly equal share. It's a question of how much more to give. And the second question is whether that money should go to just districts that have more students, whether it's this tipping point of having 50% low income students should dramatically change your funding or whether it should be more proportional. But the question of how we would to distribute it within education is something that's going to be controversial. What the governor has going for him, everyone is going to get more, some will just get more than others. This is the right time during growth to be doing distribution.
CAVANAUGH: And he did not say this was the line in the sand with the legislators. It seemed to open the door for some negotiation.
ORR: It was interesting. He seemed to back down from his earlier press conference when he said anyone who opposes this are in for the fight of their lives. He backed off that and said this is what we want, I have my part in the government, the legislature has its part in the government, let's figure something out. And even the Republicans were offering reaction after this news conference, and they were saying that this is not really a partisan issue. Because there are Republicans that represent schools with no income students and nonEnglish speakers. It's more of a school by school basis. So they like the idea of the local funding, that schools have more control over how they spend their money, but again, it's how they distribute that money and what the formula exactly is. I think that's probably where we're going to see the fight over the details of this plan.
CAVANAUGH: Democrats in the state assembly apparently are looking at what the governor wants to do with the May revise, extra revenue, and they would like to see the governor use some of that money to fund healthcare and childcare programs that were deeply cut during California's years of deficits. Our reporter asked the governor about that, and this was his response.
NEW SPEAKER: No. The money's not there, we have obligations under Prop 98, and we have incredible responsibilities under the Affordable Care Act, and the known unknowns are considerable.
CAVANAUGH: So, Thad, that was pretty definite.
KOUSSER: Well, as you said, in the past piece, I think the governor recognizes that he is not the only decider. And the areas that you talked about, all provision of childcare for people who have used up their time to welfare and need to go back to work, those are the services were the serves that were most dramatically cut during the lean years, and advocates of those groups say they should be first in line not last in line. That will be a fight. And I think we may see a Senate president pro tem who saw services cut who is about to leave, Darryl Steinberg I think will try to fight for that kind of funding and source the governor to either veto a budget that helps these groups that are quite sympathetic or risk some political fallout.
CAVANAUGH: Now, there was an area of what the governor was talking about today that was really quite murky. And that is this transition that we're going through, the state in the county and going to go through as Medicare expands and we move into the Affordable Care Act. Certain held out health funding from the state. They don't know how much they're going to get. Governor Brown doesn't know how much the counties are going to get.
KOUSSER: There are two really contrasting things going on. The state of the leaniers got red of its healthy families program and moved those programs into Medicaid. And at the same time cutting Medicaid reimbursement rates. And as part of the new Obamacare Affordable Care Act, the expansion to cover the loss of the uninsured here in California will come from Medicaid. Does that mean fewer people are going to go to the emergency rooms and other county clinics where counties are footing a lot of the bill? How much money can be pulled out of the emergency room and county clinics budget in response to more people being covered through the Medi-Cal and Medicaid rolls? And do doctors get back that 10% cut they took in the lean years?
CAVANAUGH: What were the risks to this budget that the governor spoke about?
ORR: Well, there are a lot of them. I think one of the biggest risks is that there are so many unknowns. He's saying that the economy is sort of in his view, is taking a shift back toward not growing as fast as they would like to see it. They're not sure if California's recovery is going to hang in there. So that is an issue. There is a response in California of maybe having to spend a lot of money to fix the prison overcrowding issue. A 3-judge federal panel has ordered the state to further reduce its prison population or deal with overcrowding. That could be a very expensive prospect. He also pointed to the world economy, China and Europe, their economies are sputtering a little bit, and that can have a big impact on California. Also the sequester. The 2% federal income tax for high earners, that hit California's budget. So there are a lot of things that are weighing on the California economy. And that's one of the reasons we see Brown being a little more conservative with this surplus.
CAVANAUGH: Is this in your opinion as the governor called it a prudent budget for uncertain times?
KOUSSER: I think it is. Compared to what we've seen in the last two, this doesn't make the heroic exemptions we heard. With the budget that the legislature and governor Schwarzenegger passed that expected the governor to get $5 billion from Congress just by showing up in Washington DC, those type of smoke and mirrors that we've seen in the past are gone from this budget. Though there still are many uncertainties.
CAVANAUGH: Is it too prudent?
KOUSSER: That's what advocates will be arguing. They'll be saying, hey, the economy is getting back, and it's time to start restoring the cuts we've seen in past years. And I think the governor has drawn a line in the sand at clearly he does not want to sign a budget that commits the state to permanent spending of what could be a temporary surplus.
CAVANAUGH: Katy, are you getting ready for governor a lot of battles up in Sacramento over this new budget?
ORR: I think so. Everyone speaks very politely. But when there's money out there, the temptation or just some people's general belief is that they should be spending it on things that the state can really use. The governor is saying we don't know how long this money is going to last, so we can't commit to these projects. But I do think there is definitely going to be some back and forth over what should get money and for how long.
CAVANAUGH: I've been speaking with Katie Orr, state government reporter for capital public radio, and Thad Kousser, UC San Diego professor of political science. Thank you both so much.
ORR: Thank you
KOUSSER: Thank you.