State Budget Update

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State Budget Update

• Jennifer Kuhn
  Legislative Analysts Office October 4, 2007

www.lao.ca.gov
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• 2007-08 State Budget

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States General Fund Condition
In Millions
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Major Actions Taken to Balance Budget
Proposition 98
Prop. 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 Area
Dollars in Millions
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• 2007-08
• K-12 Budget

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Funding From All Sources
Dollars in Millions
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Ongoing Proposition 98
In Millions
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Ongoing Proposition 98 Major
Actions
In Millions
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One-Time And Special Funds Major Actions
In Millions
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Governors Vetoes
In Thousands
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K-12 Proposition 98Spending Per Pupil
In Billions
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Balance on Education Credit Card Grows
In 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 EducationPossible 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