May 13, 2014
Today the Governor released the May Revision budget update. His budget estimates an additional $2.4 billion in revenues from 2012-13 through 2014-15. This increases the Proposition 98 minimum guarantee by $659 million.
The Governor continues to prioritize fiscal restraint and addressing long-term debts. As such, the May Revision is silent on the possibility of a new statewide bond on the November ballot. It also does not include any modifications or additional comments on the school facilities proposals made in the January budget: $188.1 million for the Emergency Repair Program, and the transfer of $211 million in remaining bond authority from four specialized programs to the main New Construction and Modernization programs.
The May Revision decreases Proposition 39 energy efficiency funds for K-12 schools by $9 million, bringing the amount available in 2014-15 to $307 million. This reflects estimated reduced corporate tax revenue generated by the change in the way multistate corporations are taxed through mandatory use of the single sales factor apportionment formula. We hope to have more information on the calculation when we receive additional detail on the May Revision proposals.
The May Revision proposes $26.7 million in one-time Proposition 98 funds for the K-12 High Speed Network. These funds will provide technical assistance and grants to local education agencies to address the technology requirements necessary for successful Common Core implementation. The funds will be targeted to LEAs most in need of help with securing required internet connectivity and infrastructure.
The Governor proposes a plan to eliminate the unfunded liabilities in the teacher pension system (CalSTRS) in approximately 30 years by asking the State, teachers, and school districts to increase annual contributions. The May Revision includes an additional $450 million ($73.2 million General Fund) to begin implementing the plan.
The May Revision includes a revised Rainy Day Fund, which must be approved by voters as a constitutional amendment to go into effect. The Rainy Day Fund would set aside 1.5 percent of General Fund revenues every year, plus additional revenues when capital gains rise to more than 8 percent of General Fund tax revenues. This proposal was negotiated by Legislative leaders and the Governor in advance of the release of the May Revision.
C.A.S.H. is hosting a webinar to provide more information on the Governor’s May Revision budget proposal this Thursday, May 15 at 2:00 pm. Click here to register.
The full May Revision document is available here.
~ Rebekah Cearley