News
Wednesday, January 9, 2008
State budget shortfall grows
Education at higher risk for mid-year cuts
December 12, 2007
By Sandra Silberstein, CASBO Assistant Executive Director, Advocacy & Policy
The state’s budget shortfall has grown significantly beyond the $10 billion hole projected earlier, making it all but a certainty that mid-year cuts to education will be among the budget solutions discussed in upcoming budget negotiations.
Rumors of a bigger budget deficit began circulating soon after the legislative analyst’s mid-November estimate of a $10 billion state budget shortfall. In the weeks since that announcement, it became apparent that the state’s housing market woes were continuing to drag down the economy and almost all state revenue sources.
Over the past week, those rumors became real as the administration met with major budget stakeholders, including education and local government representatives, and began talking more publicly about the continued decline in the state’s revenue forecast. Latest reports peg the shortfall at $14 billion over the next eighteen months, with no end in sight.
As state revenues tank, so does the minimum guarantee for education. In November, Legislative Analyst Elizabeth Hill called for a relatively minor mid-year reduction of $400 million in education spending – to bring education down to the lowered current year minimum guarantee she was predicting. The legislative analyst noted that such a move would not only save the state money in the current year, but would lower the Proposition 98 guarantee in out-years, saving the state in excess of $1 billion over the next few years.
But budget watchers now predict that the continued decline in state revenues have further lowered the Proposition 98 minimum, meaning education’s current year “over-appropriation” could be twice that predicted by the legislative analyst, putting education at greater risk of more significant mid-year reductions.
Given the magnitude of the state’s revenue shortfall, it seems highly likely that education cuts will be proposed as part of a package of current year cuts to almost all state programs. At this juncture, CASBO urges school districts to “plan, not panic” in anticipation of some level of mid-year cuts. At the same time, CASBO is continuing to work with other education stakeholders at the state level to do all we can to protect school funding and to mitigate any reductions that may ultimately come our way.