![](https://edsource.org/wp-content/uploads/2024/05/David-Goldberg-CTA-President-2-1024x633.png)
David Goldberg, president of the California Teachers Association.
Source: California Teachers Association
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Opposition from two powerful education groups could derail Gov. Gavin Newsom's plan to close a massive state budget shortfall for TK-12 schools and community colleges and lead to lawsuits this summer with unpredictable consequences.
The debate is over Proposition 98, a complex 35-year-old formula that determines how much schools and community colleges should receive each year from the state's general fund. Newsom said that by complying with the law, he is largely sparing schools and community colleges from the massive budget cuts facing UC, CSU and the non-education sector of the state.
“Thank you, but no thanks,” says the California School Boards Association and the California Teachers Association.
In separate announcements, the School Boards Association on Wednesday and the CTA on Friday threatened to sue over what they characterized as the final run-through surrounding the Proposition 98 formula that would deny billions of dollars to schools and community colleges. They argue that Newsom's tactics will set a bad and expensive precedent that governors in other difficult times will emulate if allowed.
CTA President David Goldberg called the budget plan a “blatant attack on public school funding” that “will wreak havoc for years to come.”
Patrick O'Donnell, a former senior assemblyman and current director of government affairs for the Board of Education, said the organization is willing to talk to the governor but will not allow a violation of the state constitution on Proposition 98. He said, “Our lifeline is education.”
Like other areas of state government, schools and community colleges face huge revenue shortfalls. Proposition 98 funding has decreased by $17.7 billion over three years, including $3.7 billion since January alone.
The largest part of the decline reflected a major miscalculation. Due to winter storms across the United States in early 2023, the federal government and California have postponed tax filing date from April 15 to November 15. June 24 Budget; They found they spent $8.8 billion more than the minimum required by Proposition 98.
Because TK-12 and community colleges have already been budgeted and spent money, Newsom promised to hold them harmless. The dispute concerns his Treasury adviser's plan to treat “overpayments” as an off-the-books accounting ploy.
The Treasury will pay $8.8 billion in cash. The state appears to have a lot of cash these days. Spending would then accrue from the general fund over five years, starting in 2025-26.
HD Palmer, Treasury's undersecretary for external affairs, said the proposed budget “is not only legal and constitutional in our view, but is also designed to provide predictable and reliable support in response to the unprecedented disruption to revenue forecasts.” But the nonpartisan Legislative Analyst's Office questioned whether the governor's plan was prudent, without commenting on its legality. And key lawmakers, including Sen. John Laird, D-Santa Cruz, chairman of the Education Finance and Budget Subcommittee, and Rep. David Alvarez, D-San Diego, appeared skeptical at hearings this week.
CTA and the Association of School Boards disagree, calling Prop. 98 a “manipulation” of the mandate. Voters passed the proposition as a constitutional amendment to protect education spending from tax cutters and prevent tax volatility, as has happened more often recently. This formula sets a funding minimum, but not a cap, and the Proposition 98 appropriation amount for a given year is generally the basis for calculating the minimum amount for the following year. There are several “tests” related to economic conditions and student attendance growth that determine how much Proposition 98 funding changes each year.
Teachers unions and school board associations argue that the additional $8.8 billion is the basis for calculating obligations for 2023-24 and is not a mistake or overpayment.
According to CTA's calculations, adding $8.8 billion and applying other elements of Proposition 98 would increase funding by $6.8 billion more in 2023-24 and $5.1 billion more in 2024-25 than Newsom called for in his May amendment. It will.
“The Proposition 98 measures proposed in the May amendment threaten public school funding,” Goldberg said in a statement. “Weakening this guarantee will harm schools for years to come, creating a situation where class sizes will increase, counselors, school nurses and mental health professionals will be reduced, cuts to essential school programs and layoffs will likely occur.”
Kenneth Kapphahn, senior fiscal and policy analyst with the Legislative Analyst's Office, said the agency has not seen the CTA's calculations, but the union's numbers are “close to the numbers we are tracking.”
Possible Stopping of Proposition 98
Newsom's May budget amendment uses $8.8 billion from the general fund to make up the shortfall in 2022-23 and pulls about $8.5 billion from Prop. 98 reserves to balance 2023-24 and 2024-25 and expand preschool and transitional facilities. Billions of dollars worth of cuts were made, including delays in facility spending for kindergartens, middle-class college scholarships, tuition subsidies for teacher candidates, and funding for kindergarten positions.
A victory for the CTA and school board associations, whether through negotiations or in court, will not immediately send additional revenue the state does not have to school districts' doorsteps or resolve the $17.7 billion shortfall.
O'Donnell, who represents the school board, acknowledged that adding billions of dollars to the Proposition 98 minimum could add to the “short-term pain” of balancing the budget.
The immediate consequences of this could be further cuts, the creation of billions of dollars in IOUs called an emergency halt or postponement of Proposition 98 this year.' Kapphahn, the legislative analyst, said the state faces the next fiscal year with reduced state revenues and no emergency funds for support.
Actions to suspend Proposition 98 when the state was unable to fund its minimum mandate took place twice: in 2004-05 and 2010-11. Suspension requires a vote of two-thirds of the state Legislature and creates a debt called a “maintenance element,” which Kapphan said “could take years to recover.”
The deferrals, used in the years following the Great Recession, cover late payments ranging from a few days to several months into the next fiscal year, and are carried over from year to year until enough new funds are available to end them.
“There are several options, and they are all difficult. “Everything except the measures proposed by the governor seem to require us to pay for funds that are not in the budget,” said Laird of the Senate. “We will be holding intensive discussions over these options over the coming weeks.”
The CTA acknowledged that a suspension of Proposition 98 may be unavoidable, but it is necessary. “At a minimum, the suspension brings about the restoration of the constitutionally required level of assurance through repayment of the maintenance component, thereby avoiding permanent reductions in school funding and the whims of future administrations,” it said in a statement Friday.
The union plans to put pressure on lawmakers. “We will be demanding that our elected leaders protect school funding in the coming weeks,” Goldberg said, adding that CTA will launch a media campaign to help our communities understand what is at stake.