12-1-06 Education Leaders Project Pressures on Education

Volume 19 For Publication Date: December 1, 2006 No. 25

Education Leaders Project Pressures on Education

Recently, educators and school business officials from around the state gathered at a conference to hear a presentation given by state and local officials focusing on both education politics and policy.

While the recent Budget forecast by the Legislative Analyst’s Office (LAO) was a significant theme throughout the conference, state politics and the consequences for education in 2007 were reflected in panel discussions on major issues facing public education.

Among the presenters, Senator Jack Scott (D-Altadena), chair of both the Senate Education Committee and Senate Budget Subcommittee on Education, joined legislative staffer Rick Simpson (Office of Assembly Speaker Núñez) in presenting the legislature’s perspectives on the Budget.

The coming year may be dominated by a convergence of emerging structural and policy trends that have mixed consequences for public education. On one hand, as reported by the LAO, the broad mid-to long-term fiscal outlook for California’s K-14 schools under Proposition 98 is generally healthy. With projections that schools will move to Test 1 of Proposition 98 over the next two to three years, annual fiscal growth is likely to be in the 4% range. However, speakers throughout the conference, including Scott and Simpson, pointed out that education faces pressures from other policy sectors, which means Proposition 98 may only be funded at the minimum guarantee (no additional appropriations). Whereas education sat on a lofty perch for decades, now both the Democratic leadership of the Legislature and Governor Schwarzenegger are pushing broader agendas that focus on balancing economic development, government services, and stable tax rates. Among the policy issues that will pressure education during 2007 are:

1. Health care—In his post-election discussions, Governor Schwarzenegger has made clear he wants to expand health care for children and the poor.

2. Corrections—With the system under a court order for a long-standing inability to provide sufficient health care to inmates, the state has lost its ability to control both spending and policy decisions.

3. Higher education—The state is depending on consistent expansion of higher education services, especially at the community college level. The Governor continues to prioritize career and technical education as a cornerstone of his education policy agenda, further pushing expansion of higher education.

4. Retirement and health benefits—State Teachers’ Retirement System (STRS) this year, will test the ability to close a $20 billion structural gap in long-term reserves by seeking to raise member fees. The broader issue facing the state is that of unfunded liabilities at all levels of the public sector for retirement and health care costs.

With these significant challenges in front of the state, Senator Scott and other speakers predicted that 2007 will also be a time when schools are relatively stable from a funding perspective, but two major developments will shape the ongoing debate about future increased education investments. The first is the ongoing structural deficit ($5 billion) noted by the LAO, which is estimated to create a $3 billion hole in the initial 2007-08 State Budget (the $5 billion deficit would be reduced by $2 billion in state reserves). With the Governor pledging not to raise taxes and with growth in various tax revenues seemingly in decline (property taxes especially), state officials are in for a challenge. The second development is the long-promised and now soon-to-be-delivered studies on fiscal adequacy and efficiency for California’s schools. Shortly, these studies will be headed to lawmakers for a closed review period. If (as some predict) the studies lead to a call of an increase in funding for California’s schools of between 10% - 25%, state officials will be confronted with a new $6 billion to $15 billion problem.

—Arnold Bray