Fourth District PTA Advocacy Roundtable

1. Fourth District PTAAdvocacy Roundtable Presented by Ron Bennett President and CEO

2. Funding Per ADA – Actual vs. Statutory Level Loss due to midyear cut $4,911

3. Money Matters in Student Performance

4. California’s Education Spending Continues to Lag

5. California’s Spending Lags the Nation

6. Historic IDEA Funding

7. Governor Brown’s Budget Revenues vs. LAO Forecast • Governor Brown’s Budget assumes revenues and transfers of $95.4 billion in 2012-13, a 7.7% increase • The LAO forecasts a two-year shortfall of $6.5 billion,including $2 billion in additional tax revenues relatedto the Facebook initial public offering • $3.0 billion attributable to 2011-12;$3.5 billion to 2012-13 • The LAO forecast assumes passage ofGovernor Brown’s original tax proposal

8. Reasons for the LAO’s Pessimism • Economic Outlook • The LAO forecasts stronger U.S. and California economic growth thanthe DOF • Revenue Forecast • The LAO disagrees with the DOF’s assumption about capital gains income; the DOF is too optimistic • Average home price appreciation for 2002-2006 was 18% annually; 2012-2015 forecast of 1.2% • Capital gains income between 2002-2006 of $88 billion annually; $90 billion a year forecast by the DOF for 2012-2015 • Recent shortfalls have been attributed to weak capital gains income

9. Competing Tax Initiatives • Governor Brown’s Budget assumes passage of $6.9 billion in new taxes, but other measures could be on the ballot • Conventional wisdom says that if more than one tax initiative is on the ballot, they all fail • What’s in play? • Governor Brown’s initiative – ½ cent sales tax and higher income tax rates for $250,000 and above • California Federation of Teacher’s (CFT) millionaires tax • Molly Munger/Parent Teacher Association’s broad based income tax • Latest entry: Governor Brown’s compromise with CFT • ¼ sales tax and higher income tax rates at $250,000 and above

10. How Do the Tax Initiatives Compare?

11. How Do the Tax Initiatives Compare?

12. Political and Logistical Challenges • A Field Poll in February placed CFT’s millionaire’s tax first (63% support), then Governor Brown’s (58%), finally Munger’s (43%) • A March 7 Public Policy Institute of California (PPIC) poll placedGovernor Brown’s at 52% • Signature gathering to qualify • About 500,000 valid signatures forMunger’s and CFT’s • About 800,000 for Governor Brown’s(constitutional amendment) • About six weeks remaining tosubmit signatures

13. Weighted Student Funding • Governor Brown has proposed a major change to California’s school finance system • Revenue limits and over 40 categorical programs would be replaced with a weighted student funding (WSF) formula • $4,920 per-ADA base rate, plus 37% additional for English Learners and free and reduced-price lunch students • Six-year phase-in, with 5% phase-in in 2012-13; hold harmless in budget year • Major categorical programs added to flexibility • Economic Impact Aid • Class-Size Reduction • Transportation

14. Weighted Student Funding • The WSF proposal has evolved since January and other changes are expected • Grade span weights, similar to the charter school block grant • Major challenges and shortcomings • Eliminates deficit factor • Redistributes base funding ($5,244 per ADA vs. $4,920 per ADA) • Nothing “magical” about 37% weights • Disregards cost factors unrelated to disadvantaged students • Each Legislator will have winners and losers in his/her district

15. Transitional Kindergarten Proposal in 2012-13 • Senate Bill 1381 (Chapter 705/2010): • Changed eligible birth dates for kindergarten and 1st grade • Established “Transitional Kindergarten (TK)” • According to current law, TK is to start in 2012-13 • Districts offer TK to students who otherwise do not qualify for traditional kindergarten due to change in age eligibility dates • Must offer TK to students turning five between December 2 andNovember 2 in 2012-13 • Can offer TK to students with birthdays between September 2 and December 2 • Not required at every school site – whatever works best for the district • Not compulsory – students are not required to attend kindergarten

16. Transitional Kindergarten Proposal in 2012-13 • Governor’s Proposal: • Eliminates all statutes associated with TK • TK would be an optional local decision • Allows students turning five at any time during the school year to: • Enroll in kindergarten, fully funded, at the beginning of the school year • On a case-by-case basis, upon local board approval • Legislature has been generally unfavorable – future of proposaluncertain • Resources will be available for TK in either current law or Governor’s Proposal

17. K-12 Deferrals • Nearly $10 billion in payments of state aid for K-12 schools is deferred into the next year • Equates to more than 38% of the principal apportionment • Districts receiving most of their funding from local sources: • Have always had to borrow to meet cash flow – mostly within year • Borrowing needs are less affected by deferrals of state aid • Districts receiving most of their funding from the state: • Historically, cash flow more closely matches spending • Operating cash needs often met without borrowing • Therefore, deferrals of state aid have a significant impact • Imposes new borrowing requirements to match cash needs • Requires borrowing across fiscal years • May require two Tax Revenue Anticipation Notes, with theassociated costs

18. Basic Aid Budget Reductions • Fair Share • Revenue limit districts have been impacted by a deficit of 20.602% in 2011-12 as an ongoing deficit beyond 2011-12 • The comparable impact on basic aid districts includes a fair share reduction of 9.57% for the 2011-12 fiscal year • The reduction of the fair share will be based on the 2011-12 P-2 revenue limit subject to the deficit factor for each of the respective districts identified as “basic aid” in the 2011-12 • The reduction is taken from categorical program funds apportioned in the 2012-13 fiscal year

19. Thank you