Making sense of the Governor’s budget plan
Headlines can be so confusing. Here are some headlines from the past 24 hours, talking about Governor Brown’s most recent budget proposal for 2011-2012 (the “May Revise”):
- Brown proposes revised budget with lower deficit
- Jump in revenue helps halve California deficit (New York Times)
- California revenue up, but Brown still pushes tax hikes
- Brown says tax extensions still needed to fix California’s deficit
- Jerry Brown recasts tax push, targeting California’s wall of debt (Sacramento Bee)
- Brown trims proposed tax increase for Californians (Wall Street Journal)
(Contra Costa Times)
(San Jose Mercury News)
Notice how the first two headlines emphasize a lower deficit, and the other four emphasize increased taxes? (And, actually, the Contra Costa Times and the San Jose Mercury News ran same article by the same reporter, but published with two different headlines — one emphasizing a lower deficit, the other emphasizing increased taxes.)
It just goes to show that skimming is not enough. To really make sense of the Governor’s budget plan, we have to read several different articles, commentary from different points of view, and ask our own questions.
What happens when we just skim? We draw erroneous conclusions. For example, here in a post on the Pleasanton Weekly Town Square forums, is some evidence of how those headlines can be misinterpreted:
The parent who wrote the post implies that the Pleasanton school board might ignore the extra money the state might send to the district, still eliminate programs and fire teachers. Also, the parent misses a key fact: the May Revise is not the final budget.
Here’s what the Mercury News says the implications are for schools (in an article entitled “here’s what you need to know…“):
Q What happens to schools?
A Brown’s new plan would increase by $3 billion the amount of money going to schools from his January budget, funneling much of the unanticipated tax revenue to education. However, his budget message says that K-12 public schools could be closed a month early if the tax extensions aren’t approved and if an “all cuts” budget is needed. Neither Democrats nor Republicans in Sacramento support that.
There’s also another important detail that only a few news outlets (like the San Leandro Patch and the Orange County Register) have honed in on. The “increase” in education funding is not really an increase.
The OC Register quotes Ron Bennett, president of School Services of California, who explains:
“It would be a mistake to say education has a $3 billion windfall,” Bennett said.
“This deal is like saying to your brother-in-law, ‘I’ll loan you 50 bucks for your car payment,’ but then he comes up with the 50 bucks, so you say, ‘I’m not going to loan you the money anymore.’ “
School districts still have to continue making payments. They have just been given a brief reprieve.
The San Leandro Patch explains further:
Brown projected that the state will take in $6.6 billion more in tax revenue this year and next year than was originally expected, with $1.6 billion of that going to K-12 education and community colleges.
But that money is cash already owed to the schools. The Sacramento Bee reports that the extra cash would go towards reducing short-term IOUs to schools, which the governor’s previous budget proposal relied on, in part, as a form of “backdoor borrowing.”
Essentially, the state has been deferring payments to school districts. In this current fiscal year, the state told districts that they were budgeted to receive X million dollars, but they could only expect about 80% of that money to be paid in cash before the end of the fiscal year — 20% of the payments would be deferred, to be paid next year. Now, the governor is proposing that increased state revenue should be used to pay schools the remaining 20% on schedule, rather than deferring the payments.
So the fuss over education spending will continue. The budget is still being negotiated, and the best possible scenario is flat funding for next year. The worst possible scenario for next year looks less bad than it did last week — but it could still be pretty bad. After that, tax extension votes make everything uncertain again.
My prediction for Pleasanton
Based on what I have read so far, I would be surprised if the Pleasanton school board votes to rescind any layoffs at their next meeting. Rather, it is more likely that the budget will be approved in June based on conservative assumptions, and if the final state budget gives the district more leeway, then we may see some layoffs rescinded in July or August.