impact of prop. 30 and prop. 38 on lausd
TRANSCRIPT
Facilities, Budget and Audit Committee
Tuesday, October 2, 2012
AGENDA
California Budget LAUSD Budget Comparison of Propositions 30 and 38
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The California Budget
Current budget assumes passage of Proposition 30 If passes, funding for K-12 education is basically
flat. Proposition 98 goes up, but most of the funding is to
repay cash deferrals. If fails, funding for K-12 education is reduced by an
estimated $441 per student, statewide.* Equates to approximately $255 million to LAUSD** Please note, the average cut per student statewide is $441 per student. The LAUSD specific cut would be $439 per student.
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LAUSD’s Unrestricted Revenue Per Child
Source: School Services of California, Inc. http://www.sscal.com/brl_calc.cfm*Note the above does not include categorical
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$5,797
$6,126
$6,388 $6,363 $6,506
$6,718
$5,797 $5,645
$4,962
$5,220 $5,165 $5,221
$4,782 $4,700
$5,200
$5,700
$6,200
$6,700
2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
LAUSD Revenue Limit per Student
Projected Statutory COLA Flat Funding Actual Funding Midyear Cut
Loss of COLA
Loss of baseline dollars
Loss due to potential failure of Prop 30
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California Per Student Spending Has Fallen by Over $1,100 per
Student Since 2008
California’s per student spending has been cut by $1,105 per student since 2008.
This chart assumes that Proposition 30 passes.
IF Proposition 30 fails to pass, California will rank #1 nationally for cuts to school funding.California will further reduce per student spending by an additional $441 per student. Cuts to per student spending will rise to $1,546 per child since 2008.
Source: http://www.cbpp.org/files/9-4-12sfp.pdf, page 3.
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The November Elections
Proposition
30Proposition
38
“The Schools and Local Safety
Protection Act of 2012”
“Our Children, Our Future: Local Schools and Early
Education Investment and Bond Reduction Act”
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Proposition 30“The Schools and Local Safety Protection Act of 2012”
Supported by Governor Brown Designed to provide additional revenues to the state general fund to
avoid further cuts to public education. The revenues would be part of the state’s general fund budget and
administered according to state law. New income taxes heavily weighted toward highest earners.
Sales tax increase would affect all taxpayers This funding would be part of the state’s normal funding to schools, not
additional. The additional revenue could prevent deeper cuts to public education.
This initiative helps the state to meet its commitments, but in the near term does not provide additional funding for public education.
Source: http://www.lao.ca.gov/ballot/2012/30_11_2012.pdf
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Proposition 38“Our Children, Our Future: Local Schools and Early Education Investment and Bond Reduction Act” Supported by Molly Munger and California PTA. This measure is designed to provide a significant amount of funding
directly to school sites and early childhood education. With a minimum of administrative cost and influence. New taxes are broad-based, but high earners pay more. Separate and above any other state or local funding. It provides funding for retirement of state-level debt during the first 4 years.
This initiative is clearly intended to provide supplemental funding for public education to improve California’s comparative standing with other states.
Source: http://www.lao.ca.gov/ballot/2012/38_11_2012.pdf
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Comparison - Description of Tax Proposals
¼ cent sales tax increase; up to 3% increase in personal income tax for high-income earners (>$250,000).
Generates $6 billion in 2012-13 through 2016-17; with smaller amounts in 2011-12, 2017-18, and 2018-19.
DURATION: Sales tax for 4 years; Income tax for 7 years.
Increase in personal income tax for all but low-income earners, from 0.4% for lowest income individuals to 2.2% for individuals earning >$2,500,000.
Generates $5 billion in 2012-13; $10 billion thereafter.
DURATION: Income tax for 12 years.
Proposition
30Proposition
38
Source: http://www.lao.ca.gov/ballot/2012/30_11_2012.pdf Source: http://www.lao.ca.gov/ballot/2012/38_11_2012.pdf
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Comparison – Increase in Personal Income Tax Rates
$0 - $7,316 $0 - $14,632 0% 0%
$7,316 - $17,346 $14,632 - $34,692 0% 0.4%
$17,346 - $27,377 $34,692 - $54,754 0% 0.7%
$27,377 - $38,004 $54,754 - $76,008 0% 1.1%
$38,004 - $48,029 $76,008 - $96,058 0% 1.4%
$48,029 - $100,000 $96,058 - $200,000 0% 1.6%
$100,000 - $250,000 $200,000 - $500,000 0% 1.8%
$250,000 - $300,000 $500,000 - $600,000 1.0% 1.9%
$300,000 - $500,000 $600,000 - $1,000,000 2.0% 1.9%
$500,000 - $1,000,000 $1,000,000 - $2,000,000 3.0% 2.0%
$1,000,000 - $2,500,000 $2,000,000 - $5,000,000 3.0% 2.1%Over $2,500,000 Over $5,000,000 3.0% 2.2%
Single Filer’s Taxable Income
Joint Filer’s Taxable Income
Proposition
30Proposition
38
Source: http://www.lao.ca.gov/ballot/2012/30_11_2012.pdf Source: http://www.lao.ca.gov/ballot/2012/38_11_2012.pdf
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Comparison – Distribution of Funds
Allocation of funds: Proposition 98 share of
increase will be determined by formula (approximately 40%)
Allocation of funds: Years 1-4:
30% State Bond Debt Relief 60% K-12 Programs 10% Early Childhood
Years 5-12: 85% K-12 Programs 15% Early Childhood
Proposition
30Proposition
38
Source: http://www.lao.ca.gov/ballot/2012/30_11_2012.pdf Source: http://www.lao.ca.gov/ballot/2012/38_11_2012.pdf
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Comparison - Revenues Generated for Education
Limited – additional funds offset State General Fund obligation; $2.9 billion increase in Proposition 98 in first year.
First 4 years: 60% K-12 schools 10% Early Childhood
Education 30% State General Fund
bond debt.
Remaining years: 85% K-12 schools 15% Early Childhood
Education.
Proposition
30Proposition
38
Source: http://www.lao.ca.gov/ballot/2012/30_11_2012.pdf Source: http://www.lao.ca.gov/ballot/2012/38_11_2012.pdf
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Comparison - Effect on California State General Fund Budget
Revenues used to fund Proposition 98 guarantee, freeing up General Fund revenues for other priorities.
First 4 years: General Fund relief due to
state bond debt payments of about $3 billion annually.
Remaining years: Negligible, funds outside
Proposition 98.
Proposition
30Proposition
38
Source: http://www.lao.ca.gov/ballot/2012/30_11_2012.pdf Source: http://www.lao.ca.gov/ballot/2012/38_11_2012.pdf
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Comparison – Impact on Local School Districts
Indeterminate for first few years. Increase in Proposition 98 funding to be used to pay down inter-year deferrals, reduce deficits, fund COLAs.
Roughly $1,000 per ADA.
Proposition
30Proposition
38
Source: http://www.lao.ca.gov/ballot/2012/30_11_2012.pdf Source: http://www.lao.ca.gov/ballot/2012/38_11_2012.pdf
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Comparison - Allocation of Revenues to Local School Districts
Increased Proposition 98 funding will be allocated to State budget priorities; remainder offsets state aid.
Funding formula will be based on CBEDS enrollment counts, and must be spent at school that generates the funds.
Funds to be used to support locals schools: Educational Program Grants
(70%) Low-Income Student Grants
(18%) Training, Technology, and
Teaching Materials Grants (12%)
Requirement to supplement, not supplant.
Proposition
30Proposition
38
Source: http://www.lao.ca.gov/ballot/2012/30_11_2012.pdf Source: http://www.lao.ca.gov/ballot/2012/38_11_2012.pdf
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Comparison - Accountability
Requires open meeting of the governing board to make spending determinations.
Prohibits revenues from initiative from being used for administrative costs.
Public display of how tax revenues are spent.
Inclusion of tax revenues expenditures in LEAs annual financial and compliance audit.
Prohibits use of funds for administrative costs, or for increasing compensation for current staff.
Requires at least two meetings annually for each school site: one for input on use of funds, and one for response to board recommendations prior to action.
Public display of school-level budget Annual report on the use of funds.
Proposition
30Proposition
38
Source: http://www.lao.ca.gov/ballot/2012/30_11_2012.pdf Source: http://www.lao.ca.gov/ballot/2012/38_11_2012.pdf
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What if They Both Pass? If provisions of two or more measures that are
approved at the same election are in conflict with each other, the provisions of the ballot measure receiving the most affirmative votes goes into effect (Article II, Section 10(b) of the California Constitution).
Both initiatives contain language deeming them to be in conflict with the other
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What if They Both Fail? Current estimate is that LAUSD will lose
approximately $439/ADA. Equates to approximately $255 million in additional
cuts to LAUSD Law allows school year to be reduced to 160 days. Cuts will need to be made immediately, as cuts will
affect the 2012-13 budget.
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Sources for Additional Information California Secretary of State – Online Official Voter
Information Guide http://www.voterguide.sos.ca.gov/propositions/
Legislative Analyst Office Summary http://www.lao.ca.gov/handouts/state_admin/2012/Prop_30_31_38_39_Aug_8_12.pdf
LAO Detailed Analysis of Propositions 30 and 38 http://www.lao.ca.gov/ballot/2012/30_11_2012.pdf http://www.lao.ca.gov/ballot/2012/38_11_2012.pdf
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Questions?
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