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California school finance: Déjà vu deficit, tackling structural problems head-on.

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TLDR:

– California faces structural problems with its education budget, as volatile tax revenues and economic downturns threaten funding for schools.

– The state has made significant financial investments in programs aimed at improving education, but many of these funds are one-time only, putting them at risk in the future.

– Governor Gavin Newsom’s draft budget for the 2024-25 fiscal year includes deficit reduction measures, which could delay funding for programs like preschool and full-day facilities grants.

– The state must address its structural fiscal problems, including reforming Proposition 13 and accounting for long-term liabilities, in order to secure stable funding for education.

California is facing structural problems with its education budget, as volatile tax revenues and economic downturns threaten the stability of funding for schools. Despite the state’s record level of education spending, the highly volatile nature of state tax revenues means that funding can change from good news to bad news almost overnight. The Legislative Analyst’s Office (LAO) has identified a $68 billion “budget problem” in its latest fiscal outlook, and its revenue forecasters predict persistent deficits for the state through 2027-28. This has led to talk of cutting K-12 funding, as lawmakers did during the Great Recession.

In addition to the budget problems, there is also concern over the stability of funding for programs aimed at improving education. The state has made significant financial investments in programs such as teacher recruitment and retention, social and emotional learning, and community schools. However, many of these programs were funded with one-time only funds, putting them at risk of losing resources in the future. The draft budget for the 2024-25 fiscal year includes deficit reduction measures, which could delay funding for programs like preschool and full-day facilities grants.

To secure stable funding for education, California must address its structural fiscal problems. This includes reforming Proposition 13, which limits property tax increases, and accounting for long-term liabilities such as pensions. It may also involve broadening the sales tax base to include services, creating incentives for the state and local governments to save, and exploring unconventional funding sources such as a sovereign wealth fund or a consumption tax.

To transform California’s schools and provide adequate and equitable funding for students, there needs to be a serious discussion about supporting education investments with stable revenue. This involves addressing the state’s structural budget problems and ensuring that strategic investments in education are not lost due to funding instability.

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