Newsom signs off on 2023-24 state budget after compromise with fewer cuts for K-12

ONE DAY AFTER settling their differences, the Legislature on Tuesday quickly approved a $310 billion 2023-24 state budget and sent it to Gov. Gavin Newsom, who signed the bill Tuesday night. Senate Bill 101, the budget, will provide slightly less funding for schools and community colleges than last year, yet assures school districts will have a sizable increase in general operating money by fully funding a cost of living increase.

The final deal also offers more immediate relief for struggling child-care providers that Newsom had offered and help for parents of young children by capping the amount of their income they must pay for child care.

For higher education, the budget spares delays and cuts to construction and student housing projects by shifting costs to bonds, provides debt-free college to foster youth, and assures that the current $289 million for the state’s middle-class scholarship program will continue through 2024-25.

The state budget, which the Assembly approved 62-14 and the Senate passed 32-6, takes effect July 1. It marks a retrenchment from three years of record education funding supplemented by tens of billions in one-time federal and state Covid relief, which together set in motion ambitious new programs with eye-popping costs. These include $4.4 billion for community schools and $4 billion for after-school and summer programs for low-income children through the Expanded Learning Opportunities Program.

Funding for all of those Newsom priorities remains intact in the new budget, as does an 8.2 percent cost of living increase for the Local Control Funding Formula, special education and other ongoing programs — the top priority of school districts.

Funding for Proposition 98, the formula that sets the portion of the state general fund going to TK-12, community schools and some child care funding, will be $108.3 billion. That is $2.1 billion less than the Legislature adopted a year ago for the current year.

But it is also $1.5 billion more than Newsom had proposed in January for 2023-24. The difference reflects higher projected revenue from local property taxes going to the state for Proposition 98, enabling the Legislature to substantially reduce cuts in one-time funding that Newsom had suggested. Instead of reducing $1.8 billion from the $3.6 billion arts, music and instructional grant program, the cut will be only $200 million. Instead of cutting $2.5 billion from the $7.5 billion learning recovery block grant, the cut will be $1.6 billion, with an intent to restore $379 million in 2025-26 and 2027-28.

More gold for Golden State Pathways program

The additional revenue will also stave off the Legislature’s proposal to delay spending $400 million of $500 million from another Newsom priority, the Golden State Pathways program. Passed last year, it will promote career opportunities for low-income high school students in high-skill, high-wage areas, including technology, education and health. It would combine dual enrollment in college courses, completion of A-G courses required for admission to the University of California and California State University, and workplace apprenticeships.

“We are thrilled the governor and Legislature did not attempt to balance the budget on the backs of students of color and other marginalized students by cutting the Golden State Pathways program investment,” said Brian Rivas, senior director for policy and government relations, for the advocacy nonprofit Education Trust-West. “We hope the California Department of Education will move quickly to roll out these funds so that more students get the preparation they deserve for high-quality college and career opportunities.”

The 8.2 percent cost-of-living adjustment will raise the funding formula, which is the primary funding source for general expenses and additional money for high-needs students, by 4.5 percent to $79 billion. The additional funding takes into account a projected 3.16 percent decline statewide in average daily attendance, including fewer students than projected enrolling in traditional kindergarten.

Other additional spending in the education portion of the budget includes:

• $300 million to the funding formula to create what Newsom is calling the “equity multiplier” program. It will enable at least several hundred high-needs schools to close opportunity and achievement gaps by addressing learning needs for the lowest-performing racial and ethnic student groups, students with disabilities and English learners in those schools.  The criteria to qualify for the funding changed in the language accompanying the budget. Instead of only schools with 90 percent or more students qualifying for free school meals, funding will also factor in school instability, reflecting high rates of expelled and truant students, dropouts, homeless and foster-care students plus a minimum of 70 percent low-income students.
• $250 million in one-time funding to double grants over five years to high-poverty schools to train and hire literacy coaches for one-on-one and small-group interventions for struggling readers.
• $80 million in ongoing funding for juvenile court and alternative schools operated by county offices of education, in part to expand access to A to G courses, provide vocational training, and aid in post-secondary education.
• $20 million in professional development grants for bilingual teachers.
• $6 million more to the Golden State Teacher Grant program, which offers up to $20,000 to a teacher candidate who commits to working in a priority school for four years, for teacher candidates preparing to become special education teachers. In a related measure, the budget increases what school districts receive for each teacher participating in the Teacher and School Counselor Residency Grant program from $25,000 to $40,000. Residents will be paid at least half of that amount.
• $3.5 million ongoing to county offices of education to stock opioid overdose reversal medication, with at least two units at all middle and high schools within each county office’s jurisdiction.
• $1 million to develop a state “literacy roadmap” to provide guidance on teaching, training and using evidence-based practices on effective reading instruction.
• $1 million for a panel to identify a choice of screening instruments from which all schools must choose, starting in 2025-26, to identify students at risk for dyslexia and other reading difficulties.
• $1 million for professional development and leadership training through the Museum of Tolerance.

Generally well received

Reactions to the negotiated budget were positive overall.

“We know the state’s revenues remain precarious, but this is an education budget to be celebrated. Given the state’s $31.5 billion budget deficit, the Legislature and governor deserve full credit for boosting core educational services under the Local Control Funding Formula while largely avoiding any painful cuts to the state’s fledgling suite of “whole child” services,” said Derick Lennox, senior director of governmental relations and legal affairs for the California County Superintendents association.

“At the same time, the parties have increased investments for two groups of students with significant equity needs: socioeconomically disadvantaged students, under the LCFF equity multiplier, and students being educated in juvenile court and county community schools,” Lennox added.

“While not a perfect budget like last year’s record budget, the best fiscal plan in the state history, I still give us an A- grade,” said Assemblymember Kevin McCarty, D-Sacramento, who chairs the education subcommittee of the Assembly Budget Committee. “We expand access and base funding for child care, implement universal pre-K, fund TK-14 education, including community colleges, at a record level, significantly grow UC and CSU student enrollment, expand college financial aid, and launch a state-funded program to build needed college student housing.”

There is always guesswork in revenue projections, but they are particularly tenuous this year because of a suspension of the deadline for 2022 income tax payments until October, due to the impact of winter storms and flooding. The Legislative Analyst’s Office is predicting that state revenues could come in $10 billion below what Newsom is counting on, which would leave schools and community colleges $4 billion short.

One protection, which schools and community colleges lacked in the last recession, would be a full Proposition 98 rainy day fund. With the addition of $892 million in the coming year, the Public School System Stabilization Account will max out at $10.8 billion — 10 percent of the Proposition 98 general fund — fulfilling a constitutional obligation imposed by voters a decade ago.

Child care

California’s beleaguered child-care sector will finally be getting a raise, in the form of up to $2.8 billion to boost subsidies to care for low-income children as well as a cap on family fees, under the new state budget agreement.

“This budget is a great victory for child care,” said Scott Moore, head of Kidango, a nonprofit organization that runs many Bay Area child care centers, “The huge reduction in child care co-pay fees is a giant win for low-income families.”

Early childhood advocates are calling this much-needed progress toward helping child-care providers, many of whom subsist on survival wages. Family fees will be capped at 1 percent of family income.

“Subsidized child-care providers should get a big bump in pay from this budget deal,” Moore said. “It is a giant step in the right direction.”

There is also a provision to develop an alternative rate model because current rates, pegged to 2016 costs, are outdated, many experts say. This has put great financial pressure on child-care providers, a sector already strained by the pandemic. California currently pays some child-care providers as little as a quarter of what the service costs, research suggests.

However, details on the nature of the rate increases remain unclear pending bargaining with Child Care Providers United, a union that represents 40,000 home child-care providers across the state.

“We are still in wait-and-see mode because decisions are being made in union negotiations,” said Mary Ignatius, statewide organizer of Parent Voices, a California parent advocacy group. “If we come out with short-term stipends that won’t go to every provider or program that needs it to maintain the current workforce or attract new early educators, we’ll remain in crisis.” 

Higher education

The agreement approves 5v base funding increases for both university systems — $215.5 million in ongoing general fund support to UC and $227.3 million to CSU. Both increases come with a stipulation that each system must increase its enrollment targets. UC would be expected to add 7,800 full-time students this fall. CSU would be expected to add 4,057 more full-time students this fall and increase enrollment by 9,866 students in 2024 and 10,161 students in 2025.

The budget agreement remains the same as the May revision for community college funding. The 116-campus system’s base funding is tied to Proposition 98, which determines the portion of the state’s general fund that goes to education.

The agreement also includes the shift in funding Newsom proposed for several projects, including student housing, to use community college-, UC- and CSU-issued bonds. The state would cover the debt payment for those bonds.

EdSource reporters Karen D’Souza, Diana Lambert, Betty Márquez Rosales and Ashley Smith contributed to this article. 

This story originally appeared in EdSource.