LAO: One-time ‘windfall’ to benefit schools
December 7, 2020
California’s Legislative Analyst’s Office is projecting a $26 billion windfall in revenue for the state in the next fiscal year that will benefit K-12 schools, according to a fiscal outlook released Nov. 18.
The LAO’s Fiscal Outlook analyzes revenue projections ahead of the January budget proposal for 2021-22 and determined that the economic impacts of the pandemic have not been as catastrophic as anticipated.
“Although the state economy abruptly ground to a halt in the spring with the emergence of coronavirus disease 2019, it has experienced a quicker rebound than expected,” according to the LAO. “But, the recovery has been uneven. Many low‑income Californians remain out of work, while most high‑income workers have been spared.”
While California is in for a one-time surplus in revenue, the LAO notes state spending is still expected to outpace revenue growth, which would result in a small operating deficit in 2021-22. That deficit would grow to around $17 billion by 2024‑25.
For schools, the outlook is more positive. The LAO estimates the Prop. 98 minimum guarantee for K-12 schools and community colleges will increase by 18.5 percent over the June budget act, in what the LAO describes as a “remarkable” turnaround.
Specifically, the LAO’s report estimates:
- The Prop. 98 minimum guarantee is up $1.6 billion in 2019-20 and $13.1 billion in 2020-21 as compared to estimates in the June 2020 budget plan;
- The state is required to make a supplemental payment of $2.3 billion to schools;
- After accounting for various baseline adjustments, including covering the 1.14 percent statutory cost of living adjustment in 2021-22, the Legislature will have $13.7 billion in one-time funds and $4.2 billion in ongoing funds available for allocation to schools in the upcoming budget cycle.
While stopping short of putting forth spending recommendations, the LAO’s report does include various spending options for the Legislature to consider, including paying down deferrals, mitigating learning loss and providing relief for pension costs.
“Given the significant impact the COVID-induced recession has had on our economy, we are grateful for the news of stronger state revenues than projected, a possible COLA for the coming year and the potential restoration of Prop. 98 apportionment deferrals, which combined bring a renewed sense of hope to our state’s education community. Education is also in great need of additional federal stimulus relief funds for the coming year to fiscally survive,” said Gina Potter, superintendent of San Ysidro School District and chair of ACSA Legislative Policy Committee.
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