Wanted you to have the latest breaking development on the state budget today as the California State Senate leadership has announced budget priorities, released this afternoon in a document, that signals some positive differences from Governor’s January budget. There is not a whole lot of detail, but five areas referenced in the document are encouraging. The first point is that they are supporting a record level of one-time and ongoing resources to schools as a result of the increases to the Proposition 98 guarantee from a dramatically rebounding economy.
The second point is particularly hopeful in that they emphasize the need to ensure long-term stability of local school districts by maximizing the pay-down of deferrals and providing added support for school pension stabilization. This may suggest they will go farther than the Governor’s budget on both deferral pay-down and pension obligation relief. As we have repeatedly pointed out, the Governor’s budget leaves a balance of $3.7 billion in deferrals with no plan to pay them down and he has no proposal for new resources next year to further help with pension costs. To the extent they are pushing on the Administration to do more on these issues is a very positive thing.
A third point the Senate makes among its priorities is the intended support for mental health, learning loss and other pandemic related impacts by leveraging education and health policies. It is not clear how their position might be different from the Governor who supports these issues as well. Another key issue they identify is the need to provide greater state level support for school nutrition programs. We have seen school nutrition receive long-overdue attention this year due to the COVID-19 Pandemic, but it appears the Senate has realized that ongoing funding is going to be crucial as well. Finally, they have also included increased support for special education programs on their short list or priorities. It is clearly a priority of the Governor as well, but the Senate may be signaling that may want to see even more meaningful support than what has been proposed in Governor Newsom’s January budget plan.
This is all good and serves as an interesting strategic move prior to the Governor’s release of the May Revision. You might remember that the Senate made a similar move last year, but it came after the May Revision, signaling that they were completely opposed to the Governor’s proposed devastating cuts to school funding a year ago. The Senate’s move helped to frame the debate for the final negotiations over the budget which ultimately did not contain the budget cuts. This announcement prior to the May Revision helps again this year to frame the budget debate, but may positively impact the Governor’s highly anticipated May Revision for 2021-22. We will keep you informed as the budget process moves forward.
Kevin Gordon, PresidentCapitol Advisors Group, LLC