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Proposition 98 Nets California Schools A 12.5 Percent Increase in State Funds

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California's public schools received a record-high 12.5 percent funding increase in the first state budget passed since voters approved Proposition 98, a constitutional amendment that governs education spending.

Gov. George Deukmejian signed the budget measure, which contains a myriad of hard-fought compromises, on June 30, just hours before the state's new fiscal year began.

The Governor's timely action on the budget prevented schools from gaining a multi-million-dollar "embarrassment of riches" that they would have been entitled to under Proposition 98. (See Education Week, June 21, 1989)

The budget nevertheless represents a victory for public education because it "protected the integrity of Proposition 98," said Susan Lange, a spokesman for State Superintendent of Public Instruction Bill Honig.

"Education can finally look down the road and do some long-range planning," Ms. Lange said.

The budget fulfills Proposition 98's central requirement that elementary and secondary schools and community colleges receive 40 percent of all new state revenues.

Gains Threatened

Lawmakers, however, also approved a proposed constitutional amendment that, if endorsed by voters next June, would reduce education's claim to funding under Proposition 98 by $10 billion over the next five years, according to education-department estimates.

The proposal, sca 1, would amend the government spending limit in California's constitution to allow state spending to grow more rapidly.

The change would significantly reduce the likelihood that the state would collect more revenue than it could legally spend, a situation has occured in three of the past four years.

Before the passage of Proposition 98, such "excess revenues" had to be returned to taxpayers. The school-spending amendment, however, directs that most unspent revenues be diverted to education.

A large portion of the new fiscal year's budget increase for education will be funded by excess revenues collected during the past fiscal year.

Education lobbyists and their al8lies in the legislature accepted fewer dollars for education in the new budget, as well as the changes called for in sca 1, to prevent lawmakers from suspending Proposition 98 or mounting a move to repeal it.

Some also acknowledged that Proposition 98 could, in its current form, prevent the state from adequately funding other important services.

But Mr. Honig and most education groups have thus far taken a neutral stand on sca 1, and have expressed concerns that it could undermine Proposition 98.

Supporters of sca 1 admit they will have a hard time winning voter support because the amendment would also allow lawmakers to raise gasoline taxes by up to 9 cents a gallon for transportation programs.

"If the amendment doesn't go through, the state would not have a great fiscal situation, but it's basically very much in our favor," Ms. Lange said. "We're still sitting with all the cards."

After all the bargains had been struck, Proposition 98 allowed public schools and community colleges to gain almost $1 billion more than Mr. Deukmejian had recommended in his budget proposal, Ms. Lange said.

The additional money allowed lawmakers to grant a full cost-of-living adjustment to all categorical education programs for the first time since Mr. Deukmejian took office, and provided for growth in some programs.

Part of the increase will also help the state's districts to cope with enrollment growth that has been averaging almost 3 percent a year.

In the negotiations that paved the way for the budget's passage, Republican legislators insisted on the creation of a new, $180-million program of supplemental grants to4remedy what they said was inequitable funding under current categorical programs.

The new grants will be distributed to districts that receive little or no funding from traditional categorical programs. The money may be used at the districts' discretion for initiatives similar to the 32 existing categorical programs.

The education department is advising districts that receive the new grants that their spending will be governed by existing laws and regulations. But that interpretation may be challenged, Ms. Lange said.

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