Education Funding

Davis Proposes Cuts, Block Grants for Schools

By Joetta L. Sack — January 22, 2003 5 min read
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Despite deep cuts to education, California school administrators may find a silver lining in Gov. Gray Davis’ new plan to address his state’s staggering $35 billion budget gap over the next two years.

In a much-anticipated budget speech on Jan. 10, Mr. Davis pledged to protect education and children’s health-care systems “as much as possible,” but outlined deep cuts in school spending.

Then, he announced that he also wants to roll 64 state education programs into a block grant. That move would likely be welcomed by California school administrators, who long have complained of little spending flexibility. Yet the plan, which would have to be approved by the legislature, is likely to be overshadowed by budget cuts.

Gov. Davis, a Democrat starting his second term, is proposing to decrease the state’s general-fund budget from $75.5 billion in fiscal 2003 to $62.8 billion in fiscal 2004. He also hopes to shift responsibility for another $8.2 billion in services to local governments, including the department of education’s child-care programs.

State education officials say that Proposition 98, which amended the state’s constitution to provide a minimum-funding guarantee for K-12 education, would see slight increases—from $38.5 billion to $39.9 billion over the same period.

But in a budget that would chop the total allotment for categorical education programs from $11.03 billion to $5.54 billion in the next budget year, that’s little comfort.

“You cannot address this kind of deficit and hold education harmless,” said Secretary of Education Kerry A. Mazzoni in an interview last week.

The strains have already collapsed at least one district.

Earlier this month, Oakland, the state’s sixth-largest school district, asked the state for a $100 million emergency bailout. Local and state officials worry that other districts will take the same path.

To help raise revenue, Gov. Davis has proposed a one-cent sales-tax increase, an increase of $1.10 per pack in the cigarette tax, and the restoration of higher taxes on upper-income brackets. He also wants to increase higher education tuition.

But, added Ms. Mazzoni, “Without this additional revenue, education could be in a much worse situation.”

Class-Size Burdens

California has borne the brunt of the nation’s economic recession in recent years, having seen the meltdown of its dot-com industry. State finance officials said this current crisis is the most severe shortfall the state has seen since World War II.

“We’re being cut to the bone in California schools, and we just have to face these cuts and mitigate them,” said Kevin Gordon, the executive director of the California Association of School Business Officials.

But some analysts blame the governor and lawmakers for ratcheting up spending and cutting taxes during the boom years.

“These reductions come on top of some very hefty increases,” said Lance T. Izumi, director of the Center for School Reform at the Pacific Research Institute, a think tank based in San Francisco.

“During the boom years, lawmakers here didn’t account for the fact the funding stream was unstable,” he said. Many problems stem from district-negotiated raises that they can no longer afford, he added.

Dennis Smith, the president of the Orange County District Superintendent Association, a coalition of 28 local districts, said Gov. Davis requested raises for teachers when he spent surpluses in the late 1990s, and most districts obliged. If a district did not raise salaries, he added, it would be harder to recruit and retain employees.

“Our teachers deserved it, and with the high cost of living in California, our teachers are still underpaid,” said Mr. Smith, who is also superintendent of the Placentia Yorba-Linda district.

Now, many Orange County districts are considering layoffs to balance their budgets.

One of the biggest thorns is the state’s class-size-reduction program, a favorite of Gov. Davis’ which mandates that classes in grades K-3 have no more than 20 pupils. Local administrators have decried the inflexibility of the plan, which was adopted under former Gov. Pete Wilson, a Republican.

Meanwhile, the Orange County superintendents want to put up to 22 students in a classroom, and one or two more in emergencies. Gov. Davis is not expected to endorse that proposal.

But in a surprising move that is finding favor with districts, the governor is proposing to meld 64 education programs into a block grant to districts, and would make the programs voluntary. The list includes programs such as technology, transportation, gang-risk intervention, and adult education.

That way, officials say, districts can choose which programs are most needed and can also transfer some of those funds into their class-size-reduction programs. The total for those 64 programs would be decreased 10 percent.

Ms. Mazzoni pointed out that special education, standardized testing, and other programs that are considered vital would not be included in the block grant.

“There are a number of things with flexibility and suspension of mandates that would save us hundreds of millions of dollars,” said Mr. Smith. “There are silos of money, and each one is separate and prescriptive.”

Meanwhile, the 48,000-student Oakland Unified School District has become so cash-strapped that it has asked the state for a $100 million loan.

Oakland Crisis

In a Jan. 9 letter to employees, Oakland school board President Gregory E. Hodge and Superintendent Dennis K. Chaconas said that a loan would be needed to pay district employees after May 1.

Under conditions of legislation proposed by Oakland’s representatives in the legislature, the state superintendent of public instruction would appoint an administrator to oversee the district until the loan is repaid and the district is financially solvent. The school board would be reduced to an advisory role during that time.

Despite recent improvements under new leadership, the district has been unable to recover from years of financial problems.

Mazzoni said the state has set aside $102 million in a fund for districts that are financially insolvent.

“Given this budget situation, we don’t know how many more districts might be needing assistance,” she said.

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