December Budget Update
On December 13th the California Department of Finance (DOF) issued its economic forecast for the remainder of the 2011-12 fiscal year. According to the DOF projections, the state General Fund revenues will fall short by $2.2 billion compared to the initial budget assumptions. These estimates are much improved over the projections provided by the Legislative Analyst’s Office (LAO) last month, and will spare K-12 education from the most severe mid-year cuts. However, under these projections, school districts will face a $248 million cut to transportation programs, and all schools will experience a $79.6 million cut to general purpose revenue limits. This results in a cut of approximately $13 per pupil in K-12 schools, or one-half a day of instruction for the school year. Much better than we were expecting.
Budget Update
On November 16th the Legislative Analyst Office released its economic foreecast report, the 2012-13 Budget: California's Fiscal
Outlook. According to the report, state General Fund revenues will be short by $3.7 billion by the end of this year, and the state will face a $13 billion shortfall in 2012-13. The revised revenue forecast is a critical point in evaluating whether automatic “trigger” cuts to education will be implemented in January. If these projections are confirmed by department of Finance in December, automatic cuts of $2 billion will be imposed in January. For charter schools this will mean a mid-year cut of approximately $185 per pupil in general purpose funds. For FRCS this is a loss in revenue of approximately $20,000. On the upside, our Board predicted this event and built this cut into our current budget.
State Budget Update - Are MidYear Cuts for Schools Looming?
State Controller John Chiang has reported that for the first month of the new fiscal year, California missed its $5.2 billion July general fund revenue target by $538.8 million, or 10.3 percent. As you may recall from the CCSA Budget Brief, this year’s budget contains an automatic “trigger” to force additional cuts to education and other public services if revenues fall short of projections. Because the Department of Finance has until December to determine whether the state is on track to hit its revenue target, it is clearly premature to assess where the state will be in December based on only one month of receipts. However, that news and the recent downturn in the financial markets add additional concerns about the optimistic projections for state revenues assumed in the approved budget. Even though the current law would trigger automatic cuts, lawmakers will likely face pressure to avoid K-12 cuts before the automatic reductions are triggered in February even if the revenues fall short. We will update you as new information is available.
