LAO Predicts Windfall for Schools Next Year
Despite a global pandemic and ensuing recession that has crippled revenue in California, the Legislative Analyst’s Office is expecting a “dramatic rebound” in K-12 and community college funding next fiscal year.
The sunny report was released on November 18, as schools across the state were reeling from new community public health restrictions that put reopening plans in jeopardy.
Based on the much stronger revenue projections in our outlook, we estimate the 2020‑21 [school and community college] guarantee is up $13.1 billion (18.5 percent) over the June budget act level. We estimate the 2021‑22 guarantee is up another $595 million (0.7 percent) over our revised 2020‑21 estimate. Under a law enacted in June, the state also would be required to make a $2.3 billion supplemental payment on top of the guarantee in 2021‑22. After accounting for various baseline adjustments—including prior‑year revisions, a 1.14 percent statutory cost‑of‑living adjustment (COLA), and required deposits into the Proposition 98 Reserve—we estimate the Legislature has $13.7 billion in one‑time funds and $4.2 billion in ongoing funds available for allocation in the upcoming budget cycle.
As a result, the LAO predicts the state will have enough funds to reverse all the payment deferrals from the June 2020 budget plan.
By paying down deferrals, the Legislature could improve cash flow for schools and community colleges and reduce pressure on future Proposition 98 funding.
The LAOs’ K-12 expert, Edgar Cabral, spoke to EdSource about the new fiscal outlook and what it means. Listen here.