Summary of LAO Findings and Recommendations on the 2012-13 Budget

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Program
Budget Issue		LAO Finding Or
Recommendation
Last Updated
See Detail  Proposition 98 May Revision Proposition 98 proposal Recommend the Legislature consider alternatives to the Governor's basic Proposition 98 budget plan and trigger plan (were his tax measure to fail). The alternatives are based on a reasonable approach to the creation and payment of maintenance factor obligations. In addition, the alternatives use a consistent "current-year" method for all applicable "rebenchings." 5-30-12
See Detail  Education Mandates Block grant for K-14 mandated activities Adopt Governor's May proposal to eliminate roughly half of education mandates and create a block grant for remaining activities. Modify proposal so that (1) block grant activities are required only as a condition of accepting the grant and (2) different types of local educational agencies receive funding based on different per-student rates. 5-30-12
See Detail  Finance and Flexibility K-12 funding restructuring Adopt Governor's budget proposal to begin allocating K-12 funding based on a weighted student formula. Adopt most May Revision modifications to January proposal, but include Targeted Instructional Improvement Grant and Home-to-School Transportation in new formula. 5-30-12
See Detail  Kindergarten Transitional Kindergarten (TK) program Adopt Governor's January budget proposal to cancel initiation of new TK program, because program is costly and poorly designed. Modify Governor's proposed waiver policy to permit early entrance for underage students, but only to traditional kindergarten and only for children born shortly after date cutoff. Estimate would save $75 million (in contrast to Governor's May estimate of $92 million). 5-30-12
See Detail  Finance and Flexibility K-12 funding restructuring and categorical flexibility Recommend the Legislature provide options that will help districts manage their budget uncertainty in 2012-13 as well as improve the overall K-12 funding system on a lasting basis. 5-07-12
See Detail  Proposition 98 School district fiscal oversight and intervention Recommend state preserve existing fiscal oversight system and avoid actions that would diminish its ability to assess school district fiscal health, provide support for fiscally unhealthy school districts, and prevent the need for emergency loans. 5-07-12
See Detail  Charter Schools Cash management options for charter schools Recommend adopting Governor’s proposals to allow COEs to loan to charter schools and allow charter schools to issue tax and revenue anticipation notes. Recommend authorizing, but not requiring, loans from county treasurer to charter schools. 4-26-12
See Detail  Charter schools Funding determination process for nonclassroom-based charter schools Reject Governor’s proposal to eliminate the nonclassroom-based charter school funding determination process. Doing so would remove important fiscal oversight—potentially resulting in nonclassroom-based charter schools reducing spending on instruction-related activities. Moreover, it would increase state costs by $20 million--providing more funding for certain schools without a clear rationale. 4-25-12
See Detail  Commission on Teacher Credentialing (CTC) CTC's $5 million 2012-13 operating shortfall Adopt Governor’s proposals to: increase credentialing and tests fees on an ongoing basis, permanently eliminate 17 positions, and achieve one-time technology-related savings. Additionally, recommend authorizing a small budget-year transfer and directing CTC to explore options for achieving greater efficiencies and instituting fees for accreditation services. 4-13-12
See Detail  Child Nutrition Nutrition subsidies for children not attending public K-12 schools Limit state funding for meal subsidies to students attending public K-12 schools. Adopt Governor's proposal to save $10.4 million non-Proposition 98, and also apply to school district-run child care programs to save an additional $2.5 million Proposition 98. 4-11-12
See Detail  American Indian Education Centers Oversight of centers Recommend the Legislature remove the centers from the categorical flexibility provision enacted in February 2009. Reinstating as a standalone catgorical program would allow for much stronger program accountability. 3-12-12
See Detail  Non-Proposition 98 Programs Eliminating non-Proposition 98 funding for select education programs Recommend approving the Governor's proposal to reduce non-Proposition 98 General Fund support for select education programs by a total $19.4 million given the state's fiscal shortfall. 3-12-12
See Detail  Early Mental Health Initiative (EMHI) Program elimination Adopt Governor's January budget proposal to eliminate program given school districts can use funding flexibility to provide early mental health services if they are a local priority. 3-09-12
Preschool Various To view all preschool-related items, please select the "Child Care" policy area from the drop-down menu above. 2-10-12
See Detail  Proposition 98 Back-up budget plan Build contingency plan. If plan assumes midyear cuts, be deliberate in both setting the magnitude of the cuts and specifying the allocation of the cuts. Alternatively, if plan assumes midyear augmentations, use funds to retire existing obligations (such as paying down deferrals). 2-10-12
See Detail  Proposition 98 Multiyear plan to reduce education obligations Use Governor's January plan as a starting point. To increase likelihood plan is consistently implemented, consider extending the payment period, spreading out payments more evenly, designating settle-up funds be used for mandates or deferrals, and redirecting Quality Education Investment Act program savings to other obligations (with first call to retire Emergency Repair Program obligations). 2-10-12
See Detail  Proposition 98 Flexibility options Provide school districts with one-time options to help them respond to potential trigger cuts. Effective July 1, could remove additional categorical and mandate requirements (beyond current-law requirements), allow for a shorter school year, increase or suspend maximum statutory class sizes, and authorize a special post-election layoff window. 2-10-12
See Detail  Proposition 98 Payment deferrals Adopt Governor's January proposal to retire some existing K-14 payment deferrals rather than provide K-14 program augmentations if the state has additional Proposition 98 resources to spend in 2012-13. 2-10-12
See Detail  Proposition 98 Counting K-14 debt service payments to Proposition 98 minimum guarantee We have serious policy concerns with the Governor's January debt service proposal, given the size of annual debt service payments is significantly more volatile than annual changes in the Proposition 98 minimum guarantee. 2-10-12
See Detail  Proposition 98 Rebenchings of Proposition 98 minimum guarantee Adopt Governor's January proposal to eliminate the rebenching for the "gas tax swap." For other rebenchings, recommend consistent year-to-year approach. 2-10-12