May 2017

Proposition 98 Overview

Proposition 98 Multiyear Forecast Under LAO Revenue Estimates

Assumes Governor's May Revision Policies (Dollars in Millions)

  2016-17 2017-18 2018-19 2019-20 2020-21
Minimum Guaranteea          
General Fund $50,579 $52,054 $53,551 $55,708 $57,964
Local property tax 20,883 21,918 23,127 24,233 25,302
   Total $71,462 $73,972 $76,679 $79,941 $83,266
         
Change in General Fund From Prior Year         
Amount $1,154 $1,475 $1,497 $2,156 $2,256
Percent change 2.3% 2.9% 2.9% 4.0% 4.0%
Change in Local Property Tax From Prior Year      
Amount $1,205 $1,034 $1,209 $1,106 $1,069
Percent change 6.1% 5.0% 5.5% 4.8% 4.4%
Change in Guarantee From Prior Year         
Amount $2,359 $2,509 $2,707 $3,262 $3,325
Percent change 3.4% 3.5% 3.7% 4.3% 4.2%
           
Inputs          
General Fund taxesb $122,083 $127,666 $133,222 $139,550 $146,653
K-12 average daily attendance 5,961,453 5,942,972 5,913,257 5,893,152 5,866,633
State civilian population 39,367,492 39,642,531 39,898,474 40,143,653 40,383,898
Growth Factors          
Per capita personal income 5.4% 3.7% 5.0% 4.8% 4.6%
Per capita General Fundc 3.6% 4.4% 4.2% 4.6% 5.0%
K-12 average daily attendance -0.2% -0.3% -0.5% -0.3% -0.5%
State civilian population 0.9% 0.7% 0.7% 0.6% 0.6%
K-14 cost-of-living adjustment 0.0% 1.6% 1.6% 0.7% 1.0%
Outcomes          
Proposition 98 operative "test" 3 2 3 3 2
Maintenance factor:          
   Amount created/paid (+/-) $1,228 -$102 $596 $115 $0
   Amount outstanding 1,299 1,241 1,892 2,090 2,177
PSSSA deposit? No No No No No
           
a Outlook reflects LAO estimates of General Fund revenue, local property tax revenue, and other Proposition 98 inputs. Outlook also assumes the state adopts the Governor's proposal to (1) provide $433 million above the guarantee in 2015-16, (2) notwithstand the Test 3 supplement from 2016-17 through 2020-21, and (3) adopt contingency language to reduce Proposition 98 funding by up to $1.1 billion in 2017-18 to the extent the minimum guarantee falls below May Revision estimates.
b Reflects General Fund revenue that affects the calculation of the minimum guarantee.    
c Reflects per capita General Fund plus 0.5 percent (one of the Test 3 factors).   
PSSSA = Public School System Stabilization Account.