Screen Shot 2014-01-13 at 10.26.45 PMCalifornia may have in at least "a few billion dollars" more in revenue this twelvemonth than Gov. Jerry Brown forecast a week ago, the nonpartisan Legislative Analyst's Office wrote Monday in an analysis of the governor's proposed state budget.

Although a lot tin change between now and May, when Brown revises his upkeep, "Withal, we advise state leaders to plan for the pregnant possibility that revenue estimates for 2013-14 and perchance 2014-15 volition be higher when they are revised in mid-May," the LAO said in its 44-page "Overview of the Governor's Upkeep."

Any increase in the General Fund will be continued practiced news for pedagogy. For every $ane billion more in revenue in the current fiscal year, at least one-half must go toward 1000-12 schools and customs colleges under Proposition 98, the formula that determines money for education. And if revenues surpass Brown's projections in 2014-xv, an even larger percentage would be channeled to G-12 and community colleges, Edgar Cabral, primary fiscal policy annotator with the LAO, confirmed Monday.

But with state revenues very much dependent on receipts from the volatile majuscule gains taxation, which is tied to returns on the stock market place and the income of the country's wealthiest 1 percent, the LAO urged circumspection in farther raising operating budgets. Instead, information technology recommended the "prudent mix of one-time and ongoing spending" that Brown proposes in his 2014-15 upkeep.

Additional revenue could embolden legislators to argue for phasing in a 2nd year of universal transitional kindergarten for all 4-year-olds – a priority of Democratic leaders. Or it could strengthen the call for more i-fourth dimension money for preparing for the Mutual Core standards. Brown added $1.25 billion for Common Core in the last May budget revision; in last week's budget he proposed calculation only $46 one thousand thousand, to pay for new Common Core tests.

Brown'due south upkeep includes $11.8 billion in increased Prop. 98 spending next financial year, with almost a third of that coming from recalculations from previous years' acquirement. And he wants to use more than half of that to pay off deferrals, tardily payments to school districts. The LAO liked that thought: "By retiring the $6.two billion in outstanding Chiliad-14 deferrals, the Governor'south plan would eliminate the largest component of the school and community college wall of debt."

Dark-brown would channel $four.7 billion more to ongoing budgets, with nearly all of it for the Local Control Funding Formula, the new G-12 school finance system that gives school districts more spending authority.

The LAO says per-student spending would rise from $seven,936 in the current financial year to $8,724 in 2014-fifteen—an increase of $788 or x percent. (Brown's upkeep said per-student spending would ascent from $8,469 to $9,194 side by side yr, but that includes eliminating deferrals payoff, which is a one-time debt payoff, not a programmatic increase, Cabral pointed out.)

The LAO praised Brown'southward general approach to the land budget, including the focus on deferrals and other ways to lower the state'south "wall of debt."

"The Governor's emphasis on debt repayment is a prudent one. Overall, the Governor's proposal would place California on an even stronger fiscal footing, continuing California's budgetary progress," the LAO said.

But the LAO likewise disagreed on some points and suggested alternatives on teaching spending:

  • Start squirreling abroad now to contribute to teacher pensions: Dark-brown proposed negotiating a bargain with lawmakers, teachers and districts over the next yr to increase payments, starting in 2015-16, to the California State Teachers' Retirement System or CalSTRS. The pension fund for teachers and administrators remains $fourscore billion underfunded, which could require as much as $five billion more in annual contributions. The LAO suggested getting a head outset now by setting aside some of higher-than-expected state acquirement for future payments into CalSTRS;
  • Give Dark-brown's plan for a rainy twenty-four hours fund a hard look: In 2010, the Legislature passed a proposed constitutional amendment, ACA iv, for the November 2022 ballot. Brown want to strengthen it to sock away more than money when times are good, limit the amount of reserves that tin be siphoned off at whatever 1 time, and start feeding the reserve when receipts from the tax on capital gains amount to more than than 6.5 percent of general revenue. He also wants to create an even college reserve within the reserve for Prop. 98 acquirement, which tends toward bigger gyrations within the budget. The LAO suggests that the Legislature not lock into the 6.v percent threshold and proceeds a better understanding of how the rainy twenty-four hour period fund and Prop. 98'southward requirements would work together.
  • Avert a hard and fast LCFF funding commitment: Brownish has projected it will take eight years to phase in the LCFF. School districts and advocates for disadvantaged students accept praised Brown'south commitment to the new finance system but worry that information technology might not exist a priority if there's a recession or subsequently another governor is elected. Brown implies in his budget message that he volition propose that LCFF be guaranteed a set percentage of Prop. 98 revenue. (This yr, the initial year of LCFF, it makes up nigh eighty percent of Prop. 98 spending.) The LAO recommends that the Legislature refuse this idea to proceed its options open.

John Fensterwald covers state education policy. Contact him and follow him on Twitter @jfenster. For our full state upkeep coverage, go here. Sign up here for a no-cost online subscription to EdSource Today for reports from the largest education reporting team in California.

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