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  • Gov. Newsom’s twists and tricks to spare cuts to schools and community colleges in state budget

    Gov. Newsom’s twists and tricks to spare cuts to schools and community colleges in state budget


    Gov. Gavin Newsom answers a reporter’s question about his revised 2024-25 state budget during a news conference in Sacramento on May 10, 2024.

    Credit: AP Photo/Rich Pedroncelli

    True to Gov. Gavin Newsom’s promise, the 2024-25 budget compromise that the Legislature announced Saturday and will pass this week will spare TK-12 and community colleges from cuts that other state operations will bear.

    TK-12 funding will be flat and will continue Newsom’s major commitments to multiyear, multibillion-dollar programs, including community schools and before- and after-school expansion.

    Update: State Budget Signed

    On June 26, Gov. Newsom signed Assembly Bill 107, the main budget bill, and Senate Bill 154, the Proposition 98 suspension bill. On June 28, Newsom signed SB 153, the education trailer bill.

    The budget will even throw in a couple of billion in new revenue that Newsom didn’t call for in January or in his May budget revisions. Newsom and legislators, meanwhile, struggled to squeeze an additional $28 billion out of a $211 billion general fund spending.

    But protection for schools and community colleges will carry risk. To balance the budget, Newsom and legislative leaders rely on budget maneuvers that would give a button-down accountant acid reflux.

    They include creating a $6 billion debt that won’t be fully repaid to the state treasury for a dozen years, and draining the $8.4 billion education rainy day fund.

    The deal also requires delaying payments to schools and community colleges and suspending — for only the third time in its 36-year history — Proposition 98 obligations for the current school year, on the assumption the money will be repaid quickly. Proposition 98, a constitutional amendment voters passed in 1988, established a formula for determining the minimum level of general fund spending on transitional kindergarten through grade 12 and community colleges — generally about 40%.

    Rather than punish schools for money already spent, the budget bill creates a $6.2 billion debt that the general fund, not schools and community colleges, will repay the state treasury over a decade, starting in 2026-27. The remaining $2.6 billion will be a Proposition 98 obligation pushed ahead to 2023-24; that unfunded amount is called a deferral.

    The California State University and the University of California won’t fare as well in the budget deal, although better than Newsom had proposed in January, even with a drop in state revenues since then. Both will get a 5% budget increase in 2024-25 that Newsom had proposed delaying, equal to $227.8 million for UC and $240.2 million for CSU, to support enrollment growth of California residents this fall. 

    Another promised 5% budget increase for both systems in 2025-26, however, will be put off a year. UC and CSU also face one-time cuts in 2024-25 of $125 million and $75 million, respectively, which will be restored in 2025-26.

    Both CSU and UC will also face a 7.95% cut in their administrative expenses in 2025-26.

    There will be no reforming the Cal Grant program in 2024-25, but, at the Legislature’s insistence, the $637 million ongoing funding for middle-class scholarships will continue, with a $289 million one-time increase.

    Late spending changes

    The final budget will also restore some TK-12 and child-care cuts that Newsom had proposed in his May budget revision while maintaining others. They include:

    • Restoring $60 million for the Golden State Teachers Program, which provides $20,000 in scholarships to teacher candidates, although a new means test may pare back $10 million in eligibility.  
    • Restoring $100 million in funding to help preschools prepare classrooms and train teachers in order to enroll more children with disabilities, while withdrawing larger plans to expand the program.
    • Continuing the existing agreement to serve 200,000 more children in the state-subsidized child care system but pushing back the timetable for full compliance to 2028.
    • Rescinding $895 million in one-time spending on electric-powered school buses that Newsom had made a priority. Instead, the money will be used to reduce some of the late payments in state funding for schools.

    School districts receive the bulk of their funding through the Local Control Funding Formula, which is based on daily student attendance and a yearly cost-of-living adjustment. So, even though overall state funding won’t be cut, many districts with declining enrollments and high absenteeism rates will face financial challenges.

    The cost-of-living adjustment (COLA), which is based on a federal formula tied to the cost of goods and services but does not factor in regional costs, including housing, will be only 1.07% for 2024-25, forcing further belt-tightening. One option for school districts, giving layoff notices to staff, will be off the table. State law allows an additional round of layoffs in August in years when the COLA is less than 2%, but, at the urging of public employee unions, Newsom and legislative leaders included a clause prohibiting late summer layoffs. They have done the same statutory override before.

    The initial reaction from two veteran TK-12 budget watchers was mixed. “This budget remarkably insulates K-14 funding from cuts, abides by constitutional requirements to restore funding in the future, and even provides a modest cost-of-living increase, all amid a record budget shortfall. Pretty amazing,” wrote Kevin Gordon, president of Capitol Advisors Group, a school consultancy firm.

    Rob Manwaring, senior policy and fiscal adviser with the nonprofit advocacy organization Children Now, was cautious. “While the final budget is perhaps the best schools could anticipate given the budget challenges, we worry about the size of the suspension for schools, $8.3 billion,” he wrote. “Schools will eventually get paid back those funds in future years on top of the minimum guarantee, but these payments will result in increased school funding volatility and uncertainty until they are paid back.”

    And if revenues falter next year, schools and community colleges will no longer have a rainy day fund to turn to; it will be depleted by the end of 2023-24, with the possibility of replenishing it by $1.1 billion in 2024-25.

    Proposition 98 juggling act

    The proposed 2024-25 budget for schools and community colleges will be balanced, if revenue projections hold true, by juggling three years of Proposition 98 shortfalls, with one year’s solution creating the next year’s dilemma.

    The big drop was in 2022-23 when the Legislature “over-appropriated” the minimum Proposition 98 guarantee by $8.8 billion, while state revenue from the post-Covid stock market and the tech sector plummeted. Legislators didn’t see the warning signals because winter storms had pushed back the tax filing deadline from April to November.

    Under the mechanics of Proposition 98, the funding level for 2022-23 becomes the base level for 2023-24, even though the state still lacks the revenue to pick up the tab. So all but $1 billion of the $8.4 billion in the education rainy day fund will be drained to cover some of the 2023-24 deficit and the $2.6 billion deferral from the year before.

    On top of that, the budget deal calls for suspending $8.3 billion of the Proposition 98 funding for 2023-24. That has the effect of lowering the minimum guaranteed funding by that amount, while freeing up money to avoid deeper cuts in other state operations. That’s how the Legislature can restore cuts in 2024-25 for child care and preschool that Newsom had planned.

    The architects of Proposition 98 wanted to discourage the Legislature from suspending the law. So it requires the Legislature to declare a fiscal emergency and to make the suspended funding a priority for repayment as soon as there is new revenue. The 2024-25 budget assumes the state will have enough new revenue to pay back at least $4 billion of the suspended $8 billion, maybe more. But if revenues falter, districts won’t get what they’re entitled to, with no set date for repayment.

    That’s why the deal is also a gamble for schools and community colleges.

    There’s one more wrinkle. To raise revenue quickly, the Legislature has accelerated the temporary, three-year suspension of two tax benefits for large and medium-sized businesses: net operating loss deductions and tax credits. The period will start in 2024-25, one year ahead of schedule. It will yield a projected $5 billion, with $2 billion going to Proposition 98 — funding that will be used to pay down deferrals.

    Between this new money and the $4 billion payback for suspended funding, the Proposition 98 minimum guarantee is expected to rise to a record $115.3 billion in 2024-25.

    As with all deadline negotiations, legislators will have at most three days to review hundreds of pages of budget details spread over 16 separate bills. Newsom, Senate President pro Tempore Mike McGuire, D-Healdsburg, and Speaker of the Assembly Robert Rivas, D-Hollister, are expecting that legislators will demand some changes when they return from vacation in August.  





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  • County Office of Education can take over West Contra Costa school budget

    County Office of Education can take over West Contra Costa school budget


    Credit: Thomas Galvez/Flickr

    The West Contra Costa Unified School District may be on the verge of turning over control of its budget to the county after the school board rejected the district’s Local Control Accountability Plan on Wednesday night, limiting the chance of passing a 2024-25 district budget by July 1, as required by state law.  

    Without passing a Local Control Accountability Plan (LCAP) — a document that sets district goals to improve student outcomes and how to achieve them — the board cannot vote on the proposed budget, said Kim Moses, associate superintendent of business services at West Contra Costa Unified School District (WCCUSD). The two are linked; the LCAP is a portion of the budget and gives the district a road map on how to allocate funding for its $484 million budget. The district risks losing local control over funding decisions. Trustees voting no said it didn’t reflect priorities of the community and was not transparent.

    It’s a rare situation. Districts routinely pass budgets at the end of June to close the fiscal year and start a new one. 

    District and Contra Costa County Office of Education officials warn that a failure to pass a budget and LCAP by July 1 will cede financial control to the county office. The district can still act by midnight Sunday to avert a takeover, but district officials are assuming that will not happen. The board would still need to vote on the budget presented by the county.

    The district also would face difficulties getting the county’s approval of the budget. The state Fiscal Crisis and Management Assistance Team (FCMAT), which focuses on helping districts solve and prevent fiscal challenges, found in a recent analysis that the district had overspent, and concluded that the school board had been unable or unwilling to make cuts.

    In a statement to EdSource, Moses wrote she was “deeply disappointed” that the board didn’t pass the LCAP. The responsibility to adopt the LCAP and 2024-25 school year budget will be in the hands of county officials. Until they impose the new plan and budget, Moses said, the district will revert to operating under last year’s budget.

    “We are confident that the county will review our circumstance with a student-focused lens and do what is necessary to support our students,” the statement said. “In the interim, we will be able to continue processing payroll without interruptions, and we will be able to maintain all expenses related to the general operating costs within the district, such as utilities, required materials and supplies, and other operational necessities.”

    But because the district is functioning on last year’s budget, some schools won’t receive the funds they need, and the district can’t move forward with new goals set, said Javetta Cleveland, a school business consultant for West Contra Costa.

    “This is really serious to go forward without a budget — the district cannot operate without a budget,” Cleveland said during the meeting. “The district can’t meet or establish priorities without a budget.”

    Cleveland asked the board to reconsider approving the LCAP and have the Contra Costa County Office of Education approve the LCAP with conditions that would allow revisions after receiving feedback from parents. But that didn’t happen.

    Budget shortfalls

    District officials are projecting a $31.8 million budget deficit over the next three school years, with about $11.5 million in shortfalls projected for the upcoming school year. The plan was to use reserve funds over three school years to make up the shortfall. 

    To address budget shortfalls, the board has also had to eliminate more than 200 positions since last year. The most recent cuts were voted on in March. But at the same time, the district was dealing with three complaints, including allegations that the district is out of compliance with the law because teacher vacancies have not been filled and classes are being covered by long-term or day-to-day substitutes, which district officials acknowledged was true.

    “While the result of last night’s board meeting complicates an already challenging financial situation, members of the community should know that WCCUSD schools will continue to operate, and employees will continue to be paid as we work through the LCAP approval process,” said Marcus Walton, communications director for county office. “At this point, it is the role of the Contra Costa County Office of Education to support WCCUSD staff to address the board’s concerns and implement a budget as soon as possible.”

    FCMAT conducted a fiscal health risk analysis on West Contra Costa in March and found the district is overspending. 

    While the FCMAT analysis concluded the district has a “high” chance of solving the budget deficit, it highlighted areas it considers high-risk, including some charter schools authorized by the district also being in financial distress; the district’s failure to forecast its general fund cash flow for the current and subsequent year, and the board’s inability to approve a plan to reduce or eliminate overspending. 

    FCMAT’s chief executive officer, Michael Fine, was not available for comment.

    The vote

    President Jamela Smith-Folds was the only trustee to vote yes on the LCAP. She said she wants to see more transparency but that it’s important to keep local control over the LCAP and budget. 

    “I would be remiss if I didn’t say that there are things we need to do differently, but I think everyone is acknowledging that,” Smith-Folds said. “Now the next step after you acknowledge that is to show change and consistency.” 

    Trustees Leslie Reckler and Mister Phillips voted down the LCAP. Phillips said it was because he doesn’t believe that what the community asked for is reflected in the document. 

    “I have consistently advocated for a balanced and focused budget since joining the school board in 2016,” Phillips said in an email. “The proposed budget was neither. With my vote, I invited our local county superintendent to the table. I hope that she will work with us to create a balanced and focused budget that prioritizes the school district’s strategic plan.”  

    Reckler said that for the last two years, she had continued to ask staff to show how programs and the LCAP performed, how community feedback is being incorporated, and how money is being spent.

    “I’m frustrated I have to spend an entire weekend trying to figure out the changes in the LCAP. It should be self-evident,” Reckler said during the meeting. “This document seems to be less transparent than ever before. I don’t know how else to get your attention, and I won’t be held hostage. For these reasons, I am voting ‘no.’”

    Trustee Otheree Christian abstained, saying that there needs to be more transparency in the LCAP but did not elaborate further or respond to requests for comments on why he chose not to vote. 

    Board member Demetrio Gonzalez Hoy was absent because of personal family reasons, according to his social media post. He called the vote a failure of the board, including his absence.

    In a recent meeting with the District Local Control Accountability Plan Committee (DLCAP), made up of parents and members of community organizations, committee members shared their frustrations, saying they didn’t feel heard and needed more information about programs, Superintendent Chris Hurst said. Gonzalez Hoy said he agreed with the committee that there needs to be more transparency and in regards to spending priorities, community leaders need to be heard.

    “With that said, what we should have done is ensure that this does not happen in the future and that the DLCAP committee is taken seriously in their charge,” Gonzalez Hoy’s post said. “Unfortunately, instead of advocating for that and ensuring this occurs, I believe that some on our board want certain adults leading our district to fail and that’s really what led to a vote last night.”

    During Wednesday night’s meeting, many community members asked the board to stop making staffing cuts and to reject the LCAP and budget proposals, saying that both proposals didn’t meet student needs, and disenfranchised low-income, English learners, and students of color. Some speakers questioned if the LCAP complied with the law. 

    The district team that put together the LCAP said the planning document complies with the law, according to Moses, as do the officials at the county office of education that reviewed the document. The county gives the final stamp of approval after the board passes the LCAP, and if something needs to be fixed, they can approve the document with conditions, she added.

    “I do know, with any large document, nothing is perfect in the first draft,” Moses said during the meeting. “I’m not sure if there is something we need to take a look at, but if so, I’ll restate this is a living document; if we do find that there is an area that needs more attention, we’ll give attention to that area.”

    Moses said she agrees with the advocates — the district needs to serve students better. She and the district are committed to strengthening communication with the community and explaining how the strategies in the 203-page document are helping students.

    As of Thursday evening, an emergency meeting has not been scheduled. The next board meeting is scheduled on July 17.

    The story has been updated to clarify how operations of the district will proceed moving forward.





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  • Budget would require districts to post plans to educate kids in emergencies

    Budget would require districts to post plans to educate kids in emergencies


    The burned remains of the Paradise Elementary school on Nov. 9, 2018, in Paradise. Blocks and blocks of homes and businesses in the Northern California town were destroyed by a wildfire.

    Credit: AP/Rich Pedroncelli

    Starting next March, California school districts will be required to post a plan on their websites outlining how they will provide instruction to students within 10 school days of an emergency that keeps children from attending classes. They should also make contact with students and families within five days of the emergency. Last week, Gov. Gavin Newsom signed the education trailer bill as part of the 2024-25 budget.

    The plan must be operative by July 1, 2025. 

    Local educational agencies — school districts, charter schools and county offices of education — that do not develop an instructional continuity plan as part of their school safety plan will not be eligible to recover lost state attendance funding if schools close or a significant number of students are unable to attend because of an emergency.

    In a separate action, the trailer bill also addresses chronic absenteeism by authorizing school districts to provide attendance recovery programs during school breaks, weekends or after school, to allow students to make up for up to 10 days of school missed for any reason. Beginning next July, districts that offer the programs will be able to recover state funds lost when students in the program were previously absent from school.

    The legislation comes four years after California schools closed for more than a year because of a worldwide pandemic. Since then, chronic absenteeism rates have more than doubled. Wildfires and flooding also have closed schools across the state with increasing frequency in recent years.

    “Given the effects of public health emergencies and the significant and growing number of natural disasters that the state has faced in recent years, there is an increased need for local educational agencies to provide instructional continuity for pupils when conditions make in-person instruction infeasible for all or some pupils,” according to the trailer bill.

    The instructional continuity plan must describe how districts will provide in-person or remote instruction to students, including potentially temporarily reassigning them to other school districts. Students who are reassigned during an emergency will not have to comply with any residency requirements for attendance in that district. 

    Penalties removed

    The legislation has changed dramatically since the May budget revision, which would have given districts five days to offer students instruction after an emergency, and penalized them financially if they didn’t. 

    The revisions are due, in part, to heavy opposition from a coalition of nine education organizations, including the California Teachers Association, California School Boards Association and California County Superintendents.

    “There are countless instances where the physical infrastructure and human capacity necessary to comply with this requirement does not exist: roads, landlines, internet connectivity, access to devices, access to shelter, family and staff displacement, etc.,” said California County Superintendents in a May letter to the chairs of the Senate and Assembly budget committees. “When this occurs, a LEA may find it impossible to offer remote instruction.”

    Derick Lennox, senior director for governmental relations and legal affairs for the association said, “There was the feeling that the state does not understand the challenges that schools face to locate and serve the basic needs of their students and families during a serious emergency.” 

    As an alternative, the coalition asked for a proactive planning process without financial penalties, and lawmakers agreed, Lennox said.

    El Dorado County Superintendent of Schools Ed Manansala said that the proactive, constructive tone of the new legislation is more productive than the punitive tack legislators took in the original version.

    Manansala said it isn’t feasible to expect schools to deliver instruction 10 days after schools close in an emergency.

    El Dorado County has had at least 70 wildfires of varying sizes between 2004 and 2023, the largest being in August 2021, according to CalFire. It burned 221,835 acres and razed Walt Tyler Elementary School in Grizzly Flats.

    “We had teachers and students that were being displaced out of their communities,” Manansala said. 

    Mendocino County Superintendent of Schools Nicole Glentzer first experienced the extended closure of schools in 2017 when a fire burned 36,000 acres.

    Glentzer, who worked at nearby Ukiah Unified School District at the time, had to evacuate her home. She moved into the district office and went to work making decisions about school closures. The district’s schools were closed for five days.

    Since then, the county on the state’s north coast has been ravaged by numerous fires, including two of the nation’s largest, which together burned more than 1.41 million acres in multiple counties in 2018 and 2020.

    Schools in Mendocino County also have been closed recently because of flooding and power outages.

    Glentzer said that while she is satisfied with the revamped language in the legislation, she cringes when she hears that small districts, with small staffs, are expected to come up with plans similar to larger districts. The Mendocino County Office of Education will help the 12 school districts in its county by providing sample plans and templates, she said.

    Attendance recovery

    State chronic absentee numbers have skyrocketed from 12.1% in 2018-19 to 30% in 2021-22, according to an analysis of California data. Chronic absenteeism rates are determined by the number of students who miss at least 10% of school days in a given year.

    Attendance recovery programs like the one required by the new legislation can help districts reduce their chronic absenteeism and regain the average daily attendance funding lost when students miss school. The programs must be taught by credentialed teachers and be aligned to grade-level standards and to each student’s regular instructional program, according to the legislation.

    Attendance recovery programs can be funded through the Expanded Learning Opportunities Program at school sites where the after-school or summer enrichment programs are being offered and operated by the school district.

    “In my mind, it’s a whole theme that the administration and Legislature are going for, around addressing chronic absenteeism — one of the top issues facing students today,” Lennox said. “And, they basically outlined a few different strategies to do it.”





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  • What happens now that West Contra Costa school board failed to pass budget?

    What happens now that West Contra Costa school board failed to pass budget?


    West Contra Costa Unified’s Stege Elementary School in Richmond.

    Photo: Andrew Reed/EdSource

    Most school districts across California have already approved budgets for the upcoming school year along with a required planning document that gives a road map on how funds should be spent. It’s a routine process that by state law must happen by June 30, the end of the fiscal year.

    But what happens when a board fails to approve both by the deadline?

    After the West Contra Costa school board last month voted down the planning document, better known as the Local Control Accountability Plan (LCAP), Contra Costa County Office of Education officials are stepping in to support the district as it works to secure approval. The board didn’t get to vote on the budget at the June 26 meeting because the LCAP must be approved first. 

    The accountability plan, which also includes district goals to improve student outcomes and how to achieve them, and the budget are linked; one cannot exist without the other. There’s $64.8 million of funding in the LCAP that can’t be used until the plan is approved by the board.

    “You have to adopt the plan first before you can adopt the budget,” said Michael Fine, chief executive officer of the state’s Fiscal Crisis and Management Assistance Team (FCMAT).

    “The budget becomes subsidiary to the plan in that it just becomes a supporting role to the plan, it’s one of the mechanisms that facilitates getting the plan done and implemented.”

    Although the West Contra Costa Unified School District doesn’t currently have an adopted accountability plan or budget, the district is using its $484 million 2024-25 proposed budget in the interim to pay salaries and general operating costs, said Marcus Walton, director of communication at the county office of education. Previously, district officials thought they would revert to using the 2023-24 budget, but that has since changed.

    At the June 26 meeting, district officials and some board members had the same concern — that rejecting the 203-page LCAP and not voting on a budget would mean losing local control. At the time, district staff didn’t have all the answers about what would happen next because they had never dealt with this situation. One district consultant even asked the board to consider voting on the LCAP again because without one, it would put the district in an unprecedented situation.

    West Contra Costa is not losing local control.

    The county office of education isn’t taking control of the LCAP or budget, confirmed Lynn Mackey, the county superintendent of schools. Since the vote, Mackey said she’s spoken with district Superintendent Chris Hurst, and the county and district’s LCAP teams have met. But there are no plans to re-create the LCAP or budget for the district, she said. 

    This isn’t a scenario where a district would need to be taken over, Mackey said. That happens when a district goes insolvent and runs out of cash. 

    “The LCAP can be a very complex document, it’s a beast,” Mackey said. “They’re (district staff) doing a great job, and they have done a great job. We will be meeting with them and supporting them as it goes back to the district for a vote.”

    The next board meeting is set for July 17, but it’s unlikely the accountability plan will be brought back for a vote then, Mackey said. Key West Contra Costa staffers who work on the plan have been on vacation and are just starting to return. There won’t be enough time to post the LCAP before the meeting, which is a requirement, Mackey said. Neither the budget nor LCAP are currently on the agenda to be discussed or voted on at that meeting.

    What happens if the board rejects the LCAP again? 

    “Unfortunately, the California education code does not address what happens when an LCAP is not adopted by a school district,” Hurst said in his message to community members. “This is an unprecedented event in the state of California.”

    Mackey said she would need to confer with state officials for next steps.

    In a message to the community, district Superintendent Hurst said the county has advised the district to pass the accountability plan by Aug. 15, the county’s deadline to review LCAPs. After school boards pass them, the county must make sure the plans comply with the requirements, then give final approval.

    The county then has until Aug. 30 to respond to districts if they have questions or need clarifications on the documents, Mackey said.

    If the board approves the accountability plan and the budget by the Aug. 15 deadline, Mackey said, it signals to the county that major revisions aren’t necessary. However, the county still needs to impose that budget because it wasn’t passed before the June 30 deadline required in the state education code. 

    The county could bill the district for helping it get the LCAP and budget approved, Mackey said, but the county has no intention of doing that.

    What happens if the board does not pass a budget? 

    Mackey said the county would review the proposed budget, and as long as it meets all requirements, that budget would be imposed by her office. 

    It would be “foolish” for the board not to approve a budget, Fine said. “They need to approve the budget because that would give the county superintendent information, plus, then the district owns its budget. And that’s important.” 

    Passing the LCAP

    Between now and when the accountability plan will return for a vote, district officials are working to get it to a place where the board will approve it.

    The two district board members who voted down the LCAP — Leslie Reckler and Mister Phillips — said a major problem for them was the lack of transparency in the document. Board President Jamela Smith-Folds was the only “yes” vote. Otheree Christian abstained, and Demetrio Gonzalez Hoy was absent. 

    Many parents and other community members addressed the board during the June 26 meeting, asking the board to reject the LCAP and the budget, saying community input wasn’t reflected in the document. Public commenters said there was a lack of transparency in both proposals, that neither met student needs, and that they disenfranchised low-income students, English learners and students of color. Some speakers questioned whether the accountability plan complied with the law. 

    It’s rare for districts to turn in an accountability plan that fully complies with the law, Mackey said. However, when a board approves it, the county can work with districts to bring the documents into compliance. 

    Trustee Phillips said community concerns and not having a balanced budget were other reasons he voted down the LCAP. 

    “I want to be very clear: The community needs to be heard,” Phillips said. “That’s not me saying everything the community wants should be put in there, but they are supposed to be heard, and I don’t feel like that happened.”

    Some trustees have called the vote a failure of the board, but Phillips said that’s not accurate. 

    “It was an opportunity for me to put brakes on another unbalanced budget. That’s why I did what I did. But it was not a failure,” Phillips said. “It was a conscious decision, I did it on purpose.”

    District officials are projecting a $31.8 million budget deficit over the next three school years, with about $11.5 million in shortfalls projected for the upcoming school year. The plan was to use reserve funds over three school years to make up the deficit, which is a typical move, Fine said.

    West Contra Costa has been in “financial distress for quite a while,” Fine said. “They were deep in distress, and they are working their way out of that hole.”

    In an emailed statement, Reckler said the district should now “retool their presentation to the board and public and re-present it, tailoring it to specific questions” raised by board members and the District Local Control Accountability Plan Committee (DLCAP), which consists of parents and members of community organizations.

    The board can then give district staff comments and direct it to take any additional steps, Reckler said.

    Christian also said he abstained from voting on the accountability plan because the document lacked transparency and failed to include parent feedback. He said the document should plainly state how money is being spent to meet district goals and how programs are benefiting students, which hasn’t happened. 

    “Those who get paid the big bucks should be the ones to make sure this stuff is done right,” Christian said. “Let’s do it right, let’s make it right, let’s not have hidden agendas, and let’s spell it out.”

    If there are substantial changes to the LCAP, it could mean big changes to the budget. It’s too soon to know what kind of changes are being made, but Mackey said even if money needs to be shifted around, it doesn’t appear there will be major revisions.

    “It’s challenging,” Mackey said. “As much work as you do on transparency, I do feel like there’s always going to be somebody who doesn’t feel the LCAP is very transparent.”

    Even if the accountability plan meets all the state requirements, some boards want more or for staff to go “above and beyond, which is understandable,” Mackey said.

    “My hope is that they (board members) don’t hold it hostage for things that you can’t go back and fix,” Mackey said. “If they want something different in the future, set that up now so as the LCAP writers are going forward, they know exactly what is expected so this doesn’t happen again.”





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  • How Federal Budget Cuts Threaten Small Colleges—and the Towns That Depend on Them – Edu Alliance Journal

    How Federal Budget Cuts Threaten Small Colleges—and the Towns That Depend on Them – Edu Alliance Journal


    May 19, 2025, by Dean Hoke: In my recent blog series and podcast, Small College America, I’ve highlighted the essential role small colleges play in the fabric of U.S. higher education. These institutions serve as academic homes to students who often desire alternatives to larger universities, and as cultural and economic anchors, especially in rural and small-town America, where, according to IPEDS, 324 private nonprofit colleges operate. Many are deeply embedded in the towns they serve, providing jobs, educational access, cultural life, and long-term economic opportunity.

    Unfortunately, a wave of proposed federal budget cuts may further severely compromise these institutions’ ability to function—and in some cases, survive. Without intervention, the ripple effects could devastate entire communities.

    Understanding the DOE and USDA Budget Cuts

    The proposed reductions to the U.S. Department of Education (DOE) and U.S. Department of Agriculture (USDA) budgets present a two-pronged threat to small colleges, particularly those in rural areas or serving low-income student populations.

    Department of Education (DOE)

    The most significant concerns center on proposed changes to Pell Grants, a vital financial resource for low-income students. One House proposal would redefine full-time enrollment from 12 to 15 credit hours per semester. If enacted, this change would reduce the average Pell Grant by approximately $1,479 for students taking 12 credits. Students enrolled less than half-time could become ineligible entirely.

    Additionally, the Federal Work-Study (FWS) and Supplemental Educational Opportunity Grants (SEOG) programs face serious threats. The House Appropriations Subcommittee has proposed eliminating both programs, which together provide over $2 billion annually in aid to low-income students.

    Programs like TRIO and GEAR UP, which support first-generation, low-income, and underrepresented students, have been targeted in previous proposals; however, current budget drafts maintain level funding. Nonetheless, their future remains uncertain as negotiations continue.

    The Title III Strengthening Institutions Program, which funds academic support services, infrastructure, and student retention efforts at under-resourced colleges, received a proposed funding increase in the FY 2024 President’s Budget, though congressional appropriations may differ.

    Department of Agriculture (USDA)

    The USDA’s impact on small colleges, while less direct, is nonetheless critical. Discretionary funding was reduced by more than $380 million in FY 2024, reflecting a general pullback in rural investment.

    Programs like the Community Facilities Direct Loan & Grant Program, which supports broadband access, healthcare facilities, and community infrastructure, were level-funded at $2.8 billion. These investments often benefit rural colleges directly or indirectly by enhancing the communities in which they operate.

    While some funding has been maintained, the broader trend suggests tighter resources for rural development in the years ahead. For small colleges embedded in these communities, the consequences could be substantial: delayed infrastructure upgrades, reduced student access to services, and weakened town-gown partnerships.

    Why Small Colleges Are Particularly Vulnerable

    Small private nonprofit colleges—typically enrolling fewer than 3,000 students—operate on thin margins. Many are tuition-dependent, with over 80% of their operating revenue derived from tuition and fees. They lack the substantial endowments or large alumni donor bases that buoy more prominent institutions during hard times.

    What exacerbates their vulnerability is the student profile they serve. Small colleges disproportionately enroll Pell-eligible, first-generation, and minority students. Reductions in federal financial aid and student support programs have a direct impact on student enrollment and retention. If students can’t afford to enroll—or stay enrolled—colleges see revenue declines, leading to cuts in academic offerings, faculty, and student services.

    Additionally, small colleges are often located in areas experiencing population decline. The so-called “demographic cliff”—a projected 13% drop in the number of high school graduates from 2025 to 2041 will affect 38 states and is expected to hit rural and non-urban regions the hardest. This compounds the enrollment challenges many small colleges are already facing.

    Economic and Social Impact on Rural Towns

    The closure of a small college doesn’t just mean the loss of a school; it signifies a seismic shift in a community’s economic and social structure. Colleges often rank among the top employers in their towns. When a college closes, hundreds of jobs disappear—faculty, staff, groundskeepers, maintenance, food services, IT professionals, and more.

    Consider Mount Pleasant, Iowa, where the closure of Iowa Wesleyan University in 2023 cost the local economy an estimated $55 million annually. Businesses that relied on student and faculty patronage—restaurants, barbershops, bookstores, and even landlords—felt the immediate impact. Community organizations lost vital volunteers. Town officials were left scrambling to figure out what to do with a sprawling, empty campus in the heart of their city.

    Colleges also provide cultural enrichment that is often otherwise absent in small towns. Lectures, concerts, art exhibitions, and sporting events bring together diverse groups and add vibrancy to the local culture. Many offer healthcare clinics, counseling centers, or continuing education for adults—services that disappear with a campus closure.

    USDA investments in these communities are often tied to colleges, whether in the form of shared infrastructure, grant-funded development projects, or broadband expansions to support online learning. As these federal investments diminish, so too does a town’s ability to attract and retain both residents and employers.

    Real-Life Implications and Stories

    The headlines tell one story, but the real impact is felt in the lives of students, faculty, and the surrounding communities.

    Presentation College in Aberdeen, South Dakota, ceased operations on October 31, 2023, after citing unsustainable financial and enrollment challenges. Hundreds of students, many drawn to its affordability, rural location, and nursing programs, were forced to reconsider their futures. The college quickly arranged teach-out agreements with over 30 institutions, including Northern State University and St. Ambrose University, which offered pathways for students to complete their degrees. The Presentation Sisters, the founding order, are now seeking a buyer for the campus aligned with their values, while local officials explore transforming the site into a technical education hub to continue serving the community.

    Birmingham-Southern College in Alabama, a 168-year-old institution, closed its doors on May 31, 2024, after a $30 million state-backed loan request was ultimately rejected despite initial legislative support. The college had a $128 million annual economic impact on Birmingham and maintained partnerships with K–12 schools, correctional institutions, and nonprofits. The closure triggered the transfer of over 150 students to nearby colleges like Samford University, but left faculty, staff, and the broader community facing economic and cultural losses. A proposed sale of the campus to Miles College fell through, leaving the site’s future in limbo.

    Even college leaders who have weathered the past decade worry they’re nearing a breaking point. Rachel Burns of the State Higher Education Executive Officers Association (SHEEO) has tracked dozens of recent closures and warns that many institutions remain at serious risk, despite their best efforts. “They just can’t rebound enrollment,” she says, noting that pandemic aid only temporarily masked deeper structural vulnerabilities.

    Potential Closures and Projections

    College closures are accelerating across the United States. According to the State Higher Education Executive Officers Association (SHEEO), 467 institutions closed between 2004 and 2020—over 20% of them private, nonprofit four-year colleges. Since 2020, at least 75 more nonprofit colleges have shut down, and many experts believe this pace is quickening.

    A 2023 analysis by EY-Parthenon warned that 1 in 10 four-year institutions—roughly 200 to 230 colleges—are currently in financial jeopardy. These schools are often small, private, rural, and tuition-dependent, serving large numbers of first-generation and Pell-eligible students. Even a modest drop of 5–10% in tuition revenue can be catastrophic for colleges already operating on razor-thin margins.

    Compounding the challenge, the Federal Reserve Bank of Philadelphia released a 2024 predictive model forecasting that as many as 80 additional colleges could close by 2034 under sustained enrollment decline driven by demographic shifts. This figure accounts for closures only—not mergers—and spans public, private nonprofit, and for-profit sectors.

    Layered onto these economic and demographic vulnerabilities are the potential impacts of proposed federal education funding cuts. The Trump administration’s FY 2026 budget blueprint once again targets student aid programs, proposing the elimination or severe reduction of subsidized student loans, TRIO, GEAR UP, Federal Work-Study, and the Supplemental Educational Opportunity Grant (SEOG). Although similar proposals from Trump’s first term (FY 2018–2021) were rejected by Congress, the renewed push signals ongoing political pressure to curtail support for low-income and first-generation students.

    To assess the potential impact of these policy shifts, a policy stress test was applied to both the Philadelphia Fed model and the historical closure trend. The analysis suggests that if these cuts were enacted, an additional 50 to 70 closures could occur by 2034.

    • Philadelphia Fed model baseline: 80 projected closures
    • With policy cuts: Up to 130 closures
    • Historical average trend (2020–2024): ~14 closures/year
    • 10-year projection (status quo): ~140 closures
    • With policy cuts: Up to 210 closures

    In short, depending on the scenario, anywhere from 130 to 210 additional college closures may occur by 2034. Institutions most at risk are those that serve the very populations these federal programs are designed to support. Without intervention—through policy, partnerships, or funding—the number of closures could rise sharply in the years ahead.

    These scenario-based projections are summarized in the chart below.

    Why Should Congress Care

    According to the National Association of Independent Colleges and Universities (NAICU), a private, nonprofit college or university is located in 395 of the 435 congressional districts. These institutions are not only centers of learning but also powerful economic engines that generate:

    1. $591.5 billion in national economic impact
    2. $77.6 billion in combined local, state, and federal tax revenue
    3. 3.4 million jobs supported or sustained
    4. 1.1 million people are directly employed in private nonprofit higher education
    5. 1.1 million graduates are entering the workforce each year

    As such, the fate of small private colleges is not just a higher education issue—it is a national economic and workforce development issue that should command bipartisan attention.

    Strategies for Resilience and Policy Recommendations

    There are clear, actionable strategies to reduce the risk of widespread college closures:

    • Consortium and shared governance models: Small colleges can boost efficiency and sustainability by sharing administrative functions, faculty, academic programs, technology infrastructure, and enrollment services. This allows institutions to reduce operational costs while maintaining their distinct missions and brands. In some cases, these arrangements evolve into formal mergers. An emerging example is the Coalition for the Common Good, a new model of mission-aligned institutions that maintain individual identities but operate under shared governance. This structure offers long-term financial stability without sacrificing institutional purpose or community impact.
    • Strategic partnerships: Collaborations with community colleges, online education providers, regional employers, and nonprofit organizations can expand reach, enhance curricular offerings, and improve student outcomes. These partnerships can support 2+2 transfer pipelines, workforce-aligned certificate programs, and hybrid learning models that meet the needs of adult learners and working professionals, often underserved by traditional residential colleges.
    • State action: States should establish stabilization grant programs and offer targeted incentive funding to support mergers, consortium participation, and regional collaboration. Policies that protect institutional access in rural and underserved areas are especially urgent, as closures can leave entire regions without viable higher education options. States can also play a role in convening institutions to plan for shared services and long-term viability.
    • Federal investment: Continued and expanded funding for Pell Grants, TRIO, SEOG, Title III and V, and USDA rural development programs is essential to sustaining the institutions that serve low-income, first-generation, and rural students. These investments should be treated as critical infrastructure, not discretionary spending, given their role in expanding educational equity, enhancing workforce readiness, and promoting rural economic development. Consistent federal support can help stabilize small colleges and enable long-term planning.

    College leaders, local governments, and community groups must advocate in unison. The conversation should move beyond institutional survival to one of community survival. As the saying goes, when a college dies, the town begins to die with it.

    Conclusion

    Small colleges are not expendable. They are vital threads in the educational, economic, and cultural fabric of America, especially in rural and underserved communities. The proposed federal budget cuts across the Departments of Education and Agriculture represent a direct threat not only to these institutions but to the communities that depend on them.

    If policymakers fail to act, the consequences will be widespread and enduring. The domino effect is real: reduced funding leads to fewer students, tighter budgets, staff layoffs, program cuts, and eventually, campus closures. And when those campuses close, entire towns are left to absorb the fallout—economically, socially, and spiritually.

    We have a choice. We can invest in the future of small colleges and the communities they anchor, or we can stand by as they vanish—along with the promise they hold for millions of students and the towns they call home.

    References

    • U.S. Department of Education, FY 2025 Budget Summary and Justifications
    • National Association of Student Financial Aid Administrators (NASFAA), Analysis of Proposed Pell Grant and Campus-Based Aid Reductions
    • State Higher Education Executive Officers Association (SHEEO) and Higher Ed Dive, Data on College Closures and Institutional Viability Trends
    • Fitch Ratings, Reports on Financial Pressures in U.S. Higher Education Institutions
    • Iowa Public Radio and The Hechinger Report, Case Studies on Rural College Closures and Community Impact
    • Council for Opportunity in Education (COE), Statements and Data on TRIO Program Reach and Effectiveness
    • Federal Reserve Bank of Philadelphia, Predictive Modeling of U.S. College Closures (2024)
    • EY-Parthenon, 2023 Report on Financial Vulnerability Among Four-Year Institutions
    • U.S. Department of Agriculture (USDA), Rural Development and Community Facilities Loan & Grant Program Summaries
    • Interviews and commentary from institutional leaders, TRIO program directors, and SHEEO policy staff
    • Integrated Postsecondary Education Data System (IPEDS), Data on Enrollment, Institution Type, and Geographic Distribution

    Dean Hoke is Managing Partner of Edu Alliance Group, a higher education consultancy. He formerly served as President/CEO of the American Association of University Administrators (AAUA). With decades of experience in higher education leadership, consulting, and institutional strategy, he brings a wealth of knowledge on small colleges’ challenges and opportunities. Dean is the Executive Producer and co-host for the podcast series Small College America. 



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  • No cuts for schools, more funding for early literacy, in Newsom’s revised budget

    No cuts for schools, more funding for early literacy, in Newsom’s revised budget


    Gov. Gavin Newsom presents his revised 2025-26 state budget during a news conference in Sacramento on May 14, 2025.

    Credit: AP Photo/Rich Pedroncelli

    TK-12 schools and community colleges can expect the same funding in 2025-26 that they received this year, plus a small cost-of-living adjustment, and there will be a big boost for early literacy, Gov. Gavin Newsom revealed Wednesday in the revision to his January state budget plan.

    Schools and community colleges will be shielded from the pain facing other state services because of the revised forecast of a $12 billion drop in state revenues that Newsom blamed on the “Trump slump” — the president’s erratic tariff and other economic policies that are affecting California.

    For the University of California and California State University, the news was better than anticipated. The systems would face a 3% cut for 2025-26, notably less than the nearly 8% reduction Newsom proposed in January. The smaller cut may provide some relief at a time when higher education in California and across the nation is worried about losses in federal research grants and other funding under Trump administration policies. 

    The 2.3% cost-of-living adjustment in 2025-26 for most TK-12 programs is determined by a federal formula that does not factor in the cost of housing, the biggest expense facing teachers and other employees.

    In his May budget revision, Newsom keeps significant money for TK-12 programs that he proposed in January for fully rolling out transitional kindergarten for 4-year-olds, along with additional funding to reduce class sizes, and for expanding summer school and after-school learning to more districts.

    And Newsom would add $200 million to his earlier $543 million proposal for early literacy instruction, with money to buy instructional materials, hire literacy coaches and train teachers in “evidence-based literacy instruction,” which is code for teaching phonics and word decoding as well as other fundamental reading skills.

    That funding would take a significant step toward creating and funding a comprehensive early literacy strategy and coincides with compromise legislation, pushed by Assembly Speaker Robert Rivas, on spelling out what the instruction and reading materials should look like.

    “We’re thrilled. We’re excited,” said Marshall Tuck, CEO of EdVoice, which pushed early literacy legislation. “In a really tight budget year, prioritizing reading for California kids and investing $200 million is real leadership.”

    Newsom would also add to past efforts to recruit teachers by including $64.2 million in one-time funding for the Golden State Teacher Grant Program, under which teachers receive college tuition in exchange for agreeing to teach in underserved districts and in subjects facing critical shortages, and $100 million to pay stipends to student teachers. Unpaid student teaching has been cited as one of the primary reasons teacher candidates fail to complete their credentials. 

    The Legislature has a month to reshape Newsom’s budget before the June 15 constitutional deadline to pass a budget for the fiscal year that starts on July 1.

    What the budget doesn’t include, however, is any funding to backfill for the potential loss of billions of federal dollars in Medi-Cal funding for school physical and mental health services, cuts for Head Start programs, training grants for new teachers and research grants for the University of California and California State University, and the dismantling of the AmeriCorps program, which supplies teachers aides and tutors in hundreds of low-income schools.

    “Our ability to backfill all these federal cuts — no, we’re not going to be in a position to do that, we just are not in that position,” Newsom said. “It’s the old adage, you can’t do everything but you can do anything. There may be areas where we can make adjustments.”

    “I think we should be cautious about eliminating consideration of x, y, and z until we see the totality of the challenges as they present themselves.”

    In one cost-cutting measure, Gov. Newsom is proposing to roll back California’s health insurance program for undocumented immigrant adults, by charging premiums and freezing new enrollment, a move that advocates said will affect their children, many of whom are U.S. citizens. One in 10 California children are estimated to have an undocumented parent.

    “When a parent or family member is sick and unable to work or provide care, kids suffer as a result,” said Mayra Alvarez, president of the nonprofit organization The Children’s Partnership.  “Ripping away these family members’ access to health care, while they are also under threat of cruel immigration enforcement and other anti-immigrant policies, in turn puts the well-being of our children at risk.”

    Higher education

    State funding for the state’s system of 116 community colleges would change little from last year, receiving 0.6% less, at $8.9 billion. However, some of its important funding — $531.6 million from Proposition 98 revenues — would be deferred for a year under the proposal.  

    UC would have its funding cut by $129.7 million, while CSU would lose $143.8 million. In January, Newsom’s administration had proposed deeper cuts of $396.6 million and $375.2 million, respectively. 

    The revised budget maintains a proposal to defer previously promised 5% budget increases until 2027-28 for both systems. Those deferrals, which were part of Newsom’s multiyear compact agreements with the systems, were also included in Newsom’s January budget proposal. 

    The compacts, originally agreed to in 2022, promised annual budget increases for UC and CSU in exchange for the systems working toward goals such as increasing graduation rates and enrolling more California residents. 

    “We were able to hold strong to that over a two-year period. And we’re struggling now with some challenges,” Newsom said during a news conference Wednesday, though he added that the compacts are “sacrosanct” and that the systems would get their deferred dollars in 2027-28.

    By reducing the proposed cut to UC’s budget for 2025-26, the 10-campus system will be able to minimize cuts to student support services and preserve “critical investments like affordable student housing construction,” President Michael V. Drake said Wednesday in a statement.

    CSU Chancellor Mildred García in January warned that a nearly 8% state budget reduction would result in larger class sizes and fewer course offerings for the system’s more than 460,000 students, hampering their prospects for graduating on time. With those cuts now dialed back to 3%, García praised the May revision as a “thoughtful and measured approach to addressing the state’s fiscal challenges.”

    Proposition 98 maneuvers

    In total, the May revision proposes $45.7 billion for the state’s higher education institutions and the California Student Aid Commission.

    The minimum funding for 2025-26 for Proposition 98, the formula that determines the portion of the general fund that must go to TK-12 and community colleges, would be $114.6 billion, down from $118.9 billion in 2024-25 because of shrinking state revenues.

    Newsom proposes to make up the difference by shifting numbers around, depleting what was left in the Proposition 98 rainy day fund. Among other maneuvers, he would:

    • Drain the remaining $540 million from a fund that was $8.4 billion only two years ago, when the state faced a fiscal crisis.
    • Defer $1.8 billion that would be due to schools in June 2026 by a month, to July 2026. Schools should notice little difference, although the maneuver does create a state obligation that must be repaid.
    • Withhold $1.3 billion due to schools and community colleges in 2024-25 in anticipation that the revenues for the rest of the year might come up short because of the further decline in state revenues.

    This last maneuver grabbed the attention of the California School Boards Association, which filed a lawsuit over a similar effort last year and is threatening to do so again.

    “Even in lean times, investing in public schools is California’s best economic strategy, so we cannot sidestep constitutional protections for public education nor underfund Prop 98 to offset shortfalls in other sections of the budget,” association President Bettye Lusk said in a statement.

    The immediate reaction to the budget proposal was positive, with some caveats.

    “The bottom line is that amid a budget crisis, the governor is protecting every major investment in education,” said Kevin Gordon, president of Capitol Advisors, a consultant for school districts. “We want to make sure Prop 98 funding is accounted for. As long as that’s the case, there’s not much to complain about.”

    Scott Moore, head of Kidango, a nonprofit that runs many Bay Area child care centers, praised the commitment to universal transitional kindergarten (TK) while criticizing Newsom’s decision to suspend a cost-of-living adjustment for child care providers for low-income children and freeze funding for emergency child care services for foster and homeless children. 

    “We know that small class sizes and highly qualified teachers are two of the most important quality standards to ensure children benefit from pre-K. This budget invests wisely in TK,” he said. “The proposed cut to the COLA (cost of living increase) for child care providers must be restored. Now is the worst time to eliminate a small, but very much needed and deserved COLA for those who take care of our youngest and most vulnerable children.”





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  • NEA: Trump Slashes Education Budget, Encourages Privatization of Public Schools

    NEA: Trump Slashes Education Budget, Encourages Privatization of Public Schools


    The National Education Association analyzed Trump ‘s proposed budget and finds that it contains deep cuts and massive support for privatization by promoting vouchers and charter schools. The proposal mirrors Project 2025 by turning Titl 1 for low-income students and IDEA funding into block grants that can be converted to vouchers. The overall goal is to undermine public schools and cut funding.

    FY2026 Budget Request Slashes Education Funding, Shortchanges Students

    …………………………………………………………………….……….

    President Trump’s FY2026 “skinny” budget request to Congress, released on May 2, cuts non-defense domestic spending by 22.6%.  The Department of Education sustains a $12 billion reduction, a cut of approximately 15.3%. 

    ! Since the President’s budget does not list specific funding requests for every federal program, the 46-page document is a “skinny” budget. Congress ultimately has the power of the purse, but the proposal is a clear signal of the White House’s priorities: a massive 24 percent cut to U.S. domestic spending, and, privitazing our nation’s public education system.  

     

     The narrative says the budget “maintains full funding for Title I,” but the numbers tell a different story. Title I and 18 unidentified programs are combined to create a single block grant, dubbed the “K-12 Simplified Funding Program,” then that block fund is cut by $4.535 billion cut.

     

     All seven Individuals with Disabilities Education Act (IDEA) programs are combined to create a single block grant called the “Special Education Simplified Funding Program.” The approach perpetuates the current shortfall—the federal government now covers 13% of special education costs, far short of the 40% Congress promised when the law was passed. 

     

     Programs slated for elimination include English Language Acquisition (Title III) and the Teacher Quality Partnership, which addresses the teacher shortage through deep clinical practice. 

     

     The budget shifts costs to states and institutions of higher education to reduce the federal investment in today’s students—our nation’s future leaders and workforce—as much as possible.  

     

     Regrouping specific, separate programs into block grants, in theory gives states more flexibility on how the money is spent. In reality, block grants usually lead to less funding and less accountability for our most vulnerable students. As the strings attached to the funding are cut, many states could maneuver block grant funds over to private school voucher programs. 

     

     Amidst these cuts, the proposal calls for investing $500 million, an increase of $60 million, to expand the number of charter schools across the country. Charter schools, along with private school vouchers, drain scarce resources for traditional public schools. 

     

    May 2025



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  • A policy analyst forecasts how the May state budget revision will impact school funding

    A policy analyst forecasts how the May state budget revision will impact school funding


    Transcript

    Every year, by May 15, the governor has to revise his proposed budget, and this is when the budget season really kicks off.

    So, just as individuals are concerned about personal finances, retirements, the impacts of inflation, and uncertainty about government services, the state is facing those same sorts of uncertainties. And in this case, uncertainty really rolls downhill. There’s national uncertainty, which is causing state revenue uncertainty and budget uncertainty, which then impacts the state’s education budget decisions, that will then impact what school districts are facing as they head into adopting their budgets by the end of June.

    So, we know that the revenue outlook for the current year that ends June 30 looks pretty good, so will that protect us?

    I’d sort of hoped that they would, but the short answer is no, and that’s because of some nuances in how Prop 98 works. A lot of those extra revenues that have come in are actually going to count against last year, the 2023–24 fiscal year. And in that year, the Legislature actually suspended the constitutional guarantee for a year. So even though there are extra revenues, none of those revenues will go to schools.

    As we look to the future, to the 2025–26 school year, the forecasts are looking much more pessimistic. The Legislative Analyst’s Office just came out with a projection of revenues for next year being down around $8 billion. That would trickle down to schools getting about $3.5 billion less compared to what their current programs receive.

    I would expect schools to get the program that’s in place for the current year, plus a cost-of-living adjustment (COLA), which is currently expected to be about 2.3%. That probably seems pretty low to most folks, especially given some of the costs districts might face—salary increases that have already happened due to inflation, the rising costs teachers are facing, plus pensions and other obligations. So, the costs districts are facing may be going up more than the 2.3% COLA they’re getting.





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  • Budget cuts begin to surface at California State University

    Budget cuts begin to surface at California State University


    Students on the campus at Cal State LA.

    Credit: Erik Adams / EdSource

    Faculty, staff and students at four campuses in the Cal State system said they’re starting to feel the impact of belt-tightening in the early weeks of the 2024-25 school year, saying this fall has brought heavier workloads, larger class sizes and fewer course options.

    University officials at select campuses acknowledged plans to reduce costs this school year. They said they’ve opened additional course sections where there’s demand and remain committed to supporting students so that they’re on track to graduate, even as they reel in budgets to match shrinking student enrollment on some campuses.

    Cal State system officials said in July that the system could experience a $1 billion budget gap in the 2025-26 school year, a forecast driven by uncertain state funding, enrollment declines and rising costs. Trustees said they expect many campus leaders to reduce their overhead this year while also looking for creative ways to raise money going forward. 

    “It’s extremely difficult to get a hold of the classes that you want and/or need,” said Ashley Gregory, a Cal State LA student who works with the group Students for Quality Education through an internship program funded by the California Faculty Association. “It’s really disheartening.”

    Cal State LA

    California State University, Los Angeles, which has a $32.4 million deficit, is directing all divisions to cut their budgets by 12.4%.

    The university is budgeting with the assumption that enrollment will come in 5.3% below the target for in-state full-time equivalent students it receives from the Cal State system, the school’s interim chief financial officer, Claudio Lindow, wrote in a Thursday email to the campus. Lindlow said there are signs that actual enrollment will reduce that gap.

    Gregory said she’s already feeling the consequences of budget cuts on her major and minor fields — history, Pan-African studies and Latin American studies. 

    “I’m constantly having conversations with other students regarding, ‘Oh, this class is no longer available. This professor is no longer here,’” Gregory said.

    A university dashboard showing enrollments by course lists fewer total courses in each of Gregory’s three departments this fall compared with the same time last year. In the history department, enrollment was down from more than 1,800 students in fall 2023 to fewer than 1,700 students this semester.

    Juan Lamata, the faculty mentor to Students for Quality Education and a member of the California Faculty Association Los Angeles Executive Board, said he’s observed fewer electives in the English department, leaving a more narrow range of classes available to students.  

    “We’re changing what an English major means at Cal State LA, because now students will not have the opportunity to take classes in things they’re interested in or things that they don’t know they’re interested in,” he said. “We’re reducing what they can even be curious about.”

    Cal State LA spokesperson Erik Frost Hollins could not confirm whether the number of courses offered by the university has declined but said course sections are down almost 7% compared with last year. The university is not experiencing longer waitlists for fall courses as a result, according to Lindow’s email, but rather has lower waitlist numbers than in the past.  

    Cal State LA has gone from overenrolling students in excess of the target it receives from the Chancellor’s Office to experiencing an enrollment decline post-pandemic, President Berenecea Johnson Eanes wrote in a July letter to the campus. 

    Each condition strained the campus in different ways, Eanes wrote. When it was overenrolled, the university absorbed the costs of additional students without receiving additional state funding, she explained, which “had an adverse impact on the experience we can provide students.” But declining enrollment “feels like a budget reduction, because of the lost tuition, even though our funding per student is up,” she added. 

    “The greater risk lies in falling below enrollment targets, losing both tuition and state/system support,” Eames wrote. “This is why we need to focus on reversing enrollment declines and push to meet our enrollment target every year.”

    Cal State LA headcount enrollment in fall 2023 was 24,673, up 6% compared with a decade ago, but below a pre-pandemic peak of 28,253.

    Cal State East Bay

    Another Cal State campus is reckoning with how to make sure it offers the courses students need while adjusting to a yearslong slide in enrollment. 

    Cal State East Bay enrollment has fallen almost 26% from its peak in 2016 to fall 2023. Explaining a decision to cut staff and administrator positions last year, officials said the university had not fully adjusted its budget to match those declines and also anticipated that its health insurance, utilities and benefits costs would rise, contributing to a structural deficit. President Cathy Sandeen, in a July message to the campus, said the school “must continue to explore all means to further reduce our expenses.”

    A longtime faculty member said she worries that in trying to reduce overhead, the university is cutting instruction unnecessarily. Jennifer Eagan, a professor at the campus since 1999, said the university deferred dozens of eligible applicants to its Master of Public Administration degree program rather than expand the program to accommodate them this year.   

    “We have enrollments that we could be capturing, like classes we could be filling, cohorts of master’s programs that could be underway,” said Eagan, who served as the statewide president of the California Faculty Association from 2015 to 2019. “But the enrollments now are being artificially depressed, in my view.”

    Cal State East Bay’s instruction expenses fell 11% from 2021-22 into 2022-23, according to the university’s two most-recent financial statements, tracking a year-over-year decline in enrollment.

    Cal State East Bay spokesperson Kimberly Hawkins said in a statement that the university is “navigating a period of lower enrollment with a continued commitment to meeting students’ needs through strategic course offerings.” Hawkins said that, though there’s been a slight increase in waitlists to get into classes, the university has opened additional sections for certain courses. “Even as enrollment trends shift, our focus remains squarely on providing our students with timely offerings that fulfill their degree objectives,” she said.

    Rin Anderson, a Cal State East Bay student interning for Students for Quality Education, said they see signs of tight budgets outside of academics, too. They said the university’s Student Equity and Success Center, which provides counseling for students from historically underrepresented communities, is underfunded and understaffed.

    “The people that work for the university, who are in charge of these affinity programs, they’re overworked,” Anderson said. “They have so many different responsibilities and hats to wear.”

    CSU Monterey Bay students move into campus dorms in August 2021.
    Credit: Monterey Bay/Flickr

    Cal State Monterey Bay

    After a pandemic-era slump, Cal State Monterey Bay’s enrollment is showing signs of recovery.

    The Central Coast campus saw a 15.6% increase in enrollment this semester compared with fall 2023 — an increase so big that the Monterey Herald reported the school is moving students into staff housing and modifying some dorms to fit an extra student in an effort to whittle down its waitlist for housing.

    But Monterey Bay has also reduced its budget. A university official said in a statement the campus opted to trim costs at the beginning of this fiscal year to balance its budget and doesn’t anticipate any additional cuts later in 2024-25. 

    Meghan O’Donnell, a history lecturer at Cal State Monterey Bay and co-president of the school’s California Faculty Association chapter, said her department has lost seven faculty members; some departed through a voluntary separation program last spring, and others left because of frustration with lack of resources. She said the department hasn’t hired replacements.

    “There’s just a lot of challenges losing that level of faculty, while also being told we have to do all of the same work, if not more, because now we actually have more students than we were anticipating having this fall,” she said.

    O’Donnell is concerned that larger class sizes on her campus would make it harder for colleagues to incorporate experiential and one-on-one learning techniques into their courses — the kind of practices she said are especially effective for first generation students.

    In a statement, CSUMB Provost Andrew Lawson said the university has a lower student-faculty ratio than other CSU campuses and remains “committed to providing strong mentorship and experiential learning opportunities to our students.” He said the Monterey Bay campus has added additional course sections to accommodate incoming students, including in general education courses for first-year students. The university’s colleges of science and business experienced the steepest enrollment increases.

    Cal State Monterey Bay is also implementing what it calls an “incentive-based budget model,” which allocates funding to each of its colleges based partially on enrollment. Budget cuts last year impacted colleges with deeper enrollment declines more than those where enrollment was steady or dipped more modestly, Lawson said.

    O’Donnell said that model is starving the budgets of departments like Spanish, ethnic studies and history.

    Students “are being told that their desires don’t matter as much, basically, unless they’re in a major that’s actively growing based on market demand,” she said. 

    Cal Maritime is the smallest campus in the California State University system.
    Credit: Cal Maritime / Flickr

    Cal Maritime

    It’s not just faculty that are feeling the squeeze.

    Cal Maritime, the smallest Cal State campus, has laid off 10 staff members, a university spokesperson confirmed. Sianna Brito, the president of the university’s chapter of the California State University Employees Union (CSUEU), said the Aug. 20 layoffs affected eight CSUEU members and two managers. 

    Declining enrollment and financial pressure have set Cal Maritime on a path to a possible merger with Cal Poly San Luis Obispo, a much larger campus 250 miles south of the current campus in Vallejo. The Cal State board of trustees opened discussions on the proposal to combine the two schools at its July meeting. It will weigh additional updates in September before voting on the plan in November.

    Cal Maritime interim President Michael Dumont wrote in an Aug. 20 email to the campus that “enrollment challenges, state budget cuts, increased utility and insurance costs, and unfunded compensation costs” had left the university of 761 students with a combined $3.1 million deficit across its general operating and housing funds. He said the lack of funds “allowed us no other options” but to reduce staffing this year.

    “I ask that each member of our community remember that we are being forced to do less with less, and we will need to exhibit grace and practice patience with one another as we continue assessing our operations and as we approach the integration recommendation decision,” he wrote. “We need to be clear eyed and realize that what we have been able to support or accommodate in the past may not be able to occur this year.”

    Brito was among the staff who lost jobs. She said the layoff was unusually abrupt, blindsiding the managers to whom she reports and leaving no time to plan for colleagues to take over her responsibilities, which include the logistical and fiscal work behind the school’s faculty development and study abroad programs.

    “We immediately had to turn in our business cards, our keys. We were locked out of our emails. We had to turn in laptops, and we were escorted off campus immediately upon being notified that we were laid off,” she said.

    That was a shift from past layoffs, Brito said, in which departing employees continued working until their layoff date and were celebrated in campuswide emails. This time around, she said, Brito and her colleagues will be paid out until their official layoff date in October, but they ceased working the same day they were notified.

    There could also be implications for students. Part of Brito’s job had been the fiscal processing that allows Cal Maritime students who aren’t studying for a Coast Guard license to study abroad.

    “Now my job is parceled out to people who don’t have the institutional knowledge of the program,” she said. “So I personally feel like our students are not going to get the best experience with me not supporting that program.”

    This story has been updated to reflect that only Cal State Monterey Bay is using the incentive-based budget model.





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  • School boards association lawsuit claims provision in California budget deal is unconstitutional

    School boards association lawsuit claims provision in California budget deal is unconstitutional


    Credit: Flickr

    This article was rewritten and reposted on Sept. 27 to clarify that the lawsuit’s aim is to prevent underfunding of Proposition 98 in future years. The earlier version misstated that the lawsuit asserted the current state budget as enacted also violated the funding law.

    Although the 2024-25 state budget shields school districts and community colleges from funding cuts, the California School Boards Association is suing the Newsom administration over a provision that the school boards association claims is unconstitutional.
     
    The change to the Education Code would deny schools money they would be entitled to under some conditions in future years, setting a dangerous precedent, CSBA argued in a lawsuit filed this week.
     
    The school boards association is asking the Superior Court in Sacramento County to invalidate that section in the education budget bill. CSBA argues it violates the letter and spirit of Proposition 98, the formula that determines how much of the General Fund must be allocated to schools and community colleges.
     
    The Department of Finance inserted the little-known statutory wording  into the budget trailer bill in the final days of the legislative session in June, with no discussion or notice.  It was not mentioned in the budget analysis that legislators reviewed before passing the budget.
     
    “CSBA’s defense of voter‐approved Proposition 98 is nonnegotiable, as is the obligation of the state to follow the Constitution that governs it,” CSBA President Albert Gonzalez, a Santa Clara Unified school board member, said in a statement.
     
    On behalf of Newsom, the California Department of Finance refuted CSBA assertions in a series of exchanges with legislative leaders in July. All of its actions were legal, Joe Stephenshaw, director of the Department of Finance, wrote.
     
    The lawsuit would not affect this year’s budget, which took effect July 1. However, the tense negotiations and controversial revenue maneuvers preceding the budget’s passage were very much on the minds of Newsom’s financial advisors when they wrote the statutory change that the school boards association opposes.
     
    It pertains to the unusual challenge that Newsom and the Legislature found themselves in trying to write the 2023-24 budget. Because of the devasting impacts of winter storms and floods, the federal government and the state pushed back the tax collection deadline from April to November 2023. Without having tax receipts in hand, Newsom and the Legislature made a best-guess estimate of what Prop. 98 minimum guarantee would be for 2022-23. As it turned out, the minimum guarantee was $8.8 billion less than what they appropriated.
     
    Rather than cut funding for school districts and community colleges after the 2022-23 fiscal year had ended and money had been spent, Newsom left what he called “an overappropriation” alone. Two of the main formulas to determine the Prop 98 minimum guarantee incorporate what the state spent on schools in the prior year. So, the over-appropriation in 2022-23 would increase the amount that the state owed schools in 2023-24, 2024-25 and beyond. his initial 2024-25 budget in January, Newsom proposed allowing schools to keep the $8.8 billion for 2022-23 but to exclude the money when calculating the Prop. 98 minimum guarantee for 2023-24 and 2024-25.
     
    CSBA and other education groups opposed that move. They said that dropping Prop. 98 below what the Legislature had approved violated the initiative that voters passed in 1988.
     
    In most years, the Legislature’s Prop. 98 appropriation becomes the base amount for the following year, then is adjusted for enrollment growth or decline, inflation, or increases in economic growth per student. That assures that Prop. 98 minimum funding guarantee will grow over time, CSBA said.
     
    Faced with strong opposition from a coalition of school groups, Newsom eventually gave up on lowering the minimum guarantee. But still short of funding to pay for it, Newsom turned to a series of multiyear maneuvers: suspending the minimum guarantee in 2023-24, deferring funding from one year to the next, draining the rainy day fund, and creating a multi-billion dollar debt that the General Fund, not future Prop. 98 revenues, would pay back over several years. All of these tactics were legal.

    Newsom tries again
     
    But Newsom and Finance officials hadn’t given up on the idea of revising the Prop. 98 minimum guarantee downward when tax revenues come up short. They quietly inserted language into the trailer bill to limit the state’s funding vulnerability in the event of another tax filing delay in the future.
     
    It says that when the filing deadline for personal and corporate income taxpayers is pushed back at least two weeks, then the state will revert to the previous year’s minimum guarantee. After the new taxes are collected, the state will recalculate the new Prop. 98 minimum and determine the difference between the original and revised Prop. 98 minimum. The “excess” appropriation won’t be able to raise the Prop. 98 minimum that year and for subsequent years, the statute says.  
     
    CSBA criticized this “unlawful provision” for “artificially lowering the baseline upon which future years’ school funding is established.” The lawsuit argues that voters passed it to assure a “stable and predictable source of funding that is not subject to political influence or manipulation.”  

    “When the Newsom administration proposed a budget maneuver in January to exclude some school funding from the Prop 98 formulas, education groups opposed it because it was unconstitutional. The budget language passed this summer to allow a similar manipulation of the guarantee in the future would be similarly unconstitutional,” said Rob Manwaring, senior policy and fiscal advisor for the nonprofit Children Now and an advisor on the lawsuit.
     
    Delays in the tax deadline as occurred in 2022 and laid out in the provision will presumably be rare, but CSBA said the integrity of Prop. 98 must be preserved.
     
    The Legislature has no authority to amend the wording of Prop. 98 – only voters can do that, CSBA argued.
     





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