Newsom Administration releases budget trailer bill, non-partisan Legislative Analyst urges caution on increased spending

The Department of Finance has released trailer bill language for Gov. Gavin Newsom’s January budget, including the education omnibus trailer bill, providing more detail on the Governor’s proposed 2023–24 TK-12 education budget.

The trailer bill homes in on major provisions of the Governor’s proposal as budget hearings in the Legislature begin, while a new analysis from the Legislative Analyst’s Office warns that more education cuts may be necessary.

One-time funds and arts grant reduction proposed to fully fund COLA

The Governor’s budget includes an 8.13 percent cost-of-living adjustment (COLA) for the Local Control Funding Formula. To fully fund the increase, the proposed trailer bill uses $1.4 billion in one‑time funds to pay for ongoing LCFF costs and makes a $1.2 billion reduction in the Arts, Music, and Instructional Materials Discretionary Block Grant included in the current year Budget Act of 2022. Funding from the grant is discretionary and many districts have already made plans for their use — from buying down retirement obligations and health benefits to purchasing instructional materials — posing challenges should the Legislature agree to the reduction.

Details provided on LCFF Equity Multiplier

The trailer bill language provides further detail on the Governor’s proposed LCFF Equity Multiplier. Starting in 2024–25, the trailer bill provides $300 million in ongoing Proposition 98 General Fund with a COLA provided in future years. Funds will be provided to local educational agencies as an add-on to the LCFF based on the prior year enrollment of eligible school sites. Eligible school sites include those serving grades TK-8 with at least 90 percent of youth eligible for free and reduced-price meals under the federal National School Lunch Program definition in the prior year, or those serving grades 9-12 with at least 85 percent of students eligible.

Funds provided by the Equity Multiplier must supplement, not supplant, existing LCFF expenditures for eligible school sites and no eligible school site will receive less than $50,000.

Greater detail provided on the Governor’s accountability reform proposals

The trailer bill includes significant reforms to the to the Local Control and Accountability Plan (LCAP) process and the California School Dashboard schedule, including:

  • 28 LCAP update deadline: County superintendents would be required to present a report on the annual update to the LCAP and Budget Overview for Parents on or before Feb. 28 each year. The report would include all available mid-year outcome data related to metrics identified in the current year’s LCAP as well as mid-year expenditure and implementation data on all actions identified in the current LCAP.
  • Course changes for ineffective actions: LCAP actions not proven effective after three years will be required to be changed. The description of the changes must include an explanation for the lack of progress and how the action will be better addressed by the new approach.
  • Metric reporting requirement: For each action and budgeted expenditure provided to all pupils on a districtwide, countywide or charterwide basis, LEAs must provide one or more specific metrics to monitor the intended outcome.
  • LCAP expansion to include Equity Multiplier and technical assistance: LCAPs will be required to include a summary of work underway related to technical assistance and stakeholder engagement at school sites receiving Equity Multiplier funding.
  • LCAP and Dashboard changes to address individual schools and subgroup disparities:
    • The trailer bill adds language that encourages using the LCAP process to address and reduce student subgroup disparities indicated by the California School Dashboard.
    • LCAPs will be required to include focused goals addressing the area of need if a school or student group within the LEA or a student group within a school received the lowest performance level on one or more state indicators on the California School Dashboard or a school within the LEA receives funding from the Equity Multiplier.
  • Changes to California School Dashboard reporting scheduling: The date by which the California Department of Education must post performance data to the Dashboard will be gradually moved up each year from 2023 to 2026:
    • Dec. 1, 2023
    • Nov. 15, 2024
    • Nov. 1, 2025
    • Oct. 15, 2026, and for each year moving forward

State Board waiver authority removed for TK

The trailer bill adds the section of the Education Code containing transitional kindergarten (TK) requirements, Section 48000, to the list of code sections that the State Board of Education cannot waive. Included in Section 48000 is the rollout schedule of Universal TK as well as other requirements like teacher qualifications, class size and teacher ratios.

Changes proposed to Special Education Local Plan Areas (SELPAs) and reporting requirements

The Governor’s proposal would extend the moratorium on the establishment of single-district SELPAs by two years from June 30, 2024, to June 30, 2026. It also includes a requirement that the CDE posts local SELPA plans on its website annually.

Greater clarity provided on the proposed Literacy Grant Program

In January, the Governor proposed an additional $250 million in one-time Prop 98 funding to help school districts further develop literacy programs, which includes funding literacy coaches through the 2027–28 school year. LEAs may opt into the program until Sept. 30, 2023, via the CDE based upon 2022–23 enrollment data. Base funding amounts are proposed to be $450,000 per schoolsite.

The proposal also includes $1 million for LEAs to develop literacy roadmaps to better assist educators on how to address equity in student literacy needs.

Delayed disbursement of $550 million in one-time funding for early education facilities

As expected, the trailer bill language delays $550 million in one-time General Fund allocated in the 2022–23 budget to help schools construct TK, full-day kindergarten or preschool classrooms to 2024–25.

Clarity provided on availability of fentanyl overdose medication

Under the January Budget Proposal, $3.5 billion in ongoing Prop 98 funds would be made available to LEAs to obtain naloxone medication to reverse the effects of a fentanyl overdose. The trailer bill language further specifies that funding would be contingent upon acquisition of the drug from a viable naloxone manufacturer, training provided on the administration of the medication and coordination with the state Public Health Officer.

LAO warns more cuts may be needed

Storm clouds may be on the horizon according to the non-partisan Legislative Analyst’s Office (LAO), which issued a new analysis of the Proposition 98 Overview and K‑12 Spending Plan on Feb. 7. The LAO, predicting lower revenues than the Newsom Administration and therefore a lower Prop 98 Guarantee, warns that the Governor’s proposal would create a $1.4 billion deficit for education. The analysis recommends that the Legislature “develop a budget for the coming year that does not rely on one‑time funding for ongoing costs” and suggests several options for closing the deficit, including: reducing the proposed COLA; modifying or potentially delaying implementation of the proposed LCFF Equity Multiplier; or pulling back unused funding for the Expanded Learning Opportunities Program and State Preschool Program.

What’s next?

Budget hearings have begun in the Legislature as the Senate and Assembly work their way through the Governor’s budget. Hearings will continue throughout the spring before Gov. Newsom releases his Budget Revision by May 15. Negotiations between the Administration and the Legislature will be ongoing until the June 15 deadline for the Legislature to pass the budget bill, at which point the Governor will then have until July 1 to sign the bill.

CSBA will continue to provide updates and opportunities for advocacy as the budget cycle continues.