Backfilling Cuts? Not at the State Level

In California, the state took action last month to address an over $40 billion budget gap through a combination of program cuts, new taxes and a whole lot of other manipulations. The voters will decide what they think about the package in a special election on May 19th. While the actions taken were historic, they addressed the budget hole identified at the end of 2008. Oh course the economy has gotten worse since then, and recent reports have suggested that there is still an additional $8 billion hole that needs to be filled in 2009-10 that grows larger in the out years. Education’s share of that $8 billion hole based on a state constitutional funding formula is around $3.6 in more cuts.

So, it came as no surprise when the legislature’s fiscal advisors proposed several steps that the state could take to use the various streams of education stimulus funds to basically backfill their state general fund budget problems (here). Clearly the purpose of the budget stabilization funds was to do just that. But the stabilization funds are not enough to backfill the holes in California, so the legislature’s advisors suggested going after as much of the rest of the education funding as possible including Title I, special education and state mandated activities. They suggest the state should use these funds to fill the holes in their future budgets at the state level.

The California Congressional Delegation was not pleased (here). They make it very clear, that these funds are not for the state to use to solve their own problems, these funds are to be passed through as quickly as possible to keep California teachers from getting laid off now (current count of layoff notices given to teachers in the state is over 27,000). It appears that the congressional intent has been heard, and the Governor intends to get these funds out as quickly as possible (here). What about next year’s continued budget hole? I guess that is a problem for next year. The message is clear, use the funds now, and worry about the fiscal cliff later. Unfortunately, it looks like California schools are facing one fiscal cliff after another until the state starts to balance revenues and expenditures. (here is a prior discussion on fiscal cliffs)