24
Jun
2014

2014-2015 California State Budget Approved

Categories: California Developments,Legislative Updates
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School Services of California Inc., by Michelle McKay Underwood, June 24, 2014

Consistent with the Budget Conference Committee action, but with some important differences from Governor Jerry Brown’s May Revision, the Legislature approved the 2014-15 State Budget on June 15, 2014. Senate Bill (SB) 852 and more than a dozen trailer bills were approved by both houses.

The 2014-15 State Budget is based on Governor Brown’s lower revenue forecast, and much of the framework is the same as the May Revision, but with important changes.

Deferrals

To balance working within the Governor’s revenue figures and spending priorities, the 2014-15 State Budget does not eliminate all deferrals. For 2014-15, nearly $1 billion in deferrals are still active for K-14 education. However, the State Budget includes a positive trigger—if next year’s May Revision reflects higher than anticipated revenues, an additional payment of up to the full amount of deferrals would be made, potentially resulting in the full elimination of deferrals by the end of 2014-15.

Mandates

The 2014-15 State Budget will begin to chip away at the education mandates portion of the Wall of Debt. For community colleges $49.5 million will be provided towards funding prior mandate claims on a per-full-time equivalent student basis. The Budget trailer bill states a district can chose to use these funds for “any one-time purpose, as determined by the governing board.”

CalSTRS Rates

Selecting a path between the Governor’s proposal and the Legislature’s alternative proposal, the California State Teachers’ Retirement System (CalSTRS) rate schedule for employers takes a smaller step in year one, but does not spike at year four as the alternative proposal would have. As specified in Assembly Bill (AB) 1469, the employer and employee rates on the member’s compensation that is creditable to the Defined Benefit Program earned after July 1 of each year as follows:

Year Employer Pre-PEPRA Employee Post-PEPRA Employee
2013-14 8.25% 8.00% 8.00%
2014-15 8.88% 8.15% 8.15%
2015-16 10.73% 9.2% 8.56%
2016-17 12.58% 10.25% 9.205%
2017-18 14.43% 10.25% 9.205%
2018-19 16.28% 10.25% 9.205%
2019-20 18.13% 10.25% 9.205%
2020-21 19.1% 10.25% 9.205%

 

CalSTRS is given the authority to adjust the employer contribution rate after 2020-21 to reflect the contribution required to eliminate the current unfunded actuarial obligation by June 30, 2046. (They will also be able to adjust the state rate, but not the employee rate.) The increase or decrease cannot change by more than 1% and cannot supplant the state’s obligation.

Career Pathways Program Trust

A major priority of Senate President pro Tempore Darrell Steinberg, a second round of funding will be provided for the Career Pathways Program. The 2014-15 State Budget includes another $250 million for this program.

Early Childhood Education

The 2014-15 State Budget provides additional funding for preschool and makes a few changes to the existing Transitional Kindergarten program. In total, funding was increased by $155 million in Proposition 98 support and an additional $100 million in non-Proposition 98 funds for the following:

  • 7,500 additional full year, part-day preschool slots
  • 500 additional alternative payment slots
  • 1,000 general slots
  • An increase in the standard reimbursement rate of 5%
  • $50 million for quality grants to local educational agencies
  • $35 million in one-time money targeted to professional development and facilities

Next Steps

Meeting the Legislature’s deadline, the main State Budget bill has been sent to the Governor. As of this writing, trailer bills are in the procedural step of “engrossing and enrolling,” which comes before the transmittal to the Governor. Last year, several trailer bills, including the Local Control Funding Formula trailer bill, sat at this step as the Governor and Legislature worked out a deal around the controversial issue around the California Public Records Act. The 12-day clock for the Governor to sign or veto a bill doesn’t start until the bill leaves engrossing and is presented to the Governor.

 

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