Program Enhancements and Other Budget Adjustments
Proposition 98 Guarantee

A voter-approved constitutional amendment, Proposition 98, guarantees minimum funding levels for K-12 schools and community colleges. The guarantee, which went into effect in the 1988-89 fiscal year, determines funding levels according to a multitude of factors including the level of funding in 1986-87, General Fund revenues, per capita personal income and school attendance growth or decline.

Proposition 98 originally mandated funding at the greater of two calculations or Tests (Test 1 or Test 2). In 1990, Proposition 111 (SCA1) was adopted to allow for a third funding test in low revenue years. As a result, three calculations or tests determine funding for school districts and community colleges (K-14). The calculation or test that is used depends on how the economy and General Fund revenues grow from year to year (see Figure K12-06).

For fiscal year 2005-06, Proposition 98 funding was $53.3 billion (this reflects the guarantee level as recalculated pursuant to the Proposition 98 Settlement Agreement), of which the General Fund share was $39.6 billion or 74.3 percent. Local property taxes covered the balance. The 2006-07 Proposition 98 funding is estimated to be $55 billion, a 3.2-percent increase over 2005-06. The General Fund share in 2006-07 is $40.8 billion or 74.2 percent. These funding levels reflect the decline in attendance and the cost of apportionments.

Proposition 98 funding for 2007-08 is proposed at $56.8 billion, a 3.3-percent increase over the revised estimate for 2006-07. The General Fund comprises approximately 72.5 percent, or $41.2 billion of total proposed Proposition 98 funding (see Figure K12-07). The totals include funding for K-12, community colleges and other state agencies that serve students. K-12 Proposition 98 per-pupil expenditures in the Governor's Budget are $8,569 in 2007-08, up from $8,293 in 2006-07.


HOME-TO-SCHOOL TRANSPORTATION
 The Budget proposes to shift the fund source for the $627 million Home-to-School Transportation program from Proposition 98 General Fund to the Public Transportation Account (PTA). This shifts Home-to-School transportation out of the Proposition 98 guarantee, allowing for the guarantee to be rebenched downward for General Fund savings of $627 million. Because available PTA funds are used in lieu of Proposition 98 funds to fund Home-to-School Transportation, this proposal does not result in a reduction to Home-to-School Transportation nor any other Proposition 98 funded program.


CHILD CARE SHIFT
 The Budget proposes to increase Proposition 98 funding for CalWORKs Child Care by $269 million. By using available Proposition 98 funds in lieu of federal Temporary Assistance for Needy Families (TANF) Block Grant funds for Child Care, this proposal allows a like amount of TANF funding to be redirected to offset non-Proposition 98 General Fund costs in the CalWORKs program. This proposal does not require a reduction to the CalWORKs program, nor does it reduce child care benefits.


PROPOSITION 98 REVERSION ACCOUNT
 The Governor's Budget proposes one-time Proposition 98 Reversion Account funding totaling $185.9 million appropriated as follows:

  • $100 million for school facility emergency repairs, consistent with the Williams settlement agreement.
  • $43.9 million for charter school facilities.
  • $25.7 million for CalWORKs Child Care.
  • $8.8 million for teacher induction programs.
  • $5 million for California High School Exit Exam study guides.
  • $1.5 million to match private funding for the Partnership for Success pilot project.
  • $1 million to make the Program Improvement Management System available statewide.
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CHAPTER HIGHLIGHTS for K thru 12 Education Back to Top

 Major Accomplishments in 2006-07
 Proposed K-12 Education Spending for 2007-08
 Program Enhancements and Other Budget Adjustments
  Total Funding for K-12 Education
 image of black pointing arrowProposition 98 Guarantee
  California State Teachers' Retirement System Purchasing Power Protection
  Addressing the Teacher Shortage
  Providing Online, User-Friendly Information on Schools
  Expanding Career Technical Education
  New Resources and Tools for Low-Performing Schools
  Preparing Students to Graduate from High School
  Improving Student Health
  Other Policy Issues
PRINTABLE BUDGET DOCUMENTS Back to Top
Budget Summary - K thru 12 Education (pdf * - 138K) -
Provides this entire K thru 12 Education Chapter in pdf format.
ADDITIONAL INFORMATION Back to Top
Proposed Budget Detail - K thru 12 Education
Displays Proposed Budget Detail information for K thru 12 Education.