The Legislative Analyst’s Office (LAO) released their analysis of the Governor’s Prop 98 proposal, along with several education specific recommendations. We have attached the report for your review. In summary, the LAO:

• Finds Governor’s Prop 98 Proposal “Reasonable” – The LAO agrees with the Governor’s balanced approach between one-time and on-going use of the cumulative $11.8 billion Prop 98 funding increases over 2012-13, 2013-14, and 2014-15. The Governor proposes to dedicate $6.7 billion to retire one-time obligations and $5.1 billion for on-going programmatic increases (primarily LCFF implementation). If enacted, this proposal would increase per-pupil funding in 2014-15 by about 10% ($788) over 2013-14 levels.
• Commends Governor’s Proposal to Retire “Wall of Debt” Before Prop 30 Revenues Expire – Specifically, the Governor proposes to:
  • Pay off all remaining K-14 inter year deferrals in 2014-15
  • Retire remaining QEIA obligation in 2014-15
  • Retire the Emergency Repair Program obligation by the end of 2015-16
  • Retire state’s unpaid mandate claims by the end of 2017-18
• Agrees with Dedicating School Funding Increases to LCFF – The Governor proposes to use $4.5 billion to close approximately 28% of the statewide gap to full implementation of LCFF.
• Recommends Legislature Reject Governor’s Proposal to Automatically Appropriate LCFF funds (Continuous Appropriation) – The LAO believes this will further complicate the education funding formula and remove the Legislature’s discretion in determining the appropriate funding level for LCFF each year.
• Agrees with the Governor’s Proposal to Add Two CTE programs into the LCFF – Governor proposes to add Specialized Secondary Programs (SSP) and Agriculture CTE Incentive Grants Program to the LCFF. The LAO also advises the Legislature to focus future approach to CTE on student outcomes rather than specific educational strategies.
• Agrees with Governor’s Proposal to Increase Funding for Student Assessments by $52 Million – This increase will fund the higher scoring costs and plans for the state to purchase interim and formative assessment tools for LEAs.
• Agrees with Governor’s Proposal to Reform Independent Study, But Encourages Legislature to Reform Grades K-12, not Just Grades 9-12 – Governor’s proposal would allow LEAs to covert entire courses to seat-time, not just individual assignments. Additionally, it would eliminate the requirement that work assignments contain a signature and date for the purposes of apportionment, allow services to commence with a signed parent agreement via fax or PDF, and allow LEAs to retain electronic copies of student work – eliminating the requirement that documents be stored in paper format.

What is next? Both houses of the Legislature have Budget Subcommittee hearings scheduled from now through May and we expect some lively debate. On or before May 15, the Governor will release his May Revision to the January Budget proposal. The Legislature is required to send a budget to the Governor on or before June 15 and we are nearly certain there will be an on-time budget. Upon signature of the Governor, the state budget for 2014-15 will take effect July 1, 2014.