Print this Article

Prop. 1B Provides $9.3 Billion in Education Funding – But Only if Prop. 1A Passes

By Vernon M. Billy - April 24, 2009

This article is the second of several we will be publishing about the ballot measures on the May 19th statewide ballot.

As a part of the February budget deal, the Governor and Legislature agreed to place six measures – Proposition 1A through Proposition 1F – before the voters in May’s special election.  These propositions collectively would establish a new budget spending cap, repay schools almost $9.3 billion, securitize lottery revenue, shift mental health funding and limit legislative salaries in budget deficit years.

One the ballot measures, Proposition 1B attempts to resolve a budget dispute between the education community and state government regarding the implementation of Proposition 98's maintenance factor requirement.

This budget dispute centered specifically around whether 1) A Proposition 98 maintenance factor is created in a Test 1 year when Test 1 is lower than Test 2; and 2) How the maintenance factor is paid in a Test 1 year.  Specifically, whether the maintenance factor is made on top of the Test 1 amount, or on top of what would be the Test 2 amount.

The solution by the State was to create Proposition 1B, which would provide $9.3 billion to schools through an account contained in Proposition 1A that would be in lieu of the normal statutory mechanism embedded in Proposition 98.

While this may sound complicated and perhaps confusing, it gets even more conditional.  Proposition 1B is literally tied to Proposition 1A, which is the state spending cap, rainy day fund, and tax extension measure.  In the event that Proposition 1A fails, then Proposition 1B does not go into effect . . . even if voters separately approve Proposition 1B on its own.

And if Proposition 1B doesn't go into effect, the State will once again have to work with the education community to determine how to pay these funds to schools – reopening issues that the Governor and the Legislature had hoped to settle in February's budget compromise.

Here's what Proposition 1B does….

Proposition 1B

Proposition 1B amends the California Constitution to require the following:

  1. Creates $9.3 billion supplemental education payment.  Under Prop. 1B the state would have to make $9.3 billion in supplemental payments to K-14 education. The payments would be made in annual installments beginning in 2011-12. In addition, these payments would become part of the base budget when calculating the subsequent year’s Prop. 98 minimum guarantee.
  2. Replaces Maintenance Factor Payments.  The annual payments required by this measure would replace any payments that the state would otherwise be required to make under current law for maintenance factor obligations created in 2007-08 and 2008-09.

    And while Prop. 1B would resolve the maintenance factor issue for this budget cycle, the measure does not address any future payments in Test 1 years. However, it is important to note that if Prop. 1B is successful it will set a precedent as being a future option for policymakers in Sacramento.
  3. Prop. 1B enactment contingent on Prop. 1A.  Proposition 1A establishes the Supplemental Education Payment Account, and beginning fiscal year 2011-12, requires the state to annually deposit 1.5 percent of General Fund revenues into that account.  Funds would be deposited into the account annually until the entire $9.3 billion in supplemental payments have been made.

If Proposition 1A fails, Proposition 1B does not go into effect – even if Prop. 1B is approved by the voters.

Editor's Note: Vernon Billy is President of Governmental Solutions Group, LLC,a policy consulting and legislative advocacy firm.