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Governor Updates May Revise, Asks for Further Cuts to Education in Current Year's Budget

By Jeff Hudson - June 1, 2009

The political maneuvering over the debt-ridden California state budget continues in Sacramento – and it looks like further budget cuts for education might be in store.

Late last Friday, Gov. Schwarzenegger – through the state Department of Finance – issued an updated version of his May Revision to the budget.  This latest version takes into account the continuing decline in state tax revenues, which are currently estimated to be running $3 billion lower than originally expected in the May 14 budget revision, released barely two weeks ago.

In this updated version, the Governor proposes an additional $680 million reduction in Proposition 98 money to K-12 schools, and also proposes a $315 million in cuts for home-to-school transportation.

The situation appears to be fluid, and the legislature’s Budget Conference Committee has yet to weigh in on the Governor’s latest proposals.  Eventually, the Conference Committee and the Big Five (made up of the Governor and legislative leaders) will have to hammer out the details.  It’s not clear whether an agreement can be reached by June 30.  If an agreement is not reached by June 30, then K-12 education will avoid the Governor’s proposed current year cuts -- but that would result in a greater level of deferrals or reductions to offset whatever opportunities are missed for savings in the current year.

Mike Genest, director of the Department of Finance, offered the not-so-cheerful forecast that “I can’t assure you it won’t get worse” on Friday.  State Controller John Chiang issued a warning that if the Governor and Legislature don’t agree on a plan and take action by June 15, the state will not be able to make all its payments on time this summer.

The Governor was scheduled to release an additional set of spending “flexibility” options on Monday to help local educational agencies balance their budgets.

The Governor is also scheduled to address a Joint Session of the legislature on Tuesday, and will doubtless argue the case for his proposals.

In the meantime, public awareness of the gravity of the state’s financial situation is growing, as headlines like “Painful Budget Cuts Ahead Will Be Felt By All” appearing in the San Francisco Chronicle, and elsewhere. Financial commentator Kevin Hassett of Bloomberg News released an article on Monday titled “California Leads Nation To Bond Default Abyss,” warning that “the California Budget crisis may well lead into a second financial calamity that would be far worse than anything experienced over the past 18 months.  And on May 25, New York Times columnist Paul Krugman, a recent winner of the Nobel Prize for Economics, wrote a column about the California budget crisis headlined “State of Paralysis,” worrying that a financial meltdown by state government here could portend new problems for the national economy.

Editor's Note: Jeff Hudson is the editor of EdBrief and an award-winning education reporter and writer in print, radio and television media.