To even out the boom-and-bust revenue cycles that can particularly destabilize education funding, Gov. Jerry Brown is proposing a separate reserve for K-12 schools and community colleges in his revised plan for a rainy day fund.
But that lock box for education would gather dust most years because of the tight restrictions that Brown is proposing, according to analysts who have looked at the proposal. It would likely be the end of the decade before one of the preconditions for making an initial deposit is met, and even then, the rules for diverting money from Proposition 98, the main source of funding for schools, would be restrictive.
Funding for K-12 schools and community colleges under Proposition 98 fell from $56.6 billion in 2007-08 to $47.2 billion in 2011-12. Gov. Brown says socking away some of the money from capital gains tax receipts in fat years would even out peaks and valleys in the future. Source: Summary of Governor’s 2014-15 Budget.
Had Brown’s plan for a reserve been in effect since Prop. 98 was adopted 25 years ago, it would have been activated only once, in 2012-13. There would have been no money put into a reserve in the years leading up to the Great Recession, when Prop. 98 funding fell from $56.6 billion in 2007-08 to $47.2 billion in 2011-12.(The rules for filling Brown’s proposed separate General Fund rainy day reserve would not be as tight, and the Legislature could tap it to help stabilize Prop. 98 funding in a recession, budget analysts said.)
But the Brown administration points to a more recent trend to justify why a separate education reserve will be both relevant and important. Revenues from the state’s progressive income tax have become less predictable and more unstable amid rising income disparities. At the same time, the state has relied increasingly on capital gains tax receipts. Just as climate scientists are Governor’s proposed rainy day reserve for education would rarely be filled | EdSource Today: