Critical battle mounting for school funds

Few parts of California’s government are more maddeningly complex than the landmark education funding law that voters enacted three decades ago, a labyrinth tucked inside one of the simplest political messages in state history.

The sales pitch for Proposition 98 — a spending mandate for K-12 schools and community colleges — was that the constitutional amendment would prohibit cuts and that spending would grow based on the student population and inflation. There are specific formulas in the 1988 law that do much of that, but the data used to crunch the numbers often are covered in political fingerprints.

In truth, what’s commonly called the “Prop. 98 guarantee” is akin to a mysterious black box. The formulas are so complicated that all it really has to do is produce a funding amount that satisfies education advocates, legislative leaders and the governor.

Which is what makes the task facing a Sacramento judge so important. On Aug. 10, the California School Boards Assn. filed a lawsuit to overturn a provision in last year’s state budget that created new rules for the Proposition 98 process. No one complained at the time, as the body language of lawmakers in the state Capitol made it clear that it was a done deal.

The challenged law revised the process that was created in 1989 to certify each year’s school funding level once all tax receipts have been tallied. It’s an important step because tax revenues often fluctuate until the last day of a fiscal year. Someone must reconcile the school funding guarantee with the actual tax revenues, right?

Not really. For most of the past 29 years, the three people tasked with the certification — the director of the California Department of Finance, the state superintendent of public instruction and the chancellor of the community colleges — couldn’t agree on how the Proposition 98 formulas should work. The result has been that lawmakers and education groups rely on the revenue numbers contained in the budget, which are routinely written through political horse-trading.

Last year, Gov. Jerry Brown signed a budget that makes the finance director — appointed by the governor — the sole decider of the certified number. The school association’s lawsuit claims that that allows the state “to define prior year education spending to be something other than what was actually allocated.” And if tax revenues came in below projections, the certified number would mean that schools were considered to be “overfunded,” a designation that would lower their base level of funding in future years. It would also, under the 2017 budget, allow the surplus dollars to count as a payment toward the state’s future school funding obligations.

“This is a time when we need to focus on bringing our schools to a full and fair funding level, not creating clandestine ways to reduce the amount of money they are lawfully owed,” said Mike Walsh, president of the California School Boards Assn., when the lawsuit was filed.

It’s worth noting the law Brown signed had some sweeteners in it for education groups, including a $100million payment of IOUs and new automatic funding for the governor’s 2013 policy that pushes money toward schools with low-income and English-learning students.

What now faces the judge, and probably an appeals court after that, is a journey into a system that promised to ensure that schools have the money they need. The plaintiffs say voters are the only ones who can make sweeping changes to the process. As with everything related to education funding in California, the stakes are high and the answers are buried in the fine print.