The May Revise and Its Impact on Moraga Schools

So far, response to Gov. Jerry Brown's May Revise has been "wait and see" neutral in the Moraga School District. District Superintendent Bruce Burns characterized things this way: “In one regard, things may not seem as dire because state revenue is up. However, the May revise is structured so that the increase in state revenue covers monies that would have been deferred anyway.”   

Deferrals are a promise of future payment of funds to school districts. While the end date often is clearly defined, three things can happen with a deferral: the funds can include past due funds and bring the revenue up to date; the funds can have a deficit factor applied or the funds may simply start up again at the end date, with no past due funds included.

As a result, deferrals not only add uncertainty to the budget picture, they also can cause significant cash flow problems. In districts with fiscally conservative reserves, deferrals cause concern, but the district uses the reserve to maintain cash flow. This is generally true of the districts in Lamorinda.

The governor’s May revise offers a “flat year-over-year budget based on what we know now,” Burns said. While a majority vote in the Legislature can pass the budget, based on a new law passed in November, the May revise suggests the Legislature will approve tax extensions, which require a two-thirds majority to pass. 

“We’re in a holding pattern until we hear if taxes will be extended or not. Once we know that, we’ll know how to plan for next year,” Burns said.

Digging into the May revise to get some sense of what its impact will be in Moraga, Burns said funding for Proposition 98 is $3 billion more than the governor’s January budget proposal, but with the deficit picture for the state, funding remains flat at best. 

“While $6 billion is good news, it is important to keep in mind the state is addressing a $24 billion deficit," Burns said. "The governor proposes using almost all of the new money ($2.88 billion of the $3 billion) to buy down existing K-12 and community college deferrals. In other words, he is just swapping out deferred dollars provided in the January budget with real dollars in the May budget."

If approved as proposed, districts will need to borrow less to cover deferrals, but the total local spending level is the same as proposed in January.

“Most of the remaining portion of the $3 billion increase (about $221 million) will go to schools to cover the costs of the governor’s new proposal to shift all AB 3632 mental health costs from counties to schools,” Burns said. “This is not new or additional funding.”

In the winter, Burns presented . When asked what the potential options are now, Burns said that the $349 cut per student is still under discussion.

“The $349/student cut estimate was a best guess as to what the total K-12 cut could be should the tax extensions fail," he said. "The May governor’s budget continues to rely upon almost the same level of tax extension revenues as proposed in January.” 

Burns added that the Moraga school district will continue to budget for the same level of downside risk, should the Legislature fail to enact and/or the voters reject a tax extension. The reinstatement of the $19/student reduction from January is good news, but "insignificant when measured against the continuing high level of education funding uncertainty that persists," he said.

Given the , Burns was quick to clarify the equity policy of the district: “Donations can be made to a specific program," he said. "However, donations cannot be made to a specific person’s job. Reductions are made by the hour and based on seniority and in accordance with the California School Employee Association contract.”