Schools unlikely to face midyear cuts from approved budget plan

The threat of additional, midyear cuts to schools posed by the newly adopted budget plan is unlikely, sources briefed on the deal said Tuesday.

The plan, which majority Democrats approved last night and is expected to be signed today by Gov. Jerry Brown, relies on an optimistic revenue forecast and includes a provision that schools would receive a cut of $1.5 billion if those dollars are not collected.

But insiders suggested Tuesday that revenue collections so far this year are already well ahead of forecasts and that reaching the revenue goal is more likely than not.

The state is now $1.2 billion above year-to-date projections. State finance officials say it would take a significant economic downturn for the state not to meet the $2 billion revenue figure needed to protect schools next year.

Based on what we are seeing, we believe that taking the revenue forecast up by $4 billion is a reasonable assumption," said H.D. Palmer, a spokesman for the governor's Department of Finance.

Even if that additional money doesn't materialize, the cut to schools would still be proportional and based on the amount of revenues received.

As a result, the Department of Finance is directing districts to plan for flat funding for next year.

It's worth noting that most districts have already planned to cut at least $350 per student below the funding level supported by Brown and legislative Democrats, according to a survey of districts conducted by the California School Boards Association.

Meanwhile, focus has shifted on Brown's plan to move the prison population from the state to local governments. This realignment' plan redirects one percent of sales tax revenues from the state general fund to local government, thus lowering the minimum school funding guarantee.

But a key part of realignment is that voter's must approve the shift in a November 2012 election, said a source close to budget negotiations.

If voters defeat the measure, then sales taxes will return to the general fund and the state must pay schools at least $1 billion for the revenue that was lost in 2011-12.

If voters approve the plan, there would be a provision included in the ballot measure that sales taxes would still need to be included in the Proposition 98 calculation in future years. Therefore schools would only lose the sales tax revenue in 2011-12.

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