Arcane funding certification needs repair
(Calif.) Although fundamental to the distributions of tens of billions of state dollars to schools every year, the required certification of the Proposition 98 funding guarantee hasn’t been executed since 2008.
The process, required under state law annually, requires three parties to bless a final number—the governor, the state schools chief and the chancellor of the community college system.
It is unclear why the three offices have disagreed on the calculation in recent years—especially since Democrats and their political affiliates have come to dominate statewide politics over the past decade—but regardless of cause, the Brown administration wants to fix it.
As part of the revised May budget, Gov. Jerry Brown has proposed assigning responsibility for certification to the director of the Department of Finance, a position that the governor appoints.
Under the plan, the department would promulgate a tentative calculation every year as part of the May revision and if no one objected, that number would become official.
Some skeptics might wonder why the governor—or anyone else—would care about mending this system given that, even with its dysfunction, schools have still been getting all the money called for under the guarantee without the certification.
But in a report out this week reviewing the governor’s revised budget plan, the non-partisan Legislative Analyst’s Office said putting the administration in charge of the process is better than having three overseers who sometimes can’t agree.
“By diffusing responsibility across three separate entities, the current certification process hinders the Legislature’s ability to hold any one actor accountable for the timely certification of the guarantee,” the LAO said.
By clearly assigning the duty to the Director of Finance, the LAO said, disputes that have often lingered for years would likely be more easily and quickly resolved.
The current system was developed and passed by the Legislature shortly after Proposition 98 was approved by voters in 1988. At the time it made sense to decentralize authority over such a critical calculation.
In practice, however, disputes over the funding guarantee have often ended up in court and typically pitted the California Teachers Association against the administration. The fights were usually about what services or programs the governor wanted to use Proposition 98 money to pay—not necessarily how the final guarantee number was arrived at.
As proposed, the new system would include all the underlying factors that have always driven the formula—some of which are under the purview of the administration, some not.
The governor’s finance department provides the data for total general fund revenue, for instance, as well as population growth. While the California Department of Education and the California’s Community Colleges Chancellor’s Office would report on student attendance and local property tax revenue.
Once all the data has been collected, the Department of Finance would publish a tentative calculation as part of the revised May budget. A public comment period would open and the administration would be required to respond to all comments.
On June 30, the comment period would end and a final calculation would be promulgated.
After that, a “concerned party” would have 90 days to challenge the number in court. If no suit is filed, the guarantee would be declared certified at the end of the 90 days.
The LAO said that under the governor’s plan, the state would face less financial risk by reducing the likelihood of post-year budget surprises such as when the population estimates had to be adjusted between 1995 through 1998.
The LAO also noted the plan would increase public transparency because currently key inputs and assumptions affecting the final calculation of the guarantee are not widely available to the public.