Education finance: constitutional minimum funding obligation: inflation and cost-of-living adjustments.

(1) The Classroom Instructional Improvement and Accountability Act, an initiative approved by the voters as Proposition 98 at the November 8, 1988, statewide general election, amended the California Constitution to, among other things, set forth a formula for computing the minimum amount of revenues that the state is required to appropriate for the support of school districts and community college districts for each fiscal year. Existing law provides specified procedures for the calculation, recalculation, and certification of the state's minimum funding obligation to school districts and community college districts. Existing law establishes the Proposition 98 Cost Allocation Schedule, to be used by the Director of Finance to account for Proposition 98 appropriations in excess of the amounts required to satisfy the minimum funding obligation to school districts and community college districts. Existing law authorizes the Director of Finance to credit any amounts attributable to the Proposition 98 Cost Allocation Schedule to satisfy the minimum funding obligation to school districts and community college districts for any prior fiscal year. If, after crediting all amounts attributable to the Proposition 98 Cost Allocation Schedule, there remains an outstanding balance in the minimum funding obligation to school districts and community college districts, existing law continuously appropriates the amounts necessary to satisfy the minimum funding obligation from the General Fund to the Controller for allocation to school districts and community college districts, as specified. This bill would delete those provisions related to the Proposition 98 Cost Allocation Schedule and instead would require, if the Director of Finance determines that the state has applied moneys for the support of school districts and community college districts in excess of the state's minimum funding obligation for the fiscal year being certified, the excess moneys to be credited to the fiscal year being certified. If there remains an outstanding balance in the minimum funding obligation to school districts and community college districts for the fiscal year being certified, the bill would continuously appropriate the amounts necessary to satisfy the minimum funding obligation from the General Fund to the Controller for allocation to school districts and community college districts, as specified. (2) Existing law continuously appropriates from the General Fund to Section A of the State School Fund for allocation by the Controller any amounts necessary to meet the requirements of specified programs during each fiscal year, including, among others, the local control funding formula, the basic aid school district block grant, and the Open Enrollment Act, upon certification by the Superintendent of Public Instruction of those amounts. Commencing with the 2019–20 fiscal year, this bill would authorize the Director of Finance to reduce certain authorized and required inflation and cost-of-living adjustments to a percentage equal to or greater than the projected growth rate of the state's minimum funding obligation to school districts and community college districts, but not less than zero, if, for an upcoming fiscal year, the total amount necessary to meet the requirements of the programs described above is projected to exceed 89% of specified revenues and allocated proceeds of taxes that are necessary to meet the state's minimum funding obligation to school districts and community college districts, excluding appropriations made to the Chancellor of the California Community Colleges for allocation to community college districts. The bill would require the Director of Finance to report to the Legislature before the enactment of the annual Budget Act each fiscal year any amounts or percentages reduced from inflation or cost-of-living adjustments pursuant to these provisions for the upcoming fiscal year. (3) This bill would appropriate $282,237,000 from the General Fund to the Controller in the 2019–20 fiscal year for allocation to school districts and community college districts for the purpose of reducing the outstanding balance of the minimum funding obligation in the 2009–10, 2011–12, 2013–14, 2014–15, and 2016–17 fiscal years, as specified. (4) This bill would declare that its provisions are not severable. (5) Funds appropriated by this bill would be applied toward the minimum funding requirements for school districts and community college districts imposed by Section 8 of Article XVI of the California Constitution. (6) This bill would declare that it is to take effect immediately as a bill providing for appropriations related to the Budget Bill.