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April 5, 2005 > Proposition 98 Guarantee Statement from the Governor's Budget Proposal

Proposition 98 Guarantee Statement from the Governor's Budget Proposal

The 2004 Budget Act reflected Proposition 98 appropriations at a rebased level approximately $2 billion less than otherwise would have been required to meet the constitutionally guaranteed funding level for 2004-05. Subsequently, the guaranteed funding level for the 2004-05 has increased by over $1.1 billion primarily due to increases in General Fund revenues. However, given the size of the State's budget shortfall and to avoid significant reductions in programs critical to the health and well-being of the State's most vulnerable children and families, the Administration proposes to maintain 2004-05 expenditures at the Budget Act level, as adjusted for changes in local revenues and ADA growth. This proposal results in savings of $1.1 billion in 2004-05 and an additional $1.17 billion in 2005-06.

Despite the savings to the Proposition 98 funding level described above, the Governor's Budget for 2005-06 includes an increase of $2.9 billion to cover increases in growth and cost-of-living adjustments (COLAs) for revenue limits and categorical programs, as well as $328 million to repay almost half of the outstanding deficit factor owed as a result of reductions to school revenue limits (general purpose funding for schools) made by the prior Administration.

Total 2003-04 Proposition 98 funding was $46.3 billion, of which the General Fund share is $30.5 billion. Total 2004-05 Proposition 98 funding is $47.1 billion, which reflects a 1.7 percent increase over 2003-04. These funding levels have been adjusted for changes in attendance and costs for apportionment programs. No discretionary reductions to program levels are proposed. Total 2005-06 Proposition 98 funding is proposed at $50 billion, which reflects a 6.1 percent increase over 2004-05. The General Fund comprises approximately 73 percent, or $36.5 billion of total proposed Proposition 98 funding. These totals include funding for K-12 and community colleges.

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