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June 24, 2014 > Governor Brown signs 2014-15 State Budget

Governor Brown signs 2014-15 State Budget

Submitted By Office of Governor Edmund G. Brown, Jr.

Governor Edmund G. Brown Jr. signed a balanced, on-time state budget on June 20 that pays down debt, shores up the teachersÕ retirement system, builds a solid Rainy Day Fund and directs additional funding for local schools and health care.

ÒThis on-time budget provides for today and saves for the future,Ó said Governor Brown. ÒWeÕre paying off the stateÕs credit card, saving for the next rainy day and fixing the broken teachersÕ retirement system.Ó

The budget includes a plan of shared responsibility among the state, school districts and teachers to shore up the State TeachersÕ Retirement System (STRS). The first yearÕs contributions from all three entities total approximately $276 million, growing in subsequent years to more than $5 billion annually. This is projected to eliminate the unfunded liability in the system by 2046.

The budget also directs $1.6 billion into the state Rainy Day Fund Ð the first deposit into the fund since 2007. The fund is expected to grow to $4.6 billion by 2017-18, if voters approve of the measure on the November ballot that was proposed by the Governor and passed by the Legislature.

When Governor Brown took office, the state faced a massive $26.6 billion budget deficit and estimated annual shortfalls of roughly $20 billion. These deficits, built up over a decade, have now been eliminated by a combination of budget cuts, temporary taxes approved by voters and the recovering economy.

Significant details of the 2014-15 Budget:

The budget reduces the Wall of Debt by more than $10 billion by paying down $5 billion in deferred payments to schools, paying off the Economic Recovery Bonds one year ahead of schedule, repaying various special fund loans and reimbursing $100 million in mandate claims that have been owed to local governments since at least 2004. Under the budget plan, the Wall of Debt would be completely eliminated by 2017-18.

The budget continues the stateÕs reinvestment in local schools, providing more than $10 billion this year alone in new Proposition 98 funding. This includes $4.7 billion for the second year of implementation for the Local Control Funding Formula, which directs new education revenues to districts serving English language learners, students from low-income families and foster youth. The budget also expands the number of low-income preschool students served, increases the rates paid to preschool providers and provides grants to improve the quality of these programs.

In health care, last year the state adopted the optional expansion of Medi-Cal under the Affordable Care Act, providing millions of Californians with affordable health coverage. Enrollment is now expected to rise from 7.9 million in 2012-13 to 11.5 million in 2014-15, for a total cost increase of $2.4 billion.

The budget includes $872 million of Cap-and-Trade auction proceeds Ð authorized by AB 32 Ð for greenhouse gas reduction, with an emphasis on assisting disadvantaged communities. The plan will modernize the stateÕs rail system, including high-speed rail and public transit, and encourage local communities to develop in a sustainable manner. It will also increase energy, water and agricultural efficiency, restore forests in both urban and rural settings and create incentives for improved recycling. The budget permanently allocates 60 percent of future auction proceeds to sustainable communities, public transit and high-speed rail. The remaining proceeds will be allocated in future budgets.

Additional budget details, including line-item vetoes, can be found at

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