4 Pages at least 3 that including the simulation website

APA

Due 26th March

Budget Simulation: California Budget Challenge (50 Points)

Complete the California Budget Challenge available at https://www.budgetchallenge.org/pages/home. As you complete the simulation, read all the pros and cons of each choice and make notes about why you were persuaded to make the choices that you did in relation to your policy goal(s). After completing the simulation, write 3-4-page describing your policy goal(s), your decisions, and why you made them as well as a reflection on the challenges you faced in completing the simulation.

I have completed the simulation. The policies that I chose has a blue check. All the other information came from each simulation.

K-12 Education

For additional information, view our California Budget Basics series here .

The level of state funding for K-12 is based on Proposition 98, which was passed in 1988 and establishes an annual minimum funding guarantee for both K-12 and community colleges (referred to collectively as K-14 education). The amount of the guarantee is calculated using a complex formula, but is generally dependent on how much General Fund revenue the state receives each year—meaning the minimum funding level will be higher in years when revenue is higher, and vice versa.

Due to the state’s low property taxes (following the passage of Proposition 13 in 1978), California schools rely more heavily on state funding than the national average. Prop 98 enables school funding to keep pace with economic growth and enrollment—the latter of which is expected to be essentially flat or even decline over the next five years. Prop 98 funding constitutes over 70 percent of total K-12 funding (and about two-thirds of total community college funding), and the funds set aside under Prop 98 must be spent on education as opposed to other programs. Since Prop 98 funds must be spent on education, options that spend Prop 98 funds are shown as No Budget Change since they do not impact the General Fund budget.

Funding for K-12 education is allocated according to the Local Control Funding Formula (LCFF), which gives each school district a base grant that is then augmented based on the number of English-learners, low-income students, and youth in foster care in a given district. The state has allocated over $24.6 billion in additional ongoing resources through the formula since its enactment in 2013. A recent study found the increased revenue through the LCFF improved graduation rates—that a $1,000 increase in district per-pupil revenue from the state in grades 10-12 led to a 5.3% increase in high school graduation rates, on average.

May Revision Update

General Fund revenues following the May Revision are significantly lower than in January as a result of the COVID-19 pandemic and recession. Since changes in General Fund revenue affect the minimum funding guarantee through Prop 98, the May Revision assumes the Prop 98 guarantee has dropped by more than $17 billion below levels estimated in January—even after a $1.8 billion boost to the Prop 98 guarantee due in part to a proposed suspension of certain tax credits. Specifically, the May Revision estimates the Prop 98 funding guarantee in $70.5 billion in 2020-21, which is $13.6 billion below the levels assumed in the January budget.

To mitigate the impact on funding for K-14 schools, the May Revision proposes temporary changes to business tax credits that will generate $4.4 billion in General Fund revenues, of which $1.8 billion would go to schools. It would also allocate $4.5 billion in federal funds to support K-12 education and proposes to withdraw all of the funding from the Public School System Stabilization Account (PSSSA), which was projected in the January proposed budget to be $524 million. The Governor proposes an additional reduction in Prop 98 funding of $6.5 billion, representing a 10% cut in funding for the LCFF, as a trigger cut.

Alternatively, the Legislature’s plan for the budget includes no Prop 98 trigger cuts, and instead if federal funds do not materialize, an additional $5.3 billion of school and community college funding will be converted to a deferral, which preserves funding for current programs. The advantage of these IOUs, known as deferrals, is that districts wouldn’t have to cut their budgets; they could count on the money, but it would be delivered late. Until districts are paid back, they would be forced to borrow money short-term—from their own reserve funds (if they have a sufficient amount), from county offices of education (those that are willing), or from private lenders, at interest rates that would vary based on risk.