State Budget Overview
The 2013–14 Budget Act reflects a significant improvement in the state’s finances due to the economic recovery and voter approval in the November 2012 election of temporary increases in the sales and use tax and the personal income tax (Proposition 30), as well as increased corporate income taxes for multistate businesses (Proposition 39). The budget package implements a plan to reduce the “wall of debt” the state has accumulated after years of deficits.
For the first time since 2008–09, the state did not face a multi-billion-dollar deficit. The 2013–14 budget package projects General Fund (GF) resources of $98 billion including new revenues generated by Propositions 30 and 39 and GF expenditures of $96.3 billion. The budget package projects an estimated $1.1 billion reserve at the end of 2013–14.
Local Control Funding Formula (LCFF)
The budget package replaces the current K–12 finance system with a new Local Control Funding Formula (LCFF). For school districts and charter schools, the LCFF creates base, supplemental, and concentration grants in place of most existing K–12 funding streams, including revenue limits and most state categorical programs. The formula does not replace Proposition 98—the initiative passed by voters that requires a minimum percentage of the state budget be spent on education—and leaves a specific list of categorical funds intact. Based on the new funding formula, K-12 schools will receive a base amount of funding for every student they serve. Schools who serve a significant population of English learners, students from low-income families, and foster youth will receive additional funds.