Budget Deal Reflects Unfamiliar Problem: How to Spend a Surplus

It’s certainly easier to reach an agreement when you’re negotiating how to spend extra money rather than where to cut funding. A full five days before the June 15 deadline for passing a state budget, Gov. Jerry Brown, Assembly Speaker John Perez and Senate President Pro Tem Darrell Steinberg reached agreement Monday on a $96 billion spending plan. Hours later, a joint conference committee had the budget approved.

The budget provides several victories for Brown. Legislative leaders had been pushing to spend an additional $2 billion, but ultimately opted for the governor’s more conservative spending number. The budget also includes Brown’s top priority, albeit a slightly tweaked version of the plan: California will direct additional money to school districts where more than half of students are either poor or learning English.

Every leader involved in negotiations got part – but not all – of their budget priorities. Perez had been pushing to fund scholarships for middle-class students attending California colleges. The scholarship program is part of the budget, but it will be phased in over several years. And Steinberg had lobbied to restore dental coverage in the Medi-Cal program. The budget spends a third less on those benefits than Steinberg wanted, and a partial restoration of the cuts will not be implemented until May 2014. “Even though all budget negotiations are complex and difficult, I’d take this one eight days a week,” said Steinberg after his final meeting with Brown and Perez.

But that old saying about compromises – that they leave everybody a little unhappy – was on display when the conference committee voted on the budget deal’s various aspects. “It’s not everything that we hoped for, but it is a compromise indeed,” said committee chair Mark Leno. The San Francisco senator and other Democrats had wanted an additional $100 million for California’s court system, but settled for $63 million. “It’s certainly better than nothing,” state Sen. Loni Hancock said about the court compromise. “Anything always is.”

As KQED's Mina Kim reported on Monday, the budget will give mental health programs a boost of about $140 million in one-time funds.

One of the health-related items that lost out in the the deal was a proposal to provide some therapies to 500 children with autism. Those children lost their services when the state shut down the children's health insurance program, Healthy Families, and moved them to Medi-Cal. Democratic lawmakers have vowed to take up the issue later if state revenues come in ahead of projections.

Changing California's Education Spending

The budget deal also reached middle ground on the most high-profile sticking point in this year’s talks: how to restructure the way California funds school districts. Senate Democrats had objected to Brown’s plan to steer extra money to districts where more than half of students are poor or learning English.

The compromise still pushes extra money to those districts, but now 55 percent of the student population needs to fit that description to trigger the extra money, instead of 50 percent.

The new plan also puts more money into the base grant that goes to every school district, and increases the formula spending by about $200 million. (Brown made up for this extra spending by scaling back the amount of Proposition 98 debt repayments by $650 million.)

Higher income districts like South Pasadena Unified still don’t like the plan, though, and argue the state should increase across-the-board school spending after years of cuts. South Pasadena Superintendent Joel Shapiro said, “Our schools are so drastically underfunded compared to schools in other states. I have not been in favor of redistributing money to school districts based on a new formula until funding-per-pupil has been brought up to a reasonable level.”

"A Point of Stability"

The budget plan came together smoothly, without the high-tension and drama that characterized negotiations during California’s years of large deficits, or when spending plans required a two-thirds vote. Assembly Speaker John Perez said the spending plan, which saves more than $1 billion for future fiscal years, is a sign that California’s economy is on the upswing. “We took this state from a point of absolute economic despair to a point of stability, where we see the economy turning around,” Perez told reporters during the end of negotiations.

Brown added this statement after the conference committee finished its work: “The Legislature is doing their job and doing it well. It looks like California will get another balanced budget and, very importantly, educational funding that recognizes the different needs of California’s students.”

The Assembly and Senate have until Friday to vote on the spending plan. Brown has until the end of the month to sign it into law.

Mina Kim contributed to this report