SACRAMENTO — California’s largest teachers union increased pressure on Gov. Gavin Newsom on Friday, announcing a public campaign aimed at blocking part of his plan to balance the budget, saying it would “do a major harm would do to the funding of our schools.”
Newsom says his plan — a complex accounting maneuver — would protect public schools from immediate cuts of $8.8 billion. But David Goldberg, president of the California Teachers Association, said it would cost districts nearly $12 billion in the future.
Goldberg said the union, which represents 310,000 educators across the state, would launch ads on Monday to “raise awareness about this unconstitutional maneuver.” If that doesn’t work, he says, a lawsuit could follow.
“We will not stand by and let this happen,” he said at a press conference. “When you have clear violations of the Constitution, you often turn to legal remedies. So that is certainly one of the tools in our toolbox.”
The public opposition from teachers marks a turning point for Newsom, who had largely avoided major battles with core constituencies during the state’s recent budget woes. Newsom addressed last year’s deficit by borrowing while delaying and deferring spending, preserving most major programs. But the deficit has only widened, putting pressure on Newsom — who is widely seen as a potential presidential candidate.
Last week, Newsom announced a budget deficit that, including previous actions agreed to by his administration and the Legislature, amounts to at least $45 billion. The nonpartisan Legislative Analyst’s Office says the deficit is actually $55 billion — mainly because of cuts in state education spending that Newsom didn’t count as part of the deficit.
Newsom defended his proposal last week, saying it was the best option for public schools because it would protect them from immediate budget cuts.
“I don’t want thousands and thousands of pink slips to disappear. “I don’t want to see any disruption to the system,” he said.
The problem is the voter-approved formula for how California pays for public schools, known as Proposition 98. The formula says schools will get a certain amount each year. California gave public schools $76 billion in the 2022-23 budget year because they thought the formula required it. However, state tax collections that year ended up being 25% less than what the state had projected.
The Newsom administration says this has retroactively affected the public school funding formula. Now they say the state only had to give about $67 billion to schools that year. It’s a difference of $8.8 billion.
Newsom could ask schools to return this money. But they already spent it. Refunding $8.8 billion would likely lead to massive layoffs and other difficult cost-cutting measures across the state’s 1,019 school districts. Instead, Newsom wants to let the schools keep the money. But he wants the state to act as if the schools gave it back.
The state’s auditors would not immediately count that $8.8 billion in expenditures. Instead, they would spread these costs over future budgets, starting in 2025-2026. It is the equivalent of the government giving itself a zero-interest loan.
“It’s pretending it doesn’t exist. Literally, ignore the $8.8 billion,” said Karen Getman, an attorney and school finance expert who represents the California Teachers Association.
California can afford to fuel this spending because even though it has a budget deficit, it still has plenty of cash on hand. California had $95.8 billion in unused borrowing funds at the end of April, according to State Comptroller Malia M. Cohen. That’s because all the state’s money has been budgeted, but not all has been spent yet. A large part of this is in reserves. Other parts are committed to large construction projects that have not yet been built.
School advocates are concerned because while the maneuver would protect districts from immediate cuts this year, they say it would reduce their budgets in the future. Not including this $8.8 billion in the public education budget changes the way the formula for school spending is calculated. The California Teachers Association calculates that this means schools would receive nearly $12 billion less in state spending this year and next than they would otherwise have received.
“They are trying to rewrite history to take down the Proposition 98 guarantee in the future,” Getman said, adding, “That is a fiction with no basis in fact or law.”
Kevin Gordon, a lobbyist for school districts in California, said that instead of changing the past, Newsom could change the future. Newsom could negotiate with school districts to suspend the school funding formula, meaning the state wouldn’t have to pay them all the nearly $12 billion they were supposed to get. Instead, districts could repay that money over time.
“The $8 billion overpayment is kind of a fiction. What is real is that they probably still owe the schools another billion ($12 billion) and the school community is ready to say, ‘We know you don’t have it , so we can waive that and conduct an investigation,” he said. “The approach the governor took needs to be adjusted. But… the goal of protecting public schools from budget cuts is the right goal.”
The nonpartisan Legislative Analyst’s Office is also not happy with the proposal, calling it “bad fiscal policy” that “creates a binding obligation that will worsen deficits throughout the year and require more difficult decisions in the future.”
Newsom doesn’t see it that way. He says his proposal would maintain “the commitments in terms of the investments we have made in previous years.”
“We respectfully disagree with that position,” he said.
