School budgets squeezed despite ‘extraordinary’ state surplus

In addition to his overall review of state finances, Taylor also issued a special report on K-12 schools and community colleges, which are dependent on the state budget, and it contained a not-so-rosy projection of their finances.

Enrollment in both systems has been declining, thanks to interrelated demographic and economic factors, while their costs have been rising, thanks to higher salaries for their teachers and employees and, most disturbingly, fast-growing pension costs.

State aid to both is largely tied to enrollment, which means that their revenues are flattening as their costs spike upwards, leading to severe income/outgo squeezes.

Taylor estimates that the “minimum guarantee” of K-12 and community college revenues under state law will increase by $2.4 billion in 2019-20 over the current year. However, mandatory payments to the California State Teachers Retirement System and the California Public Retirement System will increase by $1.35 billion, thus consuming more than half of the revenue boost.

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