State Budget Outlook Wasbo Feb 17 2009

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  • 17% = 6100/36927 (deficit / Gov ML)23% = 8500/3692739% = 6100/ (36927*.42%)55% = 8500/ (36927*.42%)
  • In terms of proportions, low income health care and other human services represent 39 percent of the budget but represent 69 percent of the program reductions in the Governor’s proposed budget
  • K-12 is 44% of SGF$5.8 B deficit through 6/30/2011K-12 share of $5.8 B is $2.5 B (informal calculation that I will not print)$5.8 B is16% across state government…if hold K-12 harmless, about 25% (also informal, will not print)
  • State Budget Outlook Wasbo Feb 17 2009

    1. 1. Washington’s Financial Condition: Layperson’s View 1. What is the financial outlook and Governor’s proposed solutions? 2. What federal funding will be available to help the state? 3. What are the implications for K-12 funding? Office of Superintendent of Public Instruction
    2. 2. National and State Economic Downturn • National economy has been in recession since 12/2007 • Washington lagged the downturn, and may lead improvement… • But state revenues collections will be impacted more severely b/c this is a consumer lead recession ▫ Consumer sentiment is lower than in previous recessions ▫ Taxable automotive and construction activity has dropped off sharply ▫ Other lay-off’s since October are significant: WaMu, Boeing, Microsoft • Washington State Economic and Revenue Forecast Council: www.erfc.wa.gov Office of Superintendent of Public Instruction 2
    3. 3. Budget Outlook • November forecast: $6.1 Billion projected deficit for 2009- 2011 Biennium ▫ Includes revenue downturn this fiscal year ▫ Through 6/30/2011 • New preliminary forecast on February 19th ▫ Speculation that Council will announce $8.5 - $9 Billion deficit through 6/30/2011 ▫ Official forecast on March 19th • 2011-13 Biennium ▫ November forecast: economy would improve quickly ▫ February/March forecast: guessing this will be revised Office of Superintendent of Public Instruction 3
    4. 4. Including the shortfall for this biennium, the Governor’s budget addressed a budget problem of over $6 billion ($6,120) Source: Senate Ways and Means Committee Staff Office of Superintendent of Public Instruction 4
    5. 5. 58% of the Budget is Protected and Unavailable for Reduction Near-General State Funds; 2009-11 Biennium Maintenance Level Other Human Services 25% Basic Education 38% General Government 2.5% Other Education .5% Higher Education 10% Medical Natural Assistance Resources 12% Debt 1% Other Service/Pensions/Other K-12 8% 3% Office of Superintendent of Public Instruction 5
    6. 6. Protected Sectors Drives Large Reductions in Others Deficit as % of Budget Deficit as % of Entire Available for If Deficit Level is: NGF* Budget Reduction $6.1 Billion 17% 39% $8.5 Billion 23% 55% • Fortunately, policymakers have some options that mitigate the need for pure percentage reductions at this level ▫ Some resource changes as proposed by Governor ▫ Pension method change ▫ Federal funding *Near General Fund-State Office of Superintendent of Public Instruction 6
    7. 7. The Governor’s budget solves slightly under 2/3rd of the budget problem by reductions and not funding salary increases…with the remaining solution coming from various resources changes Source: Senate Ways and Means Committee Staff Office of Superintendent of Public Instruction 7
    8. 8. The reductions in the Governor’s proposed 2009-11 budget are spread across state government, but some of the largest reductions occur in human services, K-12, and higher education * This reflects estimated net reductions accounting for any policy level increases included in the Governor’s proposed 2009-11 budget. There was also reductions made in her proposed 2009 supplemental budget for the current biennium. Source: Senate Ways and Means Committee Staff Office of Superintendent of Public Instruction 8
    9. 9. Schools are 41% of the Budget; Take 16% of the Governor’s Proposed Reduction * Reflects net near general fund policy change after accounting for reductions and increases, but excludes impacts of compensation-related adjustments and assumed federal funding increases. Source: Senate Ways and Means Committee Staff Office of Superintendent of Public Instruction 9
    10. 10. Federal Stimulus Funding Over 2 Years • Governor’s proposed budget assumed $1.1 Billion • Still refining new estimate for Washington: Anticipated 2 Year Funding Based on Conference Negotiations $835.6 Fiscal Stabilization (K-20 Portion) $175.2 Title I $231.9 IDEA (Spec Ed) $8.6 Ed Technology $0.0 Line-Item School Construction $3,431.5 All Other $4,682.8 Total for Washington • Not all available to solve state budget deficit!!! Office of Superintendent of Public Instruction 10
    11. 11. K-12 Context • COLA is 4.1% in 2009-10; • State cannot cut “basic 0% in 2010-11 education” ▫ New update in March ▫ $360 M cost included in • Non-basic items include deficit projection (biennial cost): ▫ Drives an additional $158 M ▫ K-4 enhancement ($388 M) in local funds needed ▫ 2 LID ($75 M) ▫ Levy equalization ($456 M) ▫ I-728 ($908 M) ▫ Gifted education ($20 M) ▫ Health Benefits inflation ($96 M if 7% inflation) Office of Superintendent of Public Instruction 11
    12. 12. Governor Proposed K-12 Budget • No COLA for 2009-11 Biennium ▫ $360 M savings in K-12; $620 M savings in state government total • I-728 reduced 22% ▫ $198 M cut from $908 M program • Levy Equalization reduced 33% ▫ $147 M cut from $456 M program • $48 M in programmatic cuts (e.g., Reading Corps) • $40 M; eliminate Math/Science Professional Development Office of Superintendent of Public Instruction 12
    13. 13. Possibilities: Caution!!! • Budget reductions by state are very probable ▫ LEA probably not as deep as proposed by Governor • Likely no, or low COLA funded by state ▫ Local funds value of $158 million or $80/student/year • Health care inflation funded • Health care purchase-shift debate • Pension contribution adjustment • More federal funds • Budget delay will make May notices difficult Office of Superintendent of Public Instruction 13

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