Our “First Look” Analysis of the 2016-17 State Budget

The California Budget & Policy Center this morning published our “first look” analysis of the 2016-17 state budget that Governor Brown signed earlier this week. The executive summary is provided in this post, and the full analysis is available here

2016-17 Budget Reflects Increases for Education and Reserves, Repeals “Family Cap” Rule, and Makes Modest Investments in Other Key Supports

On June 27, Governor Jerry Brown signed the Budget Bill and several related bills for 2016-17, the fiscal year that starts on July 1, 2016. This budget plans for $122.5 billion in General Fund spending, including increases in funding for K-14 education, the state’s mandatory reserve, and paying down budgetary debts ─ all of which are constitutionally required. The budget also makes an additional deposit into the state’s mandatory reserve, beyond the level required by the state Constitution, and provides funding for repair of state buildings. Beyond these priorities, the budget package repeals the Maximum Family Grant, or “family cap,” rule in the state’s welfare-to-work program and makes a series of modest investments in other key supports.

The 2016-17 budget allocates billions of dollars as required by voter-approved measures. The budget includes $71.9 billion for K-12 schools, community colleges, and the state preschool program to meet the minimum funding guarantee under Proposition 98 of 1988, a significant increase from the post-recession low of $47.2 billion in 2011-12. Under Proposition 2, the 2014 rainy day fund measure, the new budget sets aside $1.3 billion for paying down budgetary debt and $1.3 billion for the state’s mandatory reserve. An additional $2 billion deposit to this reserve brings the total 2016-17 deposit to $3.3 billion.

In a historic advance, the 2016-17 budget repeals the CalWORKs “family cap” rule, a punitive policy that serves only to drive children deeper into poverty. Modest advances in other key public supports include: increasing reimbursement rates for child care and preschool providers; holding tuition levels flat at the CSU and UC, in exchange for additional funding for both systems; providing a cost-of-living adjustment (COLA) to cash assistance for low-income seniors and people with disabilities; and funding a number of programs that seek to promote housing stability and reduce homelessness. The new state budget also reinstates school-based dental services and maintains California’s Earned Income Tax Credit (CalEITC) at current eligibility levels with additional funds allocated for boosting participation in the program.

In recent years, a series of reforms were enacted to reduce incarceration in state and county corrections systems, and in one case ─ Proposition 47 of 2014 ─ allocate potentially substantial savings to other priorities. However, the 2016-17 budget reflects the Governor’s low estimate of state savings from Prop. 47 while authorizing $270 million in bonds to build and renovate county jails.

Read the full report.