BY: ALEJANDRA ROCA DAISY PABLO MARILYN ARDON CINDY REYES Prop 2: State Budget/Budget Stabilization Account

The Question: Should the state of California change how it pays down their debts and saves money in the reserve?

What would prop 2 do? Revise the rules for California’s BSA (Budget Stabilization account) Require the state to set aside a certain amount of revenue each year for 15 years to pay down specific state liabilities Will establish a new budget for K-12 schools and community colleges under California’s prop 98 funding Place the state constitution as an existing legal requirement that the governor provide spending and income estimates as part of the annual state budget process

Special Fund for Economic Uncertainties and the Budget Stabilization Account The Special Fund for Economic Uncertainties (SFEU) held $1.1 billion in the adopted budget but it was later reduced to $700 million. Under Prop 58, the Governor must decide on whether to let 3% of general funds go into the BSA every year. The Governor can reduce the amount and put less or nothing into the BSA. The amount that goes in can reach a target maximum which is currently set at $8 billion (would take 3 years to reach max) Money can be taken out of the BSA with majority vote of the legislature, currently NO limit on how much can be removed.

Revenue for State liabilities and The Governor’s Spending Reducing unfunded liabilities that are related to any state pension plans Pre-funding other retirement benefits like retiree health care Governor would need to give estimates of all his spending and of all income estimates

The New Education Reserve Prop 2 would create a individual budget which would be known as Prop 98 Reserve or Public School System Stabilization Account (PSSSA) Funds for PSSSA would support K-14 schooling Would not directly change the total amount the state spends for K-14 in the long run Right now most districts keep reserves from 1-5% for their annual budget depending on the district size Prop 2 would increase the reserve to 3-10% depending on district size with 6% being the average amount

LAO Reports The Legislative Analyst’s Office (LAO) indicated that when Capital gains related taxes EXCEED 8% of the total General funds, then the 8% will be split between the BSA and PSSSA First they must see how much of this excess is needed for Prop 98, that amount would be able to go to PSSSA Remaining money will be put into the BSA

Arguments for prop 2 Establishes a stronger reserve which would force the state to save money and start paying down debts Protect schools by stabilizing school budgets to prevent cuts Revise pre-existing rules of the BSA and SFEU Will stop unnecessary tax increases

Arguments against prop 2 Will force schools to wait in “good years” for constitutionally guaranteed revenues Will allow the state legislature to use withheld educational funds to manage the general funds Requires school districts to lower minimum reserves which would place them in dangerous financial circumstances

Supporters Assembly Speaker : John A. Pérez Governor: Edmund G. Brown Jr. President of California Chamber of Commerce: Allan Zaremburg President of California State Board of Education: Dr. Michael Kirst California Democratic Party Los Angeles County Democratic Party League of Women’s Voters of California California Foward

Opponents 2014 California Treasurer Candidate: Ellen Brown California Association of School Business Officials Association of California School Administrators Educate our State Representatives:  Katherine Welch, President  Hope Salzar and Cinnamon O’Neill, Chapter Directors  Jennifer Bestor, Research Director  Cushon Bell, Secretary  Kilty Belt-Vhale, Parent Volunteer

Our Position A Yes vote would mean: existing state debts would be paid faster, there would be new rules for state budget reserves, and the school districts would have their own reserve which would mean less budget cuts. A No vote would mean: rules for the state debts, state budget reserves, and school district reserves would not change. Our Vote: YES for prop 2