Budget Woes Persist Despite Prop. 30 Passage

While school districts breathed a sigh of relief with the passage of Proposition 30 in November, Glendora Unified School District officials warned that the tax increases would not signal an immediate end to schools’ budget woes.

“This isn’t new additional funding, but level funding from last year,” said Assistant Superintendent Marc Chaldu. “It doesn’t give us money to pay for anything else.”

The proposition, which called for a quarter-cent tax increase and a tax hike on higher income residents, narrowly passed in November, saving Glendora Unified from a $3.5 million budget cut.

Chaldu said had the proposition not pass in November, the school district would have faced draconian cuts and furlough days of up to 15 days.

But the district is still behind funding levels of the 2007-2008 school year. Each year for the past few years, nearly 50 percent of funding to schools have been deferred, forcing districts to borrow Tax and Revenue Anticipation Notes, or TRANS, to make up for the shortfall. This year, the passage of Prop. 30 has cut the deferrals to 30 percent, but the district is still forced to borrow up to $15 million in loans.

“Of course, that isn’t free,” said Chaldu. While interest rates fluctuate, even with a rate of 1 percent  – the district will have to pay back up to $150,000.

In the 2002-2003 fiscal year, the state made its first cash deferral of K-12 funds of $1.3 billion. By the end of 2012, the state deferred $9.6 billion owed to California schools.

Economic analysts have warned about Prop. 30’s long-term effects, claiming the tax increase could force more residents out of the state and negatively impact the housing market.

On the national front, President Barack Obama has yet to reach a deal with Congress on the so-called “fiscal cliff” that can signal more tax hikes and spending cuts beginning next week.

Many analysts say an economic turnaround is dependant on a compromise to avoid the “fiscal cliff.” Should talks fail, insiders fear another recession and a spike in unemployment.

The national economy continues to grow at a modest pace, a forecast predicted over the last five years. The unemployment rate is still looking at a small improvement from 8 percent in 2013 to 7.2 percent in 2014.

- City News Service contributed to this report.