District finance chief warns of long-term Prop 98 risk and a $22 billion state shortfall
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Summary
District staff summarized the governor’s budget proposal and warned trustees that actions to lower Proposition 98 calculations could shrink future education funding; staff flagged a projected $22 billion state deficit in 2027–28 and estimated a $1.4 million revenue reduction to the district from a lower COLA.
Chief financial staff presented a brief on the governor’s proposed budget and outlined potential impacts for the district.
Mister Pong told trustees the governor proposed a balanced budget for the near term but that the state faces a projected deficit of roughly $22 billion in 2027–28, a figure driven in large part by volatility in high‑value stock market sectors. He said the administration is proposing a somewhat smaller Cost‑of‑Living Adjustment (COLA) for schools than previously projected and that a decrease of about 0.6 percentage points in the district’s expected COLA would reduce local revenue by approximately $1.4 million.
Pong also explained concerns about what presenters and advocates described as manipulation of Proposition 98: counting dollars from different fiscal years to make one year’s guarantee appear larger, which critics warn could lower the baseline guarantee in future years. The district is monitoring May revisions and legislative hearings, and Pong said staff will return with updated scenarios after state budget actions.
Trustees asked for specific modeling on how Prop 98 changes and COLA adjustments would affect the district’s multi‑year structural deficit and for follow‑up reporting in upcoming board budget workshops.