Budget crisis spawns uneasy election alliance between governor,teachers

*Editor's note: This story has been corrected form an earlier version

The California Teachers Association, which more than three years ago led the charge against Gov. Arnold Schwarzenegger's special-election bid to slash state spending, has changed its tune — dramatically.

The May 19 special election has brought about a temporary and uneasy truce between the Schwarzenegger administration and the teachers union that once spent millions to defeat the governor's agenda.

More than three years ago, the California Teachers Association spearheaded the opposition against Schwarzenegger's special election initiatives. Among those measures was Proposition 76, which sought to limit state spending.

Now, CTA is deeply invested in the passage of the governor's new spending cap proposal. That's because the measure that guarantees the $8 billion in school payments — Proposition 1B on the May 19 ballot — can only be enacted if the spending limit plan — Proposition 1A — is also approved by voters.

Late last year, the Schwarzenegger's administration was heading for a showdown with the powerful education lobby. The state's cash flow had plummeted, altering the revenue-driven formula used to determine how much money the state owed to public schools. The governor's numbers crunchers said they owed schools $8 billion less than what the schools thought they had coming.

The details of how and why the two groups came up with such radically different numbers has roots in the minutiae of education finance, a subject that forces the eyes of even experienced Capitol veterans to glaze over.

But the compromise that was reached was a purely political one. Essentially, the schools were given their extra $8 billion, if they agreed to wait until the 2011-12 fiscal year to recoup that money. And for good measure, the administration wrote a provision into the deal that said schools were only guaranteed their money if the governor's spending cap proposal is approved by voters in May.

The linking of the two measures was a political maneuver by Schwarzenegger to ensure the teachers union did not work to defeat the spending limit proposal. CTA has not formally taken a position on Proposition 1A, but spokeswoman Sandra Jackson said the council will vote on the measure later this month.

"We have taken a position on 1B. That is the measure that would repay Proposition 98. Of course, 1B is contingent on 1A passing, but our state council has not formally taken a position on that yet."

While the Schwarzenegger campaign team has set up a campaign committee to support all six of the measures on the May 19 ballot, campaign spokeswoman Julie Soderlund referred questions about Proposition 1B to the teachers' union.

CTA President David Sanchez wrote the ballot arguments in support of Proposition 1B. In those ballot arguments, Sanchez writes 1B "starts the process of paying back to the schools and community colleges some of the money lost by (recent) devastating cuts."

Under current law, the state may delay payments to schools in years of financial trouble. When revenues are down, the state can essentially borrow against the money Proposition 98 sets aside for schools. That borrowed money, known as the maintenance factor, is currently at more than $1.4 billion.

If Proposition 1B is approved, it would set up a more rapid repayment plan for money "borrowed" against schools in the future.

The measure stipulates that 1.5 percent of general fund revenues would go to repaying any future maintenance factor debts. So, if general fund revenues come in at $100 billion, up to $1.5 billion would automatically go to settling up general fund debts to the schools. That is in addition to the formulaic guarantee set out in Proposition 98.

"Prop. 1B has an easy payment plan," said Rick Simpson, who advises Speaker Karen Bass, D-Los Angeles, on education issues. "It will create a steady restoration schedule of 1.5 percent of general fund revenues, which makes it more predictable for schools."

The state legislative analyst's breakdown of Proposition 1B underscores the potential fight that would erupt if the measure is not passed. On the one hand, the LAO writes, the bill could save the state "several billion dollars" over the next two years by delaying maintenance factor payments.

But that is under a reading of the law that says the schools would be owed $8 billion next year. "Under other interpretations of current law, however, this measure would result in no savings in 2009-10 and/or 2010/11," the analysis states.

But passage of the measure "under most situations" would increase state payments to public schools and community colleges "potentially by billions of dollars each year."

Simpson said the administration avoided a showdown with the education lobby by agreeing to place Proposition 1B on the special election ballot. But the détente is all dependent on the measure being approved by voters this spring.

Simpson said if Proposition 1B is not enacted, Schwarzenegger and education interests will once again be locked in an $8 billion showdown. The fight would come back "with a vengeance" if the measure is not enacted, Simpson said.

 *An earlier version of this story indicated that CTA spoksewoman Sandra Jackson said it was likely CTA would support Propsition 1A. In fact, Jackson said CTA had not taken a position on 1A, and that the CTA state council would decide on the measure later this month. Jackson pointed out thatimplementation of Proposition 1B was linked to 1A's passage, but made clear that did not guarantee the union would support Proposition 1A. Capitol Weekly regrets the error.

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