Governor Schwarzenneger Proposes Budget that Invests in Education

For Immediate Release:

Pays Down State's Debt Early, Creates Prudent Budget Reserve

Gov. Arnold Schwarzenegger announced a plan that invests in our children and our future by increasing school funding by $3.1 billion this year and $8.3 billion over the last two years, and is fiscally responsible by paying down the state's debt in the revised state budget plan he submitted to the Legislature today.

"With the unanticipated new revenue, I intend to pay down more of our inherited debt, invest new money in education and build a rainy day fund of $2.2 billion," said Gov. Schwarzenegger. "This is by far the largest cash reserve our state has had at the time of the May Revise since 1978. There is nothing more important than investing this money into education and paying down our debt."

Gov. Schwarzenegger's $131.1 billion ($101 billion General Fund) "May Revision" continues his efforts to reduce the state's debt and structural deficit. When he first took office, the state projected an operating deficit of $16.5 billion for the fiscal year beginning in July. If the Governor's proposal is enacted, next year's operating deficit will be reduced to $2.5 billion.

Economic strength and a surge in revenues tied to corporate tax, capital gains and stock options has resulted in a large increase in projected state revenue. In the current budget year, the state has received an additional $4.8 billion. Additionally, the state expects to take in additional $2.7 billion next year above the levels projected in January, totaling $7.5 billion over two years.

With that money, the Governor will continue to exercise fiscal restraint and spend $3.2 billion of that money prepaying future debts, and providing $2.2 billion as a budget reserve.

Other key features of the proposal include:

Investing in Education: Gov. Schwarzenegger's continued commitment to putting our children first in line at the treasury is reflected in a budget total of $55.1 billion in Proposition 98 education funds - an increase from the $54.3 billion proposed in January. Since 2004-05, schools have seen $8.1 billion more in funding, a more than 17 percent overall increase.

Gov. Schwarzenegger's budget prioritizes programs vital to the success of California's students, including:

* Increasing per-pupil funding from all sources to $11,268, up from $10,325 in the current budget year and $9,811 in the 2004-05 budget year.

* Eliminating fall fee increases at UC and CSU to relieve the burden for college students and their families.

* Boosting the state's investment in charter schools, career technical education, infrastructure, teacher and principal training, testing, accountability, arts and music, physical education, and healthy student programs.

* Providing more funding for middle and high school counselors in order to improve the ratio of counselors to pupils and provide career technical counseling in addition to academic counseling.

* Investing in Proposition 49 after-school programs for elementary and middle school students to improve their academic performance and provide a safe environment for them following regular school hours.

* Investing significant funding to help students at risk of failing the California High School Exit Exam pass the test through more tutoring, materials and opportunities to take the test.

Enhancing Disaster Preparedness: In order to better prepare for a potential disaster, the Governor proposed $400 million to help local hospitals and public health agencies prepare for public health emergencies and natural disasters by providing funding for equipment, medicine and other assistance in developing surge capacity to handle medical needs during future public health emergencies, including a potential influenza pandemic.

Strengthening Our State's Levee System: The May budget revision will include $500 million that will allow the Department of Water Resources to begin work on the most critical flood control activities immediately. This work, along with the bond passed by the Legislature last week, will help protect the people of California from a Katrina-style disaster and repair levees originally built decades ago.

Protecting the Public's Safety: The Governor is strongly committed to enhancing pubic safety and has increased funding for programs by $142.2 million. To fight the "war on meth," he has added $20 million in funding for five regions statewide. Specialized vertical prosecution units will receive an additional $10.1 million statewide to help victims by following specified heinous crimes throughout the entire judicial process. The May Revision includes $50 million of new funds for projects designed to curb recidivism among mentally ill offenders. The Citizens' Options for Public Safety (COPS) and Juvenile Justice Crime Prevention Act will receive an additional $42.6 million ($21.3 million each). A proposal of $19.5 million in news funds will offset the costs of training local sheriffs' deputies and probation officers who work in jails and juvenile hall.

Increasing Children's Health Care: The proposal provides $23 million to eliminate waiting lists on existing county health initiatives, covering approximately 24,000 by the end of 2006-07.

Fighting Climate Change: Continuing his leadership on protecting California's environment, the Governor's May Revision adds $500,000 to the already proposed $7.2 million to implement greenhouse gas reduction strategies.

Investing in our Natural Resources: The May Revision provides $50 million in one-time spending for salmon and steelhead restoration, marine life and reserve management, non-game fish and wildlife programs, deferred maintenance in state parks, wetlands and riparian habitat conservation and coastal wetlands management.

For more information about the Governor's state budget proposal, please visit www.BuildingABetterCalifornia.com.