Propositions 1A through 1F were adopted by the Legislature with a two-thirds vote and supported by the Governor as part of the 2009-10 budget package for placement before the voters on the May 19th special election. During their last meeting the CSU Board of Trustees voted to endorse Proposition 1A – 1E on the May 19th ballot. Several of the measures would redirect existing revenues dedicated to specific purposes including the state’s lottery, mental health and early childhood programs in order to help balance the state General Fund budget.

In addition, Proposition 1A protects us from future deficits by putting more money into California’s “rainy-day” budget stabilization fund. The California State University (CSU) and higher education are impacted whether these initiatives pass or fail.

We would like to take the time over the next two Legislative Reports to provide you background on the key propositions that will directly impact the future of the CSU.

Proposition 1A - Rainy Day Budget Stabilization and Accountability Act
Proposition 1A is the long-term reform the state needs to help stabilize revenues and funding for vital services over the long-haul, and to prevent massive deficits in future years. Proposition 1A:

• Forces the Legislature to put money away in good years, so we have it in bad years. Prop. 1A requires the state to direct 3% of General Fund revenues into a “rainy day” budget stabilization fund each year, except when the fund is full or during economic downturns.
• Mandates increased savings. Prop. 1A increases savings in the “rainy day” fund from 5% to 12.5% of General Fund revenues. Money can only be taken out of the rainy-day fund when there is a budget deficit or an emergency.
• Stabilizes state spending. Prop. 1A ensures that, each year, the state budget is consistent with state revenue trends over the past 10 years. Any money above this amount will be saved into the “rainy-day” budget stabilization fund until it reaches 12.5% of General Fund revenues. This prevents unsustainable spending of one-time spikes in revenue, which can lead to big deficits when revenues drop.

If Prop. 1A doesn’t pass it will result in the loss of $16.2 billion in revenues between 2010-2013. These revenues were included in this year's budget and are dependent on approval of Prop. 1A.

Proposition 1B - Protect Education Funding
The budget crisis has cut more than $12 billion from our schools and colleges. Over 5000 teachers and education support professionals have been laid off and thousands more are threatened. Prop. 1B lays out a responsible timeline for paying back our schools more than $9 billion in cuts that they experienced during the budget crisis. Instead of permanently losing vital education funds, Prop. 1B sets up a repayment plan to ensure schools are paid back as economic conditions improve. Payments to schools will come out of the newly-created Rainy Day Fund, but not until 2011-12 when the fiscal outlook is expected to improve. If the state doesn’t pass 1B, California will be permanently downgrading its public school system.

For more information on both propositions please visit the campaign websites below:

Legislative Analysts Office Report

Proposition 1A & 1B Support:
California Budget Reform Now
California Chamber of Commerce

Proposition 1A & 1B Opposition:
Service Employees International Union
Howard Jarvis Taxpayer Association