Thursday, July 14, 2011

Prelude to a Deal? Governor Dayton today took a big step toward ending the half-month government shutdown by agreeing, in part (and let me stress, in part), to an offer forwarded by legislative leadership during the last few days of June. Under the framework of the deal, there would be no tax increase. Instead, the $1.4 billion in revenue needed to close the budget gap (along with $3.6 billion in cuts) would come from setting the education aids payment shift at 60%/40% (up from 70%/30% last year and 90%/10% currently proscribed by statute) and bonding for cash based on dollars currently in reserve due to the tobacco settlement. Each of these items would generate approximately $700 million. In order to help school districts with the increased costs of borrowing, $50 per pupil would be placed on the education basic formula in each of the next two years.

The Governor has also asked that a $500 million bonding bill be part of the deal and that a number of policy provisions sought by the Legislature be dropped.

Where confusion and potential stumbling blocks exist is in the yet unspecified policy provisions either contained in legislative spending bills or discussed as part of the negotiations that were held in June that the Governor has stated he wants dropped. At this point in time, it is unclear whether that means all policy provisions will be dropped and that current law will remain in place except where changes were made and accepted during the regular legislative session or that provisions that the Governor does not support will not be accepted from this point forward in the negotiations. The former is clear, but the latter leaves a massive gray area, as we don't know where exactly the Governor stands on a number of provisions in the education funding and education policy bills. He has provided some insight in his veto messages on those bills, but there may be a number of other provisions in those bills that he also finds troublesome but has yet to point out.

Hopefully, the mandate reform that we worked on during the 2011 session will survive. It would be extremely unfortunate if items like repeal of the January 15 negotiating deadline and the associated aid penalty, repeal of the 2% staff development set-aside and the 50%/25%/25% staff development distribution formula, and the maintenance-of-effort requirement for school safety revenue expenditures on school guidance counselors, school psychologists, and social workers were not allowed to become part of the final education policy package. A number of education groups worked very hard on all of these provisions this past session and even though schools will likely not see the massive cuts that will be experienced in the area of health and human services, no one is going to be swimming in money going into next year and the increases in the payment delay will drive up borrowing costs to ensure cash flow needs are met. Given these facts, mandate relief would be timely. In addition to mandate relief, increased flexibility by allowing transfers between budget areas for the coming biennium would also be welcome.

Progress in the area of teacher bargaining would also be of assistance to school districts as they seek to hold down long-term costs going forward.

Where the Legislature may have to gulp hard before accepting the Governor's offer is on the number of education reforms they have sought during the 2011 Legislative Session. What I call the "All Things Florida" reforms (3rd grade retention for below grade-level readers, opportunity scholarship or vouchers in common parlance, and the A-F grading scale for school buildings) and the comprehensive teacher evaluation language may be the items the Governor wants to see gone from the negotiations and those proposals are near and dear to a number of legislators. Would desire to retain those reforms prevent the Legislature from making a deal? Hard to say, but probably not. If they are dropped, look forward to a wild start to the 2012 Legislative Session when all of these things may once again find themselves on the Governor's desk.

Here are links on Governor Dayton's proposal:

Stay tuned. Things will probably be moving fast.

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