With latest budget crisis averted, LA Unified eyes next challenge: passing Prop. 30 tax extension

Two weeks ago, it looked like Los Angeles Unified School Board members would have to approve a budget for the upcoming school year under very complicated circumstances; a bookkeeping dispute with the state would've forced the district to spend $245 million it had counted on saving.

Then, last week, the state granted L.A. Unified an extra year to sort out the matter, making school board members' task on Tuesday much more straightforward: decide whether to pass a precariously-balanced $7.6 billion budget package for 2016-17.

But real financial hardship in L.A. Unified could be the result this November, school board president Steve Zimmer said, if voters do not pass an extension of Proposition 30, a package of tax increases for state schools and health care plans likely headed to the general election ballot.

"We’ll only be forced to do something draconian if the bottom falls out of our budget," Zimmer said last week. "The only way the bottom falls out of our budget is to lose revenue. The way we would lose revenue in that way is to not get the extension of Prop. 30."

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In 2012, California voters approved Prop. 30, which temporarily increased state sales taxes and imposed an income tax hike for those who earned more than $250,000 annually. With those hikes set to expire in 2019, a proposed ballot measure would extend the income tax hike through 2030, producing as much as $11 billion in new state revenues.

L.A. Unified officials project the measure could bring in an additional $120 million in revenues for the district, though new revenues from that extension would not start arriving until 2018-19. But the district has also relied on various one-time funding increases and carrying forward leftover cash from prior years to cover their next year's deficits.

If the Prop. 30 extension does not pass and the dispute with the state — over advocates' allegations that L.A. Unified has shortchanged targeted programs for English Learners, foster kids and low-income students — is not decided in the district's favor, the district's budget deficit in 2018-19 could grow to more than $573 million.

District officials are mounting both a regulatory and legal challenge to the state's ruling on how it spends on English Learners, foster kids and low-income students.

"Not getting an extension to Prop. 30 will be catastrophic of this district," Zimmer said. "There’s no way around that."