Since voters enacted Proposition 98 in 1988, the state is required to fund K-14 education at a minimum level based on which of two tests is higher — about 40% of general fund revenue for the year, or the previous year’s Prop. 98 funding, adjusted for student attendance and the per capita income of Californians. How much general fund revenue needs to be spent is based on how much money school districts receive from local property taxes: More property tax revenue means less general fund money is required to provide the minimum level of funding. 

What does this mean in the context of revenue volatility? 

It means each year, some portion of the general fund will have to go toward making up what local property taxes can’t provide for school funding. And that amount is tied to other complex factors that can make budget planning difficult and lock out a chunk of revenue from being spent on other priorities, including plugging budget holes. 

And the formula for determining the minimum level of K-14 education funding keeps changing as new requirements are added. For example, voters passed Proposition 28 last year, which guarantees an additional 1% of what Prop. 98 provides toward arts and music education. That’s estimated to be an additional $941 million in this year’s budget.