When Governor Schwarzenegger took office in November 2003, California faced a deep recession, an unemployment rate of nearly 7 percent and jobs leaving the Golden State. As a result of his sound fiscal policies and commitment to make the state a partner in economic growth, California has added over 850,000 jobs—taking statewide employment over 15 million for the first time in history—dropped the unemployment rate to its lowest level in over 30 years, and seen record levels of exports and personal income.

Major Changes Included in the May Revise

Maintaining Fiscal Responsibility

• Governor Schwarzenegger has continued reducing the state’s net operating deficit, previously projected to hit $16.5 billion this year, down to $1.4 billion in 2007-08, and set aside a rainy day fund reserve of $2.2 billion.
• The Administration continues to exercise restraint in funding program growth. Total General Fund spending proposed in the budget is $103.8 billion, which is just $1.5 billion—or about 1.5 percent—more than in the current year. This is the lowest rate of growth in General Fund spending in five years.

Investing in Our Infrastructure

• Governor Schwarzenegger and California’s Legislature have enacted a comprehensive prison reform package that will invest $7.7 billion in new space and improved rehabilitative services to ensure to keep violent offenders are not released early and to reduce California’s 70 percent recidivism rate.
• The May Revision proposes appropriating $11.5 billion over the next three years to begin Strategic Growth Plan (SGP) transportation projects. Changes since January include an acceleration of funding for the Corridor Mobility and Highway 99 programs and additional funding for STIP projects and retrofitting school buses. By accelerating transportation improvements, the Governor is helping to reduce the millions of dollars that are wasted each day in California because of congestion and unsafe conditions.
• To continue rebuilding California, the Governor has proposed additional bonds to finance infrastructure development through 2016—including $11.6 billion for K-12 education facilities; $11.6 billion for Higher Education facilities; $6.0 billion for water supply and management; $2.0 billion for the state's judiciary facilities; and $2.6 billion for other public service infrastructure.
• Combined with the bonds already approved by the voters, other existing funding sources and leveraged funding through the use of public private partnerships, total SGP funding will be over $200 billion.

Investing in Our Future Workforce

• The Governor proposes fully funding Proposition 98 at $57.6 billion for 2007-08, up 4-percent from the Governor’s Budget estimate. This will help take to total per pupil funding to a state record $11,562 in 2007-08.
• To help address California's critical shortage of highly trained teachers in the subjects of science and math, the Governor's Budget proposes an increase of $2 million for a total of $2.7 million for the CSU to support the third year of the Science and Math Teacher Initiative. When combined with the $1.1 million that is continued in the UC budget, this initiative proposes a total of $3.8 million for 2007-08.
  • This funding will enable CSU to establish three regional science and math teacher recruitment centers and expand its campus programs in order to double the number of science and math teachers trained annually.

• The May Revision proposes $25 million to increase the number of school counselors that specialize in career technical education (CTE). These funds are meant to supplement existing counseling resources by adding counselors who can provide students with educational advice and options that will appropriately prepare them for employment in today’s workforce after graduation or provide them with the career-specific academic skills needed for transitioning into higher-level training at a community college or four-year university.
• The May Revision provides an additional $100 million to build on previous one-time funding for investments in CTE equipment and minor facilities reconfigurations. This new funding is to be split equally between public schools and community colleges to purchase state-of-the-art equipment for programs in public schools and community colleges. From this funding, $2.5 million is earmarked to support equipment purchases for K-12 nursing career pathway programs.
• The May Revision proposes $50 million in 2006-2007 for grants to colleges for equipment and other one-time uses for nursing programs in order to assist the colleges’ enrollment expansion efforts in meeting the demands of the state-wide nursing shortage.
• The May Revision proposes $50 million in Proposition 98 funds for grants to school districts to support the hiring of more than 1,000 additional credentialed CTE teachers.
• The May Revision proposes $50 million in 2006-2007 for grants to colleges for equipment and other one-time uses for nursing programs in order to assist the colleges’ enrollment expansion efforts in meeting the demands of the state-wide nursing shortage.
• The May Revision includes $3.6 million in General Funds to support an additional 340 full-time equivalent undergraduate nursing students in the budget year in recognition of overall cost pressures on the CSU and the need to continue to increase nursing enrollments.
• The May Revision includes $165 million to address the state’s need for more, high-quality teachers, including recruitment programs as well as extended training programs.

Areas Largely Unchanged from the Governor’s 2007 January Budget

Implementing the Strategic Growth Plan

• In November 2006, California voters approved the landmark $37.3 billion SGP and a $5.4 billion bond initiative for natural resource protection, water, and parks. This historic investment in our state is projected to create hundreds of thousands of sustainable jobs for Californians.
• The Governor’s Budget begins allocating these funds to rebuild our state and proposes to complete the financing plan to rebuild California's infrastructure through 2016 by addressing the critical gaps that remain.
• The SGP includes additional accountability and performance measures to ensure that all the bonds are used appropriately and effectively to meet the goals approved by the Governor, Legislature, and voters.

Keeping California the Leader in Innovation and Technology California is the national leader in innovation. Supported by some of the world's finest universities and research institutions, California is responsible for one in four patents, attracts half of all venture capital, and provides 20 percent of all technology jobs in the United States. Research conducted at the University of California is one of the primary engines powering this innovation, as well as the state's economy, and is critical to keeping California competitive in the global market.

• To continue California’s prominence in innovation and create new technology industries, the Budget includes funding for four major projects with the potential to leverage private and federal funding in excess of $1 billion.
  • $30 million for the Helios Project to create sustainable, carbon-neutral sources of energy.
  • $40 million for the University of California to implement BP's $500 million Energy Biosciences Institute grant, focused on long-term research into the production of alternative fuels. UC was the winner of a grant competition among the world’s foremost research institutions for this project.
  • $19.8 million to the California Institutes for Science and Innovation, a multidisciplinary research effort to engage the University of California's research faculty directly with hundreds of California companies in attacking large-scale issues critical to the state's economy and its citizens' quality of life.
  • $5 million for UC to compete for National Science Foundation’s $200 million Petascale supercomputer facility.

Building California Workers

• The Governor's Budget reflects total funding of $19.8 billion, for all major segments of higher education (excluding infrastructure and stem cell research), which reflects an increase of $1.1 billion above the revised 2006-07 budget. These amounts represent a 5.7-percent total funding increase.
  • This includes funding to support over 35,000 new students at California’s UC, CSU, and CCC systems.

• Building on investments made in the current year budget, the Governor's Budget proposes $9 million in ongoing funding and $9 million in one-time current year funding to support additional nursing instructional capacity in community colleges, the leaders in training and educating the nursing workforce with 74 programs. The new one-time funding will provide for start up costs for five new nursing programs ($5 million) and development of four new regional clinical simulation laboratories ($4 million).

The Governor's Budget proposes $52 million to expand CTE course offerings and programs, expanding CTE course offerings, building stronger partnerships with the business sector, planning and implementing CTE curriculum for emerging industries, expanding internship opportunities for students, creating career-themed high schools, and establishing streamlined pathways for becoming a CTE teacher.