Last week Governor Schwarzenegger released his final budget proposal, and made headlines for his commitment to “protect” education from cuts. Here is what protection looks like in his mind. First he cuts funding in the current school year by almost $600 million. For next school year he cuts “school district administration” by $1.2 billion and makes around $750 million in other reductions.

For 2010-11, school funding in California is supported by two funding guarantees – a state one called Proposition 98 and a federal maintenance of effort requirement that the state agreed to in order to receive federal stimulus funds. The Prop 98 guarantee is driven largely by the growth in state tax revenues. Governor’s proposal will reduce the Proposition 98 guarantee by redefining a sales taxes on gas to be an excise tax on gas. The excise tax does not provide resources to schools like the sales tax would. In addition, the Governor must rewrite an agreement made with the education community last year on how the guarantee should be calculated. On the federal front, the Governor proposes seeking a waiver from Sec. Duncan to spend $600 million below the maintenance of effort level required by the stimulus package.

While I guess it could be worse, $2.5 billion in cuts achieved by manipulations to the state’s guarantee and a federal waiver to spend below the federal maintenance of effort level does not seem like the type of protection he referenced in his state of the state. The next round of teachers that will get laid off, and to the students whose classes get substantially larger will certainly not feel very protected. It will be interesting to see how California’s budget situation and this proposal impact the state’s Race to the Top application.