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Last Updated: Wednesday, 30 July, 2003, 16:06 GMT 17:06 UK
California protects education budget
Governor Davis
Governor Davis says the budget deal "could have been a whole lot uglier"

California has achieved a deal on tackling its record budget shortfall which should protect school spending.

The state has been facing a serious deficit in its finances - and a 27-hour session of the state assembly finally agreed a $100bn budget settlement.

There had been concerns about the impact on over 8,000 state schools from budget cuts - but it appears that, at least for the meantime, education spending plans have been largely protected.

Higher education will face cuts - and fees for university students are already set to rise - but overall the agreement is being seen as a compromise which limits the extent of cuts in education and health.

"It's not pretty but it could have been a whole lot uglier. It is far from perfect but further delay was unacceptable," said Governor Gray Davis.

Funding gap

"Clearly, you can't say we have a $38bn problem any more. I think reducing the shortfall from $38bn to $8bn is a step forward but there is much more work to do."

Under the proposals, there will be increases in borrowing and cuts in overall state spending, in a bid to close the deficit. And there will still be another funding $8bn gap to be resolved next summer.

The deal has also avoided an increase in income and sales tax - in a balancing act between those who wanted to protect services and those who wanted to prevent any increase in personal taxation.

California has almost six million pupils in its school system and over 500,000 students in its universities.

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