CALIFORNIA STATE GOVERNMENT WILL NOT DEFAULT ON IT'S DEBT.

CALIFORNIA STATE GOVERNMENT WILL NOT DEFAULT ON IT'S DEBT. The state Constitution holds that bond debt service has second call on general fund dollars, behind education. That means that every dollar that comes into the state treasury goes first to schools and then to bond holders - BEFORE ANYTHING ELSE. Under the current California budget, general fund revenues are estimated at approximately $89 billion. Proposition 98 education spending is appropriated at about $36 billion. That leaves about $53 billion available to pay debt service on bonds — coverage of roughly eight times the necessary $6.5 billion the state needs.