SACRAMENTO -- With California lawmakers facing a midnight Saturday deadline to pass a spending plan, they reportedly reached a key agreement on the most contentious part of next year's budget: K-12 education.

Gov. Jerry Brown and Democratic lawmakers have been arguing over just how much of a surplus the state would have following years of budget deficits. Brown wants to spend more money on disadvantaged students while keeping most of the cuts from prior years in tact, while the Legislature wanted to spend a few billion dollars more to help restore some of the social safety net cut during the recession.

The Los Angeles Times and the Sacramento Bee, citing unnamed Capitol sources, reported Monday that political leaders had reached a deal that largely adopts Brown's smaller budget.

A joint legislative budget committee was set to meet, perhaps Monday, to endorse a budget framework, allowing each house to take up the spending plan later this week.

On one side is Brown, who is lobbying for a smaller budget: a $96 billion spending plan for the fiscal year that begins July 1. His plan uses money from tax increases approved by voters in November to pump more money into schools, particularly districts with more disadvantaged students. But the governor wants to keep intact most of the cuts made to social programs in recent years.

"The thinking is (there's) lots more money and we're back on Easy Street," said deputy finance director H.D. Palmer, the governor's chief budget spokesman. "But there's a lot of stuff that could knock it sideways," such as federal cuts, economic downturns and rising medical costs for state employees. In addition, he noted, the recent rise in revenues has largely come from highly volatile sources such as capital gains.

On the other side of the debate are many Democratic lawmakers. They want to use more of the new cash from the rebounding economy and voter-approved tax hikes to restore parts of the social safety net. The Democratic-controlled Legislature has thus far rejected Brown's smaller budget figures and sided with the Legislative Analyst's Office, which estimates that the state will have $3.2 billion more to spend than what the governor is projecting.

"We can never go back to where we came. So we have to restrain spending," state Senate President Pro Tem Darrell Steinberg, D-Sacramento, said last week. "But at the same time, you can't forget that there was great damage done along the way, that those cuts had and have a real cost to people."

  Gov. Jerry Brown points to a chart showing the reduction of the budget deficit as he unveiled his proposed state budget at the Capitol in Sacramento,
Gov. Jerry Brown points to a chart showing the reduction of the budget deficit as he unveiled his proposed state budget at the Capitol in Sacramento, Calif., Jan. 10, 2013. .(AP Photo/Rich Pedroncelli)

As the result of a measure approved by voters in 2010, the Legislature no longer needs a two-thirds majority to pass a budget. A simple majority will now do.

Before that change was enacted, the state began its fiscal year in July without an approved budget in 10 of the 11 prior years.

By far, the biggest issue this year is education, which is often the case since schools make up about half of the state's general-fund spending.

Brown wants much of the extra funding to aid California's 3.4 million disadvantaged school children by targeting extra grants for districts with a majority of low-income students, English learners and foster youth. But Democratic lawmakers want the funds to be spread out evenly across the state's entire 6.2 million K-12 student body while giving extra funds to aid disadvantaged students -- but not entire school districts.

The Oakland Unified School District, which would qualify for extra funds because of its high rate of disadvantaged students, strongly backs the governor's approach. But the Democratic lawmakers' counterproposal is backed by districts like Santa Clara Unified that have relatively small pockets of poverty -- and many of the wealthier suburban districts in Contra Costa, Santa Clara and San Mateo counties.

What worries some advocates for schools is the secrecy of the negotiations. Normally change as significant as Brown's proposed new funding formula would be taken up in legislative hearings. But the governor got his wish to push through his idea in the budget process instead, saving time and limiting public comment.

"We're concerned about this process being rushed for a June 15 budget deadline," said Patty Scripter, director of legislation for the California State PTA. "It's really critical that we get it right."

When it comes to social programs, many Democratic lawmakers argue that the state can clearly afford to be more generous this year. The Senate wants $143 million more for mental health treatment and an additional $131 million to provide dental care to low-income adults, a program that disappeared during the Great Recession. The Assembly seeks $267 million more for CalWORKs, the state's welfare-to-work program, and an additional $228 million for university scholarships and grants. Both houses want another $100 million to improve court operations and set aside an extra couple hundred million dollars more for a rainy-day reserve than Brown's $1.1 billion estimate.

The Los Angeles Times reported an agreement on smaller funding allocations for adult dental care, mental health and university grants.

But Brown, who holds the veto pen, has preached fiscal prudence, pleasing many in the now-powerless GOP.

"It's more difficult in the sense that when the mama bird brings back the worm, she's got to make sure she has enough for everybody," said Patrick Dorinson, a conservative political commentator. "But there's not enough for everybody."

Contact Mike Rosenberg at mrosenberg@mercurynews.com or 408-920-5705. Follow him at twitter.com/RosenbergMerc.