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Schwarzenegger's plan to spend the bulk of the windfall on education was made in conjunction with a deal cut earlier this week that also settles a lawsuit and long-running feud with the state's teachers union.



Under that plan, Schwarzenegger proposed directing an additional $2.8 billion more to education than he initially proposed in January. The governor's spending plan will lift overall education spending in California from $50 billion in the current year to $55.1 billion in the budget year beginning July 1.



In addition, his settlement with the teachers union calls for repaying another $2.9 billion to schools over seven years that educators claimed he has owed since the two sides struck a budget-balancing deal in 2003. The governor's finance director said the deal would be partially funded by "re-funding a tobacco securitization" deal from 2003 and would not add significantly to the state's ongoing deficit.