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Legislative Update: Reserve cap legislation advancing; Gov. Brown signs bill on indemnity for design professionals 

Reserve Cap

On May 8, CSBA’s sponsored reserve cap bill Senate Bill 751 advanced to the Assembly with a 38-0 vote on the Senate floor, following unanimous 7-0 votes in the Senate Education Committee (April 19) and Senate Appropriations Committee (May 1).

SB 751 amends the current reserve cap law by narrowing the definition of funds which the reserve cap would apply to, raising the level of the cap from 6 percent to 17 percent (a nationally-recognized standard for government reserves) and exempting all basic aid districts and all small districts of less than 2,501 Average Daily Attendance.

There is one other bill currently active in the Legislature related to the reserve cap. Assembly Bill 235 by Assembly Education Committee Chair Patrick O’Donnell (D-Long Beach) was passed from the Assembly to the Senate on May 4 on a 76-0 vote.

AB 235 does not raise the level of the cap nor does it narrow the definition of funds to which the cap applies to. It does exempt basic aid districts and small school districts (defined pursuant to Education Code 44046, as unified school districts of ADA less than 1,501, and ADA of less than 901 and 301 for elementary and high school districts, respectively), and also amends the reserve cap “trigger.” Currently, if a deposit of any amount (even $1) is made to a state rainy day fund specifically for schools, the cap would be triggered —under AB 235, the school-specific rainy day fund would need a minimum balance of 3 percent of Proposition 98 funding (about $1.9 billion in the current fiscal year) to trigger the cap.

CSBA has a “support if amended” position on AB 235 and is seeking amendments to align the bill closer to SB 751. It is likely that both SB 751 and AB 235 will be heard by the Assembly and Senate Education Committees in the coming weeks.

SB 496 signed, removing ‘duty to defend’ for design professionals

After moving through the Legislature at breakneck pace, Senate Bill 496 (Cannella, R-Ceres) was signed into law by Gov. Jerry Brown on   April 28. The bill effectively eliminates what is known as the “duty to defend” of design professionals (i.e. architects, engineers etc.), meaning that such professionals will no longer be required to share legal costs when a claim is made against a local education agency. It is likely that the new law will result in significantly increased costs and longer legal processes associated with disputes over school facilities projects.

CSBA opposes the bill, which was fast-tracked through the legislature as part of a larger agreement concerning the recently approved transportation tax, on which Sen. Cannella voted “aye” when it was heard on the Senate Floor.

Additional Bills

AB 1550 (Limón, D-Santa Barbara) – This bill would significantly assist small school districts in financing school facilities projects by allowing two or more small districts (defined as ADA of 2,501 or less) to form a joint powers authority for the purpose of authorizing, issuing and selling bonds. CSBA supports the bill.

AB 841 (Weber, D-San Diego) –CSBA is closely monitoring this bill after significant amendments were recently made to change the scope of the legislation. As originally written, the bill would limit local control for governing boards over decisions related to contracting and fundraising. The original bill language would place certain prohibitions on school districts related to advertising food and beverage, and prohibit districts from participating in certain corporate incentive programs or corporate-sponsored programs. These restrictions could limit many school-sponsored activities and fundraisers that support school functions. 

Additional Info: 2017 Bills with CSBA Positions | All 2017-18 Bills Monitored by CSBA