Bill to restore school district reserve authority announced at Capitol press conference
Co-sponsors CSBA, ACSA, CASBO speak in support of Assembly Bill 146
Published: August 19, 2014
CSBA joined a statewide coalition at a press conference at the Capitol on Monday, Aug. 18, in support of Assembly Bill 146, introduced by Assembly Republican Leader-Elect Kristin Olsen (R-Modesto) and Sen. Jean Fuller (R-Bakersfield). If enacted, AB 146 would restore the ability of school districts to maintain their local reserve accounts by repealing statutory language added to the state budget education trailer bill at the last minute, which requires school districts to spend down their reserves to imprudent levels.
“Budget reserves are vital to the financial well-being of school districts and it is completely unacceptable that they were capped in this year’s budget at the last minute,” Olsen stated in a press release, noting the irony in restricting local budget authority during the same year that the Local Control Funding Formula allowed districts to exercise greater control over spending decisions.
On the importance of maintaining local control, Executive Director of ACSA Wesley Smith said, “We know our students and understand their needs. Making monetary decisions at the State Capitol and not at the local level is a disservice to students, their families and the community.”
The budget trailer bill, Senate Bill 858, was amended three days before the Legislature voted on it to include Education Code Section 42127.01, which would require that school districts spend their fiscal reserves down to no more than two to three times the State Board of Education’s minimum recommended reserve for economic uncertainties in any fiscal year following a fiscal year in which the state makes a payment of any amount to the Rainy Day Fund.
Reserve cap is ‘fiscally irresponsible’
CSBA President Josephine Lucey and Sen. Fuller spoke about the important role that local reserves play in helping school districts weather unexpected cost increases and volatile state reserves. “The idea of a safety net for schools at the state level is a façade,” Lucey said, observing that a state deposit of just one dollar would trigger all districts to spend down their reserves to as low as 6 percent, leaving them without sufficient financial protection. “This cap limits school districts to days, not months, of cash flow and payroll. It is fiscally irresponsible. Local reserves are critical for district solvency and, more importantly, for the stability and consistency of the education of each and every student in California.”
“As a former superintendent of schools, I understand the importance of having funds available for emergencies,” said Fuller. “From fire to vandalism, it is important to have the resources necessary to act quickly to limit the impact on the classroom. Assembly Bill 146 will ensure school districts can appropriately prepare for the unexpected and act in the best interests of the students.”
The local reserves cap will take effect if voters approve Proposition 2—the State Rainy Day Fund—at the polls this November, but the bill’s supporters are working hard to ensure that AB 146, which would repeal the reserve cap, is passed through the Legislature and placed before Gov. Jerry Brown during the final weeks of the current legislative session.
AB 146 is in print and awaits referral by the Senate Rules Committee to the Senate Education Committee.
CSBA, ACSA, CASBO, the Kern County Superintendent of Schools and the Riverside County School District Superintendents attended the press conference as co-sponsors of AB 146. Also attending in support of the bill were representatives of Los Angeles Unified School District, San Diego Unified School District and Public Advocates. The bill's supporters include Education Trust-West, Children Now and more than a dozen school districts and county offices of education throughout the state.
Calls, letters to legislators are critical
CSBA, ACSA and CASBO ask that board members and superintendents call or send letters to their legislators now to urge them to support AB 146. Watch CSBA’s This Just In with video of the press conference, including Josephine Lucey’s introduction, and visit the AB 146: Repeal Reserve Cap Web page on CSBA’s website for helpful advocacy tools, including a fact sheet, joint co-sponsor letter and a downloadable full-color flier that succinctly illustrates why the reserve cap is not good for districts, schools or students.