A push in the Legislature to reduce the restrictions on school districts’ budget reserves faltered last week after a coalition of school organizations fractured over proposed compromises.
Senate Bill 799 remained stuck in an Assembly committee on Friday, the last day of the session. It will resurface next year, and negotiations will continue, said Dennis Meyers, assistant executive director for the California School Boards Association.
At issue was a disagreement over how far the school organizations should compromise on their bill, which sought a total repeal of the cap on district reserves that legislative leaders and Gov. Jerry Brown imposed, at the urging of the California Teachers Association, as part of the 2014 state budget.
The cap would force districts to spend down money they put aside for economic uncertainties, emergencies and other purposes, like future computer purchases, whenever the state put money into a new rainy day fund for K-12 and community colleges. Although deposits into that fund are predicted to be infrequent – and probably won’t be made in the next several years – the California School Boards Association and other school management groups, including the Association of California School Administrators, complained that the cap potentially threatens districts’ financial stability and their credit ratings, and contradicts the state commitment to local control.
“We too loved SB 799, but one of the first rules is don’t fall in love with your bill,” said Dennis Meyers, California School Boards Association.
Last month, the school boards association-led coalition, which included some children’s advocacy groups, the League of Women Voters and the California State PTA, proposed an alternative to a repeal: SB 799 would exempt from the cap districts with less than 2,501 students, whose finances can be the most volatile, along with property tax-rich districts, called basic aid districts, which rely solely on local property taxes to pay their bills. For other districts, the cap on reserves would be raised to 17 percent, nearly triple the average 6 percent that the Legislature imposed. The new limit would be in line with the minimum reserve that a national oversight organization recommended.
Along with the prime authors, Senate Democrats Jerry Hill, D-San Mateo, and freshman Steve Glazer, D-Orinda, 15 Republican and Democratic legislators signed on as co-authors. But, sensing the bill was still in trouble, CSBA resumed negotiations on its own with the California School Employees Association, the union that represents hourly school employees, such as custodians and teachers aides. Those discussions led to a new proposal that would have set the maximum cap for most districts at 12 percent, midway between the current limit and SB 799’s 17 percent, and removed the exemption for many basic aid districts. It also would have required school boards to give a monthly accounting of money in reserves that districts assigned for specific purposes that didn’t count toward the cap under SB 799.
Those proposed changes didn’t go over well with members of the coalition, who were presented with them two days before the final day of the session. The California Associations of School Business Officers, with 3,000 members, wrote SB 799’s sponsors saying the proposed changes “are a step in the wrong direction and would erode the fiscal safety net to schools.” The California State PTA issued an alert to all legislators saying it would not support further amendments or an alternative to SB 799. The Association of California School Administrators didn’t officially oppose the proposal because it hadn’t seen the actual wording, but Executive Director Wes Smith said he also made it clear to legislators that his organization couldn’t support changes to the bill that it hadn’t reviewed and approved.
Molly McGee Hewitt, executive director of the school business officers organization, said she opposed all three “ill-conceived” changes. She expressed concern that the proposed concessions would make it harder to hold the line on passing SB 799 intact.
But Meyers said everyone acknowledges that repeal of the reserves cap “is not really in the cards,” so the goal is to significantly weaken the law. “We too loved SB 799 (as originally written),” he said, “but one of the first rules is don’t fall in love with your bill. Everyone needs to be open to any changes so that a bill that can get signed.”