California Legislature Changes Rules For School Budgets

California Assembly Bill 114 was passed at the last minute before the budget was sent to Governor Brown. You can read the full text here.

This bill was pushed though in the late evening on the same day the budget was passed - without a committee hearing, and by suspending the legislative rule that all bills are given at least one day to be evaluated before being voted upon.

Before this bill was passed, school districts had to make financial reports that proved they were able to pay their bills.  

Back in the 90s some school districts went bankrupt in our state - and the law was changed so that they had to prove multi-year solvency, so the taxpayers would not have to bail them out again.

A school district receives one of three labels, which have to  be certified by the county superintendent:

1. Positive - This means they are able to meet their financial obligations for the current school year, and the next two years based upon enrollment and employee salary projections.
2. Qualified - This means that they might be able to pay their bills.
3. Negative - This means that they probably won't be able to pay their bills.

All of the school districts in the Roseville area were "positive" this past year. However, we have seen reports of other districts throughout the region who are not doing as well.  My own district where I work, San Juan Unified, is only qualified. This has me a little concerned about getting my paycheck in the future.

Assembly bill 114 changes this requirement.  

School districts are now required to assume that they will receive the same funding in the 2011-12 school year as 2010-11, and the certification requirement for proving that they can pay their bills for the next two years will be waived.

Imagine ... the California State legislature is telling school districts that they no longer have to be able to prove that they have the ability to pay their bills for the next two years.  

You think that there are a lot of districts in distress now?  Well it might get a whole lot worse.

But wait ... there is more good news in this bill.

If the state of California does not take in as much tax revenue as they are hoping for, this bill would reduce the school year by up to seven days (or at least reducing funding to schools by this amount).

So to summarize, schools have to assume that their funding will not be cut.  Then they are told that they might get a cut later.  

That is not all!

This bill also defers the amount of money the state would normally send to districts by several months, which for some districts that are already in fragile condition will need to borrow money to pay their bills.  

Even worse - a local teacher's union might be tempted to go to their Board and say, "Funding is supposed to be stable, and we don't have to have the two out years balanced, so how about giving us raises that we have not received in a while?" (In San Juan we have not seen pay raises in three to four years).

Imagine if a school gives those pay increases, because of these assumptions - then the economy does not improve.  What sort of crisis will schools be facing then?

Will there be a overwhelming cry for tax increases to save hundreds of districts?

Roseville's Senator and Assembly woman both voted no.  I am glad that they did the right thing.  I wish I could say that for the other members of the legislature.  I would however like to know what the motivation was ... and which special interest group was pushing it.