Efforts to Repeal Cap on District Reserve Levels
1. How did the Cap on District Reserve Levels become enacted and how does it relate to the State Rainy Day Fund, Proposition 2?
The cap provision was part of an education budget trailer bill that Governor Brown signed on June 20, 2014. The trailer bill provision, SB 858, Section 27, is now contained in Education Code Section 42127.01. This cap on the level of reserves that districts may maintain is a statutory requirement that becomes operative in the following situation:
- Voters pass Proposition 2, the State “Rainy Day Fund,” on the November ballot; and,
- Certain conditions related to state revenues and expenditures are met and the State makes a deposit of any amount into the state-level Proposition 98 reserve that is created pursuant to Proposition 2.
2. Does CSBA oppose Proposition 2, the Rainy Day Fund?
CSBA has no position on Proposition 2.
3. What actions is CSBA taking to repeal the statutory cap?
CSBA continues to work with a coalition of education associations, including ACSA, CASBO, school districts and county offices of education as well as public interest groups to urge the Governor and Legislature to repeal the cap on local reserves.
Over the summer, CSBA worked with news media across the state to bring attention to the negative impact that the reserve cap would have on school districts and how the law, if it takes effect, runs counter to the Local Control Funding Formula, which is founded on local school board governance. That effort continued with the introduction of AB 146 (Olsen), a bill to repeal the reserve cap, during that last weeks of the legislative session. While that bill generated a great deal of attention to the issue, it did not pass.
A new legislative session begins in 2015 and our coalition will continue to press for repeal in both policy advocacy, budget advocacy and in the media.
4. What about the new transparency provisions around district reserves?
SB 858, the education budget trailer bill, also contained new statutory provisions requiring districts to provide and discuss information about their reserve levels and a statement to substantiate the need for levels higher than the recommended minimum for economic uncertainties. These new requirements are in Education Code Section 42127 (a)(2)(B).
CSBA is not seeking repeal of these provisions. Enhanced transparency is consistent local control, especially under the transparency and engagement processes required by Local Control Funding Formula and the Local Control and Accountability Plans.
5. What can school board members do to support the repeal effort?
There are a number of ways you can help advance this effort:
a) Pass a board resolution urging legislators and the governor to repeal this statutory cap.
b) Call and e-mail your state legislators and the governor’s office to urge repeal. See the CSBA Action Alert for more details.
c) Engage candidates for Senate and Assembly on this issue between now and Election Day.
d) Send letters to newspapers and other publications to educate others and maintain awareness of the issue and need to repeal the statute.
e) Contact other school board members in your county and CSBA regions to urge them to pass resolutions and call and e-mail their state legislators and the Governor’s office.
f) Share and use the information and sample materials that are posted on the CSBA webpage with your PTAs and other community groups such as taxpayer associations, chambers of commerce, etc. they are posted on our website.