Capitol Alert

Committee kills repeal of controversial school reserve cap

Carolyn Baldwin, center, uses an iPad connected to the internet in the classroom at Sheridan Elementary School .
Carolyn Baldwin, center, uses an iPad connected to the internet in the classroom at Sheridan Elementary School .

The Assembly Education Committee, voting Wednesday along party lines, rejected Republican legislation that would have repealed a highly controversial limit on local school district budget reserves that was enacted last year.

Assembly Bill 1048, carried by Assemblywoman Catharine Baker, R-Dublin, drew just three “aye” votes, all from the committee’s Republican members. All Democrats either voted against it or didn’t vote. “These reserves are the only way our districts survived the last economic downturn,” Baker told the committee.

Although the measure died, the underlying issue could become part of this year’s budget negotiations. Education Committee chairman Patrick O’Donnell, D-Long Beach, is carrying a rival measure, Assembly Bill 531, that doesn’t repeal the reserve limit but makes it a bit more flexible. O’Donnell, a former teacher, said opponents of the cap who supported Baker’s bill are “confused.”

The reserve restriction arose at the last moment during last year’s budget negotiations and was folded into a budget “trailer bill.” The California Teachers Association and other unions have complained that some school districts have maintained huge reserves, thus keeping money off the table for negotiations on salaries and other contract issues. They lined up Wednesday to oppose AB 1048, with a CTA representative saying, “Reserves were growing at the expense of the students.”

It was widely assumed at the time that Gov. Jerry Brown agreed to the reserve cap as a gesture to the CTA, aimed at persuading the powerful union not to oppose his ballot measure creating a new state “rainy day fund.” The CTA didn’t weigh in on Brown’s ballot measure, Proposition 2, and it was approved by voters,

Brown later indirectly acknowledged the political motivation for the cap as school district officials throughout the state expressed anger at its being sprung on them without warning.

Ever since, the California School Boards Association and other school district groups have been pressing for repeal, saying it would hamstring their efforts to maintain financial stability, damages their credit ratings and violates Brown’s “subsidiary” principle of local control of education matters.

Brown and others who enacted the reserve limit said it was unlikely to be implemented because it was contingent on the state’s putting funds into a state school finance reserve. Since then, however, state revenues have boomed and local school officials have worried aloud that the reserve cap may be triggered because the state may be forced to place extra revenues into the state school reserve.