Limit on school district reserves hurts students

By Karin Klein

Gov. Jerry Brown discusses his proposed 2016-17 state budget at a news conference at the state Capitol in January.
Gov. Jerry Brown discusses his proposed 2016-17 state budget at a news conference at the state Capitol in January. Sacramento Bee file

Gov. Jerry Brown is all in favor of saving for a rainy day and giving schools more local control over how they are run – except when he’s not. Except when the teachers unions want things done differently.

Remember the biblical story about Moses advising the Pharaoh to ration grain during years of plenty and store it for use during years of famine? Moses-like, the governor wisely campaigned for California to save more during good times to allow the smoother running of government during the lean. In 2014, voters approved Proposition 2, his plan to do just that.

But there’s a political catch. In what was widely described as a deal to gain the support of the state’s powerful teachers unions, the Legislature also passed a bill that year that prevents school districts from doing the very same thing.

To some extent, schools are protected by Proposition 2, which socks away money for K-12 education, the single biggest expense in the state budget. But as the governor argued in his many disagreements with former U.S. Education Secretary Arne Duncan, one size doesn’t fit all. He was among the stubborn and correct few governors to take a stand against the feds’ awful “Race to the Top” program, which granted states waivers from the problematic cookie-cutter approach of the No Child Left Behind law as long as they gave in to Duncan’s cookie-cutter vision for education.

So why did one size suddenly fit all when it came to school districts’ ability to set their own budgets and prudently set money aside for years when they might otherwise have to lay off teachers?

The cap on reserves is widely reviled, including by the Legislative Analyst’s Office, which recommended repealing it in January 2015, saying it could seriously undermine schools’ ability to run efficiently and provide for their students.

“To the extent districts begin spending down their reserves,” the report said, “we are concerned that they would incur a number of risks.” Those include the inability to maintain more than a few weeks of payroll in reserve, difficulty taking care of urgent expenses such as emergency repairs and higher borrowing costs.

In other words, the cap is dreadful policy in terms of fiscal responsibility, future costs, smooth operation of schools – and, most of all, for student needs. It’s particularly hard on small school districts, where an emergency repair eats up a much bigger part of the budget.

Basic aid districts, which are funded by their own local property taxes, are particularly vulnerable to downturns in the real estate market and are paid only twice each year, which would make it tougher to cover unexpected expenses. Considering that these districts don’t rely on state education funding, it’s unclear why Sacramento should even get involved.

Why would unions favor such irresponsibility? Because if districts can’t set aside money for emergencies, there’s more money on the bargaining table for raises and benefits.

Over the past two years, bills to repeal or even just moderate the reserves cap have gained no traction, though legislators and even the governor have reportedly acknowledged that districts had legitimate concerns about this.

Brown doesn’t like to admit mistakes, but he should on this one, and use his political skills to get it overturned.

What happened to local control is best control? The answer: In California, the powerful teachers unions have the most control of all.

Karin Klein is a freelance journalist in Orange County who has covered education, science and food policy. She can be contacted at