Many members have inquired about the budget trailer bill that places a much-needed cap on K-12 district reserves and adds more transparency and public accountability measures for these districts.
Specifically, AB858 does two things. First, it requires that as of the 2015-16 budget year, each district with reserves in excess of the minimum level recommended by the State Board of Education shall review and discuss in a public hearing both the level of excess reserve and a statement of reasons substantiating the excess reserves.
Second, pending the passage of Proposition 2 (the Rainy Day Fund) and a transfer of funds into the Proposition 98 Reserves (a specific part of the Rainy Day Fund designated for school funding), no district budget can have reserves in excess of two or three times the minimum reserve.
The county superintendent can grant an exemption to the cap for two consecutive years out of three, but a district must substantiate the circumstances under which it needs to maintain a higher level of reserves.
In summary, the cap on district reserves has to meet four criteria to be triggered: 1) Passage of Proposition 2 in November, 2) Paying off the current Proposition 98 maintenance factor, 3) Transfer of money into the Prop. 98 Reserves, and 4) No county exemption.
The CFT has taken a neutral position on Proposition 2. The union is opposed to new state revenues being transferred to a Rainy Day Fund instead of being put to work immediately in our schools and colleges, but the union supports a cap on district reserves.
— By Emily Gordon, CFT Research Specialist