California has made great strides in preparing its own finances for a rainy day.
There is, however, a major piece of unfinished business that needs to be addressed to stop a fiscal train wreck from hurting Santa Rosa City Schools and other school districts as well. State legislators must act immediately to fix an irresponsible law — SB 858 — passed last year that actually discourages local school districts from maintaining prudent budget reserves.
The so-called “reserve cap” discourages your local schools from adequately saving enough funds to shield against future economic downturns and being able to invest in classroom improvements even in difficult times.
I feel that Sacramento should not prevent local elected school boards from planning responsibly to ensure school children and educational services are protected.
That’s why educators, including Santa Rosa City Schools board members, community members, parents, the California State PTA, Children Now and the League of Women Voters, are calling on the Legislature to fix this problem.
Passed into law in 2014, the reserve cap limits how much school districts can save for a rainy day. Under this law, if the state deposits as little as $1 into a statewide rainy day fund for schools, local school districts could be forced to eliminate between $5 and $14 billion of their own rainy day savings that took years to build up.
For most of the 1,000 school districts in California, the new cap on savings equates to only a few days of expenses, which is inadequate for a rainy day or saving for a large investment.
Fixing the cap will allow local school districts to make the best decisions for their unique circumstances based on cash flow needs, credit ratings and capital improvement decisions.
The Legislative Analyst’s Office agrees that the budget reserve cap was bad policy and has urged the state Legislature to repeal the law. Also the credit rating agencies such as Standard & Poor’s have stated that the reserve cap likely will negatively affect school districts across the state.
I believe that when California faces the next inevitable economic downturn, local schools must be able to protect students and maintain classroom instruction and jobs. Our school district needs the flexibility to use reserve funds to pay for large purchases that benefit students such as textbooks and classroom technology or to help pay for fixing or modernizing classrooms.
The fact is that school districts in Sonoma County are just as distinct as each of the schoolchildren and communities we serve. What one district needs, another may not.
That’s why local decision-making is so important and why it makes sense for each local school district, in collaboration with those in their community, to determine what level of savings for a rainy day is prudent.
For me, the answer is not a Sacramento mandate, a one-size-fits-all formula that applies to all school districts and ignores widely varied circumstances of each of our local districts.
Fortunately, some lawmakers in Sacramento are willing to tackle this problem to restore local control and preserve responsible budgeting at the local level. Santa Rosa City Schools, parents, public advocacy groups and others are calling for fixing the cap before the state Legislature adjourns on Sept. 11.
Frank Pugh is a member of the Board of Education of the Santa Rosa City Schools District and director for both the California School Boards Association and the National School Boards Association.