Schools are in the business of educating students. Ensuring that ALL students have optimal educational opportunities is the primary means of implementing that priority. One way of keeping focused on student achievement is to maintain a school district's fiscal integrity. Fiscal integrity has a direct impact on what we can do for students now and in the future. Financially sound school districts are able to sustain effective and stable educational programs. The primary strategy for maintaining this stability is for school districts to maintain reserves that give protection from the financial storms that come from volatile state and local funding. We only need to look at the past decade to see how school funding has been subject to this volatility.

Since the passage, in 1992, of AB 1200 and subsequent legislation, the county superintendents in California have been given the responsibility to assure the fiscal integrity of school districts within each county. In Lake County, maintaining the fiscal integrity of every school district is a priority.  Fiscal integrity begins with each district having adequate reserves. Current law requires school districts in Lake County to maintain a "minimum" of 3% to 5%, depending on the size of the district, in reserves for economic uncertainties. "Minimum" does not mean "adequate." It has not always been easy, but the fact is that every one of our local school districts has maintained fiscal integrity through the long periods of recession and lack of adequate state funding that has been the pattern over at least the last 10 years.

Proposition 2, which passed in the November general election, is designed to provide a "rainy day" fund for our state and a "Public School System Stabilization Account" (PSSSA/Proposition 98 Rainy Day Reserve). Due to the complicated conditions set forth in the Proposition, it is unlikely that contributions to the "Rainy Day Fund" for schools will be made for several years.

On June 20, 2014, the Governor signed into law the "education budget trailer bill" SB 858 which went into effect when Proposition 2 passed. This law requires school districts to spend their assigned and unassigned account reserves down to no more than two times the minimum level of the statutory reserve for economic uncertainty (which, in Lake County, is 3% to 5% depending on the size of the district) in the year following the fiscal year in which the state of California makes a payment of any amount to the Public School System Stabilization Account, even if that contribution is only $1.00. While the PSSSA is designed to provide funds to schools during an economic downturn, there is no guarantee the PSSSA will be adequate enough to protect schools from future budget cuts. In essence, Proposition 2 triggers a requirement for the State of California to save for a rainy day while simultaneously preventing local school districts from doing so. The law does provide that upon submitting a justification for maintaining higher than allowed reserves, districts may receive an exemption from the county superintendent for up to two consecutive fiscal years if the justification meets specified criteria.

School districts in our state would be required to deplete billions of dollars in their reserves and ending balances in one year to levels that could jeopardize the fiscal solvency districts have spent years saving for. Since the new Local Control Funding Formula (LCFF) will not be fully implemented for several years, districts cannot survive another economic downturn without adequate reserves. Part of the LCFF includes a Local Control and Accountability Plan (LCAP) which requires that all local school district stakeholders, including parents, employees, students, and community members work together to determine the future goals for students. Developing these local plans may require establishing reserves for full implementation. SB 858 runs counter to local control and local decision making.

Local control funding and local accountability planning require that management of the budget and revenues are the responsibility of the local school districts' elected board of trustees who, with input from all of the stakeholders, should decide upon how funds are allocated and what reserves are needed. The Governor and Legislature are to be commended for emphasizing local control of our schools, but SB 858 violates that emphasis.

While we work to amend the law so it is consistent with the philosophy of local control and decision making, it is my intention as the Lake County Superintendent of Schools to use my authority in the law to support our districts in maintaining adequate reserves.

Click here to read more about why maintaining adequate reserves is prudent for our districts.

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