CASBO adopts "oppose" positions on 

Propositions 44 and 46

By Jeff Vaca and Sara C. Bachez, Government Relations 

CASBO has adopted "oppose" positions on two initiatives that will appear on the November statewide election ballot:

• Proposition 44, which would make a number of changes to the state's budget reserve account, the Budget Stabilization Account.

• Proposition 46, which among other provisions would raise the cap on noneconomic damages for medical malpractice.

Proposition 44 - State Budget.  Budget Stabilization Account

While in agreement that maintaining robust reserves at the state level makes sense from a policy and fiscal standpoint, CASBO's Executive and Legislative Committees felt strongly that the association should oppose Proposition 44, for two primary reasons:

• Pursuant to budget trailer bill legislation enacted in June, the passage of Proposition 44 would result in a statutory limit on reserve levels that school districts can maintain in some future years.

Working in tandem with local education agencies and statewide education organizations representing management, CASBO strongly opposed the budget trailer bill (Senate Bill 858; Chapter 32, Statutes of 2014) that included the statutory language to set maximum reserve levels for school districts.  In correspondence to every member of the Legislature, the Education Management Group wrote:

"In our judgment, this proposal is fiscally irresponsible, is inconsistent with the principle of subsidiarity that serves as the foundation of the Local Control Funding Formula, and discounts the critical role that prudent budget reserves play in the ability of school districts to maintain fiscal solvency.  In addition, it fails to recognize the numerous factors that go into school district decisions on reserve levels and ignores recent history with regard to how school districts used budget reserves during the great recession to avoid even greater cuts to educational programs and certificated and classified staff reductions..."

• Proposition 44 would create a state reserve for schools and community colleges - in effect, withholding funds from schools to which they would be entitled under Proposition 98 calculations - at a time when California class sizes are the highest in the nation (NEA Rankings and Estimates, 2013), and the state is currently ranked 50^th in the nation in adjusted per-pupil expenditures for K-12 education (Education Week Quality Counts Survey, 2014). According to the same survey, California's per-student spending of $8,341 is thirty percent below the national average of $11,864.

CASBO leaders believe that the statewide school reserve provisions of Proposition 44 are inconsistent with two key tenets of the association's legislative platform, as follows:

School Finance Adequacy.  CASBO supports a school finance system in California that recognizes and fully funds the costs of the state's high academic standards, at a level that allows local education agencies to fund unmet needs including but not limited to instructional materials, facilities maintenance and technology.  While committed to protecting the provisions of Proposition 98 against reductions, manipulations and suspension, CASBO recognizes that Proposition 98 represents only a minimum level of funding below which the state must not fall, and not a funding level that could be considered adequate or stable by any objective observer.

Local Control Funding Formula implementation.  CASBO supports the concept of subsidiarity and believes that those at the school district level are best equipped to ensure that decisions associated with implementing needs-driven, innovative programs to improve student achievement are consistent with the statutory goals and requirements of the Local Control Funding Formula (LCFF).  During the 8-year LCFF implementation period, the state should maintain an options-based policy framework for statutes and regulations pertaining to funding formulas, the Local Control Accountability Plan, and state accountability requirements.  During implementation, LEAs should maintain the ability to determine how they will meet the LCFF statutory requirements pertaining to services for unduplicated pupils, in partnership with their communities and key stakeholders.

In addition to opposing Proposition 44, CASBO will continue to advocate (with statewide education organizations including CSBA and ACSA) for a repeal of the statutory provisions establishing local reserve limits.

Proposition 46 - Medical Negligence Lawsuits

From CASBO's perspective, the most significant provision of Proposition 46 is one that would make a critical change to the Medical Injury Compensation Reform Act (MICRA).

MICRA was enacted by the Legislature in 1975 to make numerous changes in California's medical malpractice system.  Among those provisions was one that placed a cap of $250,000 on noneconomic damages that may be awarded to an injured plaintiff (there is no cap on economic damages).  Noneconomic damages are defined as those that are not easily quantified by a dollar amount - pain and suffering, emotional distress, and other intangible injuries.  California is one of 30 states in the nation that has a statutory cap on noneconomic damages.

If approved by the voters, Proposition 46 would raise the cap on noneconomic damages for medical malpractice.  Beginning 1/1/15, it would adjust the current cap to reflect the increase in inflation (as measured by the Consumer Price Index) since the cap was established - effectively raising the cap to $1.1 million.  Further, the cap would be adjusted annually to reflect any increase in inflation.  This is of importance to local education agencies because they, along with other local governments and the state, pay for a substantial amount of health care services in California.

According to the non-partisan Legislative Analyst's Office, raising the cap on noneconomic damages will result in higher medical malpractice costs, due both to higher settlements and awards and the likelihood that more claims would be filed.  Those costs will be partially offset by a decrease in costs stemming from a change in the behavior of health care providers, but according to the LAO the overall impact "would likely increase the costs associated with resolving medical malpractice claims," and the "higher medical malpractice costs would, in turn, increase costs for health care providers."

In their analysis, the LAO assumes that these increased costs will be passed on to state and local governments.  The LAO further assumes based on federal data and analysis, that malpractice costs comprise about 2 percent of state and local government health care spending in California.  Based on the methodology in the same federal analysis, the LAO estimates that actual costs associated with raising the cap could range from the low tens of millions of dollars to over 100 million dollars annually.

Based on these analyses, the CASBO Legislative Committee recommended an "oppose" position, and that position was adopted by the Board of Directors at its meeting in June.  Other education organizations opposing Proposition 46 include the Association of California School Administrators, the California School Boards Association, the California Teachers Association and the Small School Districts' Association.

In the days to come, information regarding both initiatives (including sample resolutions) will be posted on the CASBO website, on the Advocacy page.