In the first issue of Budget Update, I shared an overview of the 2015-2016 California budget process.  In this issue, I would like to go back to June 2014 when the 2014-2015 budget was signed.  The budget included SB 858, which was inserted into the budget bill at the last minute by Governor Brown, and caught the educational community by surprise.  With the passage of Proposition 2 in November 2014, SB 858 is activated and places a cap on the amount of reserves a district may maintain under certain conditions.  Without its reserve funds, Castro Valley Unified School District would not have been able to survive the significant reductions to the state budget during the past five years.

The California School Boards Association (CSBA), of which Castro Valley is a member, is leading the effort to repeal SB 858 and provide school districts across California with the local control that the Governor promised in the Local Control Funding Formula.  This issue of the Budget Update provides some background on SB 858 and the efforts to repeal it.

The Governor releases his Proposed 2015-2016 Budget on January 9, which will drive the budget development process for the remainder of the year.  Stay tuned for updates.

Sincerely,

Jim Negri 

Jim Negri, Superintendent

The California School Boards Association (CSBA) has produced an excellent graphic representation showing the impact of SB 858 on the district budget.  See the first graphic here.  When the provisions of SB 858 are implemented, the district's reserve funds would be capped at 6% of the total budget, an amount equal to 6-9 days of the district's operating budget.

CSBA has produced an excellent report on the impact SB 858 on district reserve funds.  The Executive Summary (pp. iii-v) provides a good overview of the critical issues for school districts.  The conclusion on page 20 states, 

In the new world of the LCFF and under the foundational concept of "subsidiarity" where the best decisions are made locally, an annual local discussion about reserves and ending balances will bring light to the thinking and reasoning behind whatever levels exist locally. Then, as the governing board, district staff and community grapple with future hopes and dreams for their students, and consider potential pitfalls, a common understanding of the need, or at least of the decisions that go into setting money aside, can be gained. That is not a conversation, nor is it an outcome, that we can expect to dictate.

I encourage you to review the full report as well as read the Op-Ed by then CSBA President Josephine Lucey.

Besides the California School Boards Association (CSBA), the Association of California School Administrators  (ACSA) has also called for the repeal of SB 858.  Read the joint statement from Vernon Billy, CSBA Executive Director, and Wes Smith, ACSA Executive Director.  Both organizations will be stepping up efforts in January with the new lelgislative session. 

At its meeting of November 13, 2014, the Castro Valley Board of Education adopted Resolution 30-14/15, Local Reserves Cap SB 858, Section 27/California Education Code 4217.01 on a 4-1 vote (AYE:  Barbieri, Friesen, Howard, Loss; NO: Banther).  Read the resolution here. Copies of the resolution were sent to Assemblymember Bill Quirk (District 20) and State Senator Bob Wieckowski (District 10).  Later in January, CSBA plans to deliver resolutions from school boards across California as well as individual letters to the legislators in Sacramento.

In Chapter 4 of The 2015-206 Budget:  California's Fiscal Outlook published by the Legislative Analyst Office (LAO), there is an excellent explanation of the impact of Proposition 2 and SB 858.