Lawmakers suspend fiscal oversight
Provisions in trailer bill appall school officials
Superintendents, business officers, and budget consultants are expressing bewilderment over demands and restrictions in the education trailer bill – AB 114 – that they say could throw already financially stressed school districts into serious financial jeopardy. School Services of California, which advises many districts on financial issues, has called on Gov. Jerry Brown to veto one particularly worrisome section of the bill that suspends fiscal oversight by county offices of education for the coming year. In adopting the provision, theLegislature “has eclipsed all of its previous low standards for ethics and integrity,” the company wrote on its website.
The 100-page trailer bill was published Wednesday morning, 12 hours after Democrats in the Legislature passed it without discussion. Except perhaps for a handful of insiders, educators had no idea what was in it.
After manipulating Proposition 98, which determines how much will be spent on education, legislators appropriated the same amount for K-12 schools as last year. Because it is based on an optimistic projection of $4 billion in additional revenue, the budget also lays out $1.9 billion in cuts, primarily by shortening the school year by as much as a week, if by January revenues are coming up short.
The problem is not the budget per se. Some school officials say it may be the best that schools could have expected, given Republican legislators’ refusal to extend about $10 billion in temporary taxes. “To this point, I have no quarrel” with legislators or with Gov. Jerry Brown, who “asked for shared sacrifice” and “put out a responsible and fair solution,” said Michael Hulsizer, chief deputy for governmental affairs in the Kern County Office of Education.
But in the trailer bill, he said, legislators “did things that tie hands of school district boards, superintendents, and county superintendents that provide oversight of budgets. They limit officials at local levels to respond to the same risks they acknowledge exist through midyear cuts.”
AB 114 does this in three ways:
1) Requiring that each school district, regardless of its individual circumstances, assume the same level of funding as last year and maintain staffing and program levels consistent with that. Legislators are dictating this even though they admit there’s a good chance that revenues may not bear that out. Many districts, taking no chances, set aside in reserve $350per student to cover a possible $2 billion revenue shortfall. Now the Legislature is saying abandon that caution and rehire teachers and staff and reinstitute programs as before, Hulsizer said. School Services observed that even with the same amount of state revenue, expenses and other f actors– health care costs, depletion of federal stimulus money, step increases in salaries – require adjustments.
Those districts that based their budget on Brown’s May budget revision – and its assumption that temporary taxes would be extended – might choose to make further cuts now. But the Legislature precluded that by:
2) Eliminating the option that districts would have over the next 45 days to make staff adjustments if they view this as necessary. Instead, the Legislature is suspending that capability under the law for the next year. As School Services noted, “This provision is clearly designed to protect union positions, even if the district cannot afford to pay for the services.”
Once the 45 days are up, districts no longer will be able to lay off any certificated teachers this year. That means that if revenues turn south, their only option will be cutting the year short, cutting teachers’ pay but also shrinking learning time. That may be the Legislature’s intent, but furloughs still must be negotiated locally. The Legislature did not authorize school districts to unilaterally impose them. Some local unions may resist additional furloughs or stretch out negotiations for months. If so, districts could run into big money problems.
“So the Budget is essentially limiting schools to only one tool in their toolbox – furloughs – for dealing with mid-year cuts,” Bob Blattner of Blattner & Associates, an education consulting firm based in Sacramento, wrote in a memo. “And furloughs are the equivalent of a two-handed saw; if the local bargaining units don’t help from their end, the tool is useless.”
Some privately speculate that the two provisions are a payoff to the California Teachers Association for agreeing not to file suit over the machinations that siphoned about $2 billion away from Prop 98 for a year. (AB 114 includes a commitment to repay schools the money over five years, though one Legislature cannot bind the next to do that.)
But the new president of the California Teachers Association, Dean Vogel, doesn’t see it this way. Calling from the National Education Assn. convention in Chicago, he said that suspending the August layoff provision will provide stability to school districts and set the right spending priorities. “This will give districts, teachers, and students assurance that once they begin the school year, the learning environment will not be disrupted.”
What most exasperated school officials was the final provision:
3) Suspending key provisions for one year of AB 1200, under which school districts must self-certify that they can balance their budgets in the current year and one and two years into the future. Those that cannot must work with their county office of education to align revenues and spending. This year 13 districts were negatively certified in the latest filing, indicating they could not balance their budgets this year and next. An additional 130 districts – nearly one in seven – acknowledged trouble balancing their budgets two years out. AB 114 would require districts to assume the same revenue as this year and prevent county offices from seeking evidence of financial stability for the next two years.
Blattner likens this to “sending riders in a dirt-bike race with blindfolds on. You have got to see what’s coming around the corner.”
Hulsizer said it would be “frightening to pull the plug on a warning system that works. The consequence will be to enable districts to make bad decisions.” A year from now, he said, districts will declare insolvency.
In his letter to Brown, School Services CEO and President Ron Bennett was more specific. “Stripping the county superintendents of their oversight responsibilities in 2011-12 will almost certainly bring dozens, if not hundreds, of school districts to the state’s door for emergency loans in future years,” he wrote. “The authority of the county superintendents to protect the state should not be taken away when it is needed most.”
At the same time, in its commentary to client districts, School Services predicted that districts would continue to do their multi-year financial projections anyway. If they don’t, they won’t be able to obtain short-term loans, called TRANs, that will keep districts afloat. “It would be difficult to find even one district chief business official who would be stupid enough to follow this misguided direction from the state,” the commentary said.