Editorial: DITCH THE SCHOOL RESERVE CAP

By The LA Times Editorial Board | http://lat.ms/1JgbwgA

Fourth grade students at Don Julian School in La Puente show off some of their artwork on June 2.(Los Angeles Times)

28 June 2015  ::  Despite broad bipartisan support, legislation to repeal an onerous cap on school district reserve funds didn't have much of a chance in the Democrat-controlled California Legislature. The bill by Assemblywoman Catharine Baker (R-San Ramon) died in the Assembly Education Committee faster than you can say “opposed by the California Teachers Assn.”

But good ideas with broad support have a way of persisting, even in the toxic environment of partisan politics. The repeal bill may be dead, but in its place is a new campaign — backed by school districts, the state PTA, the League of Women Voters, education policy groups and others — to “modify” the cap in order to get Democrats on board. Hey, if that's what it takes to relax the irresponsible rule that prohibits schools from socking away extra cash during boom years, that's fine with us.

That's how things go in the Capitol sometimes. But the new vernacular has so far improved the prospects for a legislative fix to the cap this year.

In a letter to Senate President Pro Tem Kevin de León (D-Los Angeles) and Assembly Speaker Toni Atkins (D-San Diego) in early June, 26 Democratic legislators said they support modifying the cap because of its deleterious effects on the ability of school districts to save for unforeseen capital expenses and on their credit ratings. “Modification” was not defined explicitly, but the letter did suggest that it would include lifting the cap to a workable level. If not a repeal, then supporters want a cap high enough that it wouldn't be a burden.

[The cap] is not just a case of school districts complaining about the state meddling with their finances. It's bad policy. - 

And they should have it. This is not just a case of school districts complaining about the state meddling with their finances. It's bad policy. The Legislative Analyst's Office concluded as much in a January report that said the reserve cap puts the state's school districts in financial jeopardy and ought to be removed. And restricting the amount school districts can save is antithetical to everything the governor has done to empower them to use their money as they see fit.

Teachers unions are pretty much the only fans of a limit on reserve funds, because it stops school districts from holding on to money that might otherwise be left on the bargaining table during contract negotiations. The cap was passed by the Legislature last year, and was seen as a bone to get teachers unions' support for Proposition 2, the state's rainy day fund.

Proponents think they can find a legislative vehicle for changing the cap as early as this summer. Gov. Jerry Brown may be open to signing whatever legislation results from a deal, even though he supported the cap last year. In January, Brown said his administration was aware of the concerns about the cap and would “engage in a dialogue” in the coming months. Those months have come and gone, and it's time for more than talk. Repeal — or at least modify — the school reserve cap.