Lawmakers suspend fiscal oversight

Provisions in trailer bill appall school officials
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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, the Legislature “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 $350 per 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 factors– 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.

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12 Comments

  1. Ron Bennett, in his outcry about ” stripping” the COE of their oversight duties misses the point by a wide margin.
    His remarks are disrespectful to  local boards and district CFO’s  and superintendents who are the ones who have been doing the heavy lifting to maintain student program  district solvency and community confidence in public education during the  State budget meltdown and implosion  of the legislature.
    Since district CFO’s are following State and Federal mandates in their budget decisions and will continue to do so as it is the law, the question arises as to why in these tough fiscal times  taxpayers funding this “extra” layer of  COE oversight?
    Especially given  that we find ourselves with a COE that competes with our local districts for diminishing ADA funds and local students by developing duplicate programs and directly approving charters  over local objections.
    Local district oversight is not the problem.
    Slashing $19 BILLION from the public education budget is the problem.

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  2. Ron Bennett agrees with your last point, It’s the law (is your sister ‘It’s the economy’?)

    This is from School Services’ commentary to client districts:

    “During these recession years, the state of California has consistently shown that public education occupies a low priority and that neither the Legislature nor the Governor have the leadership ability to deal with the crisis in public education. In what is still one of the richest states in the nation, education spending has been reduced from near the bottom of the rankings of the states to the absolute bottom. We have the largest class sizes, and fewest counselors, school nurses, librarians, classified employees, and administrators in the nation. We now spend half as much per student as the highest spending states. The fact that our so-called political “leaders” would allow this to happen is disgraceful.

     

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  3. This desperate law has the strategic redemption of putting off a final reck0ning in the hope that CA personal and corporate incomes will rise enough to get the system off the sandbar on which it stranded. To this end; who knows? It could work; maybe the sap isn’t gone from the CA economy and we will have a robust recovery driven by green/clean tech etc. Then again; if we do get the money as hoped, everyone ( including teachers) who has an IOU on the table will be the first served, and just when we finally get caught up paying off deferred monies, a new recession could be upon us, and the long-term secular trend of defunding public education, underway lo these last thirty years, will continue unabated. Whence the cure for our ills ? Damned if I know…

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  4. This is inexplicable.
     
    Superintendents and school boards and business managers have a responsibility to budget for the actual money they have. The state has passed a law saying that “We don’t have to pay you, we don’t know what we’re going to pay you, but you can’t cut any expenses.”
     
    This is nuts.
     
    The county offices of education may not be efficient in every county. In the rural counties, they knit districts together and provide a structure to share common services. There is no question in my mind that the county level offices have a better ability to oversee and evaluate the activities in districts in rural California than Sacramento possibly could.

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  5. Brown just zeroed out all funding for CALTIDES in a line item veto.  That would be the statewide teacher data system.  No CALPADS, no CALTIDES.  Big win for CTA.
     
    el, pretty sue what the legislators just said is “you can cut expenses, you can shorten the school year, you can lay off classified employees and administrators, but you can’t layoff any teachers”.  And any district that has no place to cut other than furloughs and a shortened school year, will have to negotiate with their union. Negotiating in January to shorten a school year by June — that’s gonna be nuts. It’s also going to wreak havoc on families lucky enough to be employed.
     
    As for the AB1200 3-year budgeting requirement, that’s been a fool’s exercise for years.  The budgets for the out years are a combination of crystal balls, self-mutilation and magical thinking.  That has been the greatest driver of families and teachers out of our public schools — scared off by looming devastation that rarely materializes. The cycle of forecasted doom, slashed programs, increased class sizes that districts have to undergo to secure the coveted positive rating from the jackbooted thugs of the COE CBOs is not good policy and certainly not good fiscal practice.  Now if the state undertakes a two-year budget cycle, then let’s implement the same for school districts.

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  6. I think the three year budget outlook does have value, even realizing the crystal ball aspect. I think it’s especially important when things are moving financially in predictable ways, which could include:
    1. increasing enrollment
    2. declining enrollment
    3. health insurance premiums increasing by 10% annually
    4. contract provisions that require raises
     
    Obviously, when the income from the state is zig-zagging, it may not be accurate. But the point isn’t so much to be accurate as to get everyone thinking early on about what changes may need to be made, so that you can see what is happening to the reserves.

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  7. While multi-year budget forecasts are almost never on-target, they are an essential tool to help identify potential problems before they grow out-of-control.   As Eisenhower put it:  “The plan is nothing, planning is everything.”
    In another vein, it will be interesting to see if any school districts file for state-mandated cost reimbursement for the cost of retaining staff that they would otherwise have laid off.

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  8. Interesting that AB114 modifies EC42127 regarding the requirement to meet financial obligations for subsequent years but does not modify EC42131. EC42127 relates to the adoption of the districts adopted budget due by July 1. EC42131 relates to the certification of the first and second interim reports required (per EC42130 also not modified in AB114); the code remains the same as to the determination of the status of a district with regard to interim reports. So this suspension of AB1200 only appears to be a 6 month suspension until the first interim report due by December 15…..pointless because a district would need to be planning for meeting the subsequent years in just a few months.

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  9. I’m” kinda” looking around for the “appalled school officials” here. I see one Kern county person expressing a mild concern. The rest of the comments are from “educational consultants.” The agendas of consultants are not necessarily the agendas of actual school people.
    There are those actual schools, with actual teachers, and actual students out there. This seems to be lost at times in all the lofty discussions of who is to be held accountable for the fact that the US refuses to be accountable for taking care of its children and CA refuses to be held accountable for failing to provide support for its schools except at near third world levels.
     
    This is not likely to turn out well for kids.  On the other hand, allowing massive further cuts now to the teaching force and raising class sizes astronomically isn’t a good option either. Time to hit “public opinion” upside of the head with the fact that there are consequences to, as someone said, having support of the schools as a “low priority.”
     

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  1. AB 114: A Blatant Attack on California’s Schools
  2. AB 114: A Blatant Attack on California’s Schools | Buzzington Host

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