The Rowland Unified School Board wants the state legislature and Gov. Jerry Brown to repeal the local reserves cap, saying SB 858 could force the 1,000 districts in the state to spend their $5 billion to $14 billion in reserves and that schools can’t survive another downturn without these savings.
“Personal finance experts recommend having enough cash in savings to cover six months of living expenses for a rainy day,” said Josephine Lucy, president of the California School Board Association. “Under the reserve cap, most districts will not even be able to cover one full week’s worth of payroll when cash flow is stressed,”
When voters approved Prop. 2, the Rainy Day Fund, it was tied to SB 858, which limits school reserves to two times the minimum allowed for economic uncertainties. Rowland officials say 3 percent is their minimum, but it currently maintains a reserve of $15 million — about 10 percent of its $155 million unrestricted budget.
“This really ties ours hands. It’s a significant reduction in our reserves, and it would only take another recession or emergency to get us into trouble,” said board member Heidi Gallegos. “How would we make our payroll or pay for the lights and water in our schools?”
Lucy said school districts will have to spend the money they saved for school repairs, as well as retiree and employee benefits.
Rowland officials note it could take many years for California to build up the Public School System Stabilization Account.
Read more in Rich Irwin’s story RESERVES.