BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
AB 531 (O'Donnell) - School finance: budget calculations.
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|Version: June 9, 2015 |Policy Vote: ED. 8 - 0 |
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|Urgency: No |Mandate: Yes |
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|Hearing Date: July 6, 2015 |Consultant: Jillian Kissee |
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This bill does not meet the criteria for referral to the
Suspense File.
Bill
Summary: This bill provides that the cap on school district
reserves in a fiscal year immediately after a fiscal year in
which a transfer is made into the Public School System
Stabilization Account does not apply to monies in a committed
fund balance.
Fiscal
Impact:
There is no anticipated fiscal impact as the provisions
included in this bill appear to be declaratory of existing
law. The State Department of Education indicates that costs
related to providing technical assistance to the field on this
bill's provisions would be absorbable.
Background: As part of the 2014-15 Budget Act, the state enacted a new
requirement to cap school district reserves in years following a
AB 531 (O'Donnell) Page 1 of
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deposit in the state school reserve established by Proposition 2
of 2014. The legislation also created a separate requirement
for districts to disclose certain information about their
reserves each year. Specifically, existing law requires that in
a fiscal year immediately after a fiscal year in which a
transfer is made into the Public School System Stabilization
Account, a school district budget that is adopted or revised
shall not contain a combined assigned or unassigned ending fund
balance that is in excess of the following:
1)For school districts with fewer than 400,000 units of average
daily attendance (ADA), the sum of the school district's
applicable minimum recommended reserve for economic
uncertainties adopted by the State Board of Education, as
specified, multiplied by two.
2)For school districts with more than 400,000 units of ADA, the
sum of the school district's applicable minimum recommended
reserve for economic uncertainties adopted by the State Board
of Education, as specified, multiplied by three.
Existing law authorizes a county superintendent of schools to
grant a school district under its jurisdiction an exemption from
the cap for up to two consecutive fiscal years within a
three-year period if the school district, among other things,
provides documentation indicating that extraordinary fiscal
circumstances, including, but not limited to, multi-year
infrastructure or technology projects, substantiate the need for
a combined assigned or unassigned ending fund balance that is in
excess of the minimum recommended reserve for economic
uncertainties. (Education Code § 42127.01)
Proposed Law:
This bill:
1)Provides that the limitation on the amount that school
districts may set aside in an assigned or unassigned ending
fund balance in the fiscal year immediately after a fiscal
year in which a transfer is made into the Public School System
Stabilization Account does not apply to monies in a committed
fund balance, as defined in the California School Accounting
Manual.
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2)Provides that school district governing boards retain the
ability to redirect monies in a committed fund balance to an
alternative purpose in any subsequent year.
Related
Legislation: SB 774 (Fuller) repeals the existing statutory cap
on the amount of fiscal reserves that a school district is
allowed to maintain. This bill is pending before the Senate
Education Committee.
AB 1048 (Baker), similar to SB 774, proposes to repeal the
statutory cap on the amount of fiscal reserves that a school
district would be allowed to maintain under specified
conditions. This bill failed passage in the Assembly Education
Committee on May 13, 2015.
AB 1318 (Gray) proposes to modify the calculation of the
statutory cap on fiscal reserves. This bill is pending before
the Assembly Education Committee.
Staff Comments: This bill is flagged as potentially imposing a
new reimbursable mandate on school districts. However, since
this bill is consistent with current law, it is unlikely that
the Commission on State Mandates would determine this bill to
impose a higher level of service.
According a recent Legislative Analyst's Office report, school
districts are currently required to categorize monies in their
reserves. The categories reflect varying levels of discretion
that districts have in spending their reserves. School
districts can use the committed category to indicate amounts
that have been earmarked through an action by the school board.
The assigned category indicates amounts that have been earmarked
by a district official. The unassigned category indicates all
amounts not designated for a specific purpose.
Existing law specifies that school district fund balances must
not have a combined assigned or unassigned ending fund balance
that is in excess of specified amounts. This bill provides that
the caps triggered by Proposition 2 deposits not apply to monies
in a committed fund balance. Since the state accounting manual
provides a district category for a committed fund balance, this
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bill appears to be declaratory of existing law. In its report,
the Legislative Analyst's Office indicates that districts that
classify some part of their reserves as committed, assigned, or
unassigned may later reclassify those amounts if desired. This
interpretation of the law is consistent with the provisions of
this bill.
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