Measure would ban school payment deferrals

Measure would ban school payment deferrals

(Calif.) The state would be required to repay, in a single year, billions of dollars it still owes K-12 districts and would no longer have the ability to defer school payments under terms of a measure being proposed for next November’s ballot.

But a just-released Legislative Analyst's of the “Fund Schools on Time Act of 2014” says such a decree could actually result in less money for education in lean budget years.

“Because the measure limits the state’s ability to implement school payment deferrals, the state would likely rely more heavily on spending reductions to address future budgetary problems,” the non-partisan LAO wrote in a review of the initiative as part of the official vetting process.

“If the state responds to future budget crises by making reductions to state programs, the measure could result in programmatic reductions for schools,” the review stated.

Over the years, the state has used the deferral process as a way to deal with its own cash-flow shortages by withholding school payments for a few days, weeks or even months.

But as the economy began slipping deeper into the recession six years ago, the months turned into years and the state found itself owing some $9.5 billion in back payments to school districts, forcing them to borrow to make ends meet.

As part of his mission to reduce the state’s overall $33 billion “wall of debt,” Gov. Jerry Brown’s 2012-13 budget – buoyed by a voter-approved tax hike in 2012 – repaid some $2 billion in K-12 deferrals. His plan is to pay down another $4.3 billion in deferrals over the next two years, leaving roughly $1.3 billion outstanding.

The Fund Schools on Time Act of 2014 (A.G. File No. 13-0034) – submitted by proponent Suzanne Cordingley representing “Fund Cal Schools” of Cool, Calif. – would eliminate all existing school payment deferrals by requiring the state to repay them over the course of the 2015-16 fiscal year.

Also, if the initiative qualifies for the November 2014 ballot and is ultimately approved by voters, school payments could be delayed by no more than 30 days and could not extend across the fiscal year – unless longer deferrals are approved by voter initiative or legislation that receives three quarters approval from both houses of the Legislature.

Cordingley did not respond to an e-mail seeking comment prior to publication of this story, and an initiative coordinator in the Attorney General’s office said no telephone number for the woman or Fund Cal Schools had been provided.

While the initiative, if adopted, would improve and make more predictable cash flow for the state’s school districts, it would restrict “the state’s flexibility to respond to future budgetary crises,” the LAO wrote in its review.

In addition, the analyst’s office said having to pay a lump sum of up to $5.6 billion in deferral payments in 2015-16, “would require the state to spend less on other education programs, spend less in other areas of the budget, implement budgetary deferrals for other programs, use budget reserves and/or raise additional revenues to accommodate the additional spending.”

The Attorney General’s office has 60 days from the date an initiative is submitted to prepare an official title and summary. The measure is then forwarded to the Secretary of State, who provides calendar deadlines that the proponent must meet – including the submission and verification of 504,760 valid registered voter signatures – in order to qualify the initiative for the ballot.