Senate Education Committee scheduled to hear new reserve cap bill AB 1164 on July 12
State Senate leadership amended AB 1164 (Thurmond, D-Richmond) on July 6 to include a merger of the two existing reserve cap bills, combined with a new version of a bill to add a third year of probationary teacher status. The merger of the reserve cap bills is intended to include provisions from CSBA’s sponsored bill SB 751 (Hill & Glazer), and AB 235 (O’Donnell, D-Long Beach), which CSBA has a Support if Amended position on. AB 1164 does not replace either of these bills.
AB 1164 is not sponsored by CSBA and CSBA does not yet have an official position on the bill.
The Senate Education Committee is scheduled to hear both AB 1164 and AB 235 on Wednesday, July 12; the hearing begins at 9 a.m. Also on Wednesday, the Assembly Education Committee is scheduled to hear SB 751 at its hearing, which begins at 1:30 p.m.
How AB 1164 would amend the current reserve cap:
Fully Exempts All Small and Basic Aid Districts: AB 1164 uses CSBA’s definition of small districts as those with 2,501 or less average daily attendance; the bill fully exempts all small districts which fit this criteria, as well as all basic aid districts from the reserve cap law. This is a critically important component of CSBA’s solution to the issue, as it will protect the state’s most vulnerable districts should the reserve cap trigger be pulled.
Level of Reserve Limit: The current reserve cap law, if enacted, would limit most districts to a reserve balance of no more than 6 percent of the general fund. AB 1164 amends the reserve limit to 10 percent for all districts. CSBA maintains that a 10 percent reserve limit still poses a concern to school districts, especially those that are issuing short and long term debt. CSBA’s sponsored SB 751 calls for a reserve limit of 17 percent, a nationally-recognized standard for government reserves.
Funds Subject to Reserve Limit: Under AB 1164, all assigned and unassigned balances in the general fund are subject to the reserve limit, as in current law.
Reserve Cap Trigger: AB 1164 uses a provision of AB 235 to add an additional condition that would need to be met before the reserve cap would become active. Currently, if a deposit of any amount (even $1) is made to a state Proposition 98 rainy day fund, the cap would be triggered. Under AB 1164, the Proposition 98 rainy day fund would need a minimum balance of 3 percent of the K-12 portion of the Proposition 98 guarantee (about $1.9 billion in the current fiscal year) to trigger the reserve cap.
Other Aspects of AB 1164
In addition to the reserve cap, AB 1164 also addresses the long-standing issue of probationary teachers by adding a third year of probation for newly-hired teachers – the current probationary period for new teachers is two years, making California one of only 12 states with a probation period of less than three years. CSBA has been and will continue to work on details of the probationary issue in order to ensure that school districts and county offices of education are provided with a meaningful third year that is accessible and useful.
CSBA has a Support if Amended position on AB 1220 (Weber, D-San Diego), a similar bill also addressing the teacher probation issue – AB 1220 is also scheduled to be heard by the Senate Education Committee on Wednesday, July 12.