Brown signs law authorizing $3.5 billion in school deferrals

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A week after it was publicly unveiled - and a day after two Republican lawmakers proposed a constitutional amendment outlawing the practice - Gov. Jerry Brown signed legislation Wednesday that would protect the state's cash flow next year by deferring $3.5 billion in payments to schools during the 2012-13 fiscal year.

The bill, AB 103, would authorize the payment delays to schools, as well as the deferral of hundreds of millions more due to local governments and the state university system. Officials said all of the deferrals likely would occur even if voters approve the governor's tax measure in November.

Members of the governor's staff have said the deferrals are consistent with cash management schedules employed over the past two years and must be adopted now to give local officials time to make necessary adjustments to their own budgets - in the forms of more cuts or short-term borrowing.

Brown had hoped to be in a position to begin paying back some of what the state owes schools, but given the magnitude of the problems the state still faces, he said last week he has few options.

On Tuesday, Republican Assembly members Brian Nestande of Palm Desert and Kristin Olsen of Modesto held a press conference at the Capitol to announce they were filing ACA 29, an Assembly Constitutional Amendment prohibiting the state from deferring payments to California schools. Passage of the measure requires a two-thirds vote of the Democratic-majority controlled Legislature.

We believe education funding should be a top priority, and this ACA will end the use of budgetary gimmicks that result in our schools being short-changed," Olsen said in a statement.

"Deferrals are driving some school districts into bankruptcy," added Nestande.

Just last week, the state's watchdog on school finance - the Fiscal Crisis Management Assistance Team - forecast the number of districts in California at risk of insolvency would reach a record number this year.

As proposed, AB 103 would put into motion a series of deferrals and repayments where no more than $1.9 billion would be held back from schools at any time.

The moves would begin in July, when $1.2 billion would be deferred. In August, another $600 million would be held. In September, $700 million of the outstanding payments would be paid back. And in October, another $800 million would be deferred.

In January 2013, the state would return $1.9 billion. Then, a $900 million payment due in March would be delayed until April.

An even bigger deferral is being contemplated if voters approve the governor's tax measure in November. As part of the revised May budget, Brown has committed to paying back $2.6 billion of the $9.5 billion in total payment deferrals.

But, based on a scheduled released by the Department of Finance this week, that repayment is not likely to happen before May or June 2013.

PUBLIC COMMENTS

From Heather Matson of Palos Verdes Estates, a former educator, an active member of the local PTA, and parent of one elementary school and one middle school student:

Here we go again! How are schools supposed to operate with deferred cash? Do you suppose that the mortgage holders on teacher's houses will take a deferred payment? Or will the government take a deferred payment on taxes? What are we doing to our schools?

It is time for our elected officials to stop fighting with each other and the governor and begin to take the steps needed to address the spending and the 'kick the can down the road' crisis that got us here, and they need to do it now! The concerns about re-election should be the last thing on their mind. Our financial crisis continues because no one wants to pay for services but everyone wants to have them. Every single resident of California needs to have some ownership, both in the problem and in the solution!

Instead of trying to patch and Band-Aid the budget, let's start from scratch. Identify the most important needs first: 1. Education of our citizenry, 2.Infrastructure, 3. Safety and Protection, and 4. Health and Welfare. In order for California to work no one gets a free ride. We can't expect the 'wealthy' to foot the bill because the definition of wealth is very subjective; what constitutes wealth in one area is middle class in another based on the cost of living. In many areas of the state it is impossible to make ends meet without both partners working full time. The income may look good on paper but in reality these families may be just getting by. Increasing their taxes would actually keep them from 'just making it.'

The persons who use the services need to have some financial obligation for the maintenance of those services. How about tolls our freeway users pay? How about community service opportunities for those who are unemployed and receiving benefits? I am sure Caltrans could use some help cleaning up. Instead of offering babysitting, how about setting up co-ops so that parents can help each other? This was once a country of creativity and invention and has now become a country of crybabies wanting Big Daddy (aka government) to take care of them. Really? Give our schools the tools to train our young citizens to use their minds to create and innovate and thus eliminate the crybaby mentality that pervades our society. Enough already!!

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