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Governor’s Staff Meets with Stakeholders to Discuss Cap on Reserves

On June 19, 2014, Kingsley Bogard issued a Client Update regarding AB 1463 (part of the Education Budget Trailer Bill), which would set a cap on school district reserves if certain contingencies were met. Assembly Member Kristin Olsen then introduced AB 146, which would repeal the cap on school district reserves in AB 1463. On August 21, 2014, however, the State Senate voted against a motion by Senator Jean Fuller that would have referred AB 146 (Olsen) to the Education Committee for hearing. As a result, AB 146 is effectively dead.

AB 1463 was part of a deal that Governor Brown reached with CTA to obtain support for Proposition 2 (Assembly Constitutional Amendment 1), which is on the November 4, 2014 Statewide General Election ballot. Since the passage of AB 1463 in June, several educational support organizations have stated their opposition to Proposition 2, mainly due to its connection to the reserve cap language in AB 1463.

The Governor has taken notice of the opposition to Proposition 2. The Governor’s Policy Director (Dana Williamson), the Director of the Department of Finance (Michael Cohen), and the Governor’s Education Advisor (Karen Stapf Walters) met with several education stakeholders to discuss the reserve cap. During the meeting, Ms. Williamson apologized for not including educational management stakeholders in discussions of the reserve cap language in June. She also stated that the Governor is open to discussion with the parties to resolve the issue when the legislative session is over.

Ms. Williamson and Mr. Cohen indicated that they will likely reference the reserve cap issue in their January Budget to highlight the need to resolve the problem. This will only be necessary if Proposition 2 passes in November (since the reserve cap will not become operative and will be repealed as of January 1, 2015 if Proposition 2 does not pass). Kingsley Bogard will continue to update you on the status of this issue.

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