10% of California’s school districts are in serious budget trouble, with 91 reporting that they may be insolvent within two years and ten districts already there. While the situation looks bleak, it is an improvement over last year, when 174 districts were on the verge of financial collapse. However, if voters refuse to approve tax increases in June, as many as 50 school districts could become insolvent this year, and hundreds more will become at risk over the next three years.
Unions: Get Ready to Battle
The Legislature lowered the required cash reserve to 1% of a district’s general fund for large districts and 3% for small districts, freeing up more money for districts to spend on class size reductions, support classes, salaries and benefits. However, financial experts are warning against this, with some calling for districts to maintain a 10% reserve as a hedge against continuing economic uncertainty and volatility.
This will become a point of contention for many bargaining units, whose members have not seen a raise in three or more years or who’ve experienced pay cuts and increased out of pocket payments toward health insurance. While it is unlikely that any bargaining units will ask for a raise under current financial and anti-union social conditions, there will be many fighting to maintain the status quo against districts trying to cut costs any way they can. The fight over the size of reserves is certain to heat up in districts across the state.