Voter approval of a multi-billion-dollar tax increase last year has reduced financial pressure on California's nearly 1,000 school districts and thus dropped the number of districts in fiscal distress, the Legislature was told Tuesday.
Joel Montero, who heads the Bakersfield-based Fiscal Crisis and Management Assistance Team, told an Assembly budget subcommittee that the number of districts in distress is half what it was a few years ago, when the state was routinely "deferring" billions of dollars in aid to local districts because of its own budget problems.
Last year, voters passed Proposition 30, which hikes sales and income taxes by about $6 billion a year, much of which will go to schools. Gov. Jerry Brown says he wants to spend much of the new revenue to repay the state aid deferrals.
"The impact of Proposition 30 has been positive," Montero said during his annual update on school financial problems.
At one time, nearly 200 districts were listed as "qualified" or "negative" in their financial conditions, but the list has now dropped to under 100, Montero said. However, the number of negative districts has risen in the last year from seven to nine, five of which are new to the list.
The most distressed district is Inglewood Unified, with nearly 12,000 students. It was granted an emergency $55 million state loan last year and the state assumed administrative control.
"The negative certifications are more negative than they have been in the past," Montero said, adding that "cash management" continues to plague many local districts, adding, "half of the districts in the state are deficit spending."
Among the potential problems looming for local school systems, Montero said, are the prospects of being hit with much-higher bills for retiree pensions, both from the California State Teachers Retirement System and the California Public Employees Retirement System, which covers non-teaching school employees.
CalSTRS says it needs $4.5 billion more a year to cover unfunded liabilities while CalPERS has already approved a phased-in contribution increase that will eventually total 50 percent.
PHOTO CREDIT: Students cheer on Gov. Jerry Brown who holds up a campaign sign and encourages students to vote yes for Proposition 30 at Sacramento City College on October 18, 2012.The Sacramento Bee/Randy Pench