To remain fiscally solvent, California requires all public school districts to maintain a rainy day, reserve fund of about three percent of their unrestricted funds.
Those reserve funds are becoming a bone of contention at some school districts as teachers unions oppose contract concessions, asking why district reserve funds can’t be used.
One such district, the Hacienda La Puente Unified School District in the San Gabriel Valley, appears to be an oasis in the desert of education funding.
“We have no furloughs. We still have 20-1 for kindergarten through third grade. And we’ve basically had no cutbacks,” said teachers union president Dani Tucker. She thanks the district’s hefty reserve funds. It’s come at a cost, she says: low teacher salaries, cuts in supply budgets, and increased class sizes.
District Superintendent Barbara Nakaoka says the frugal and penny pinching approach to budgeting began when she started her job six years ago.
“The district reserve has allowed us to pay our payroll and has allowed us to pay our bills on time,” she said.
That reserve fund and how to use it has the administration and teachers union at Hacienda La Puente Unified butting heads. In contract talks the district has proposed teachers start paying monthly health care premiums. The union wants the district to tap into the reserve funds instead and maintain current benefits. The same conflict is playing out 30 minutes south at the much larger Long Beach Unified School District. Teachers’ union executive director Joe Boyd says teachers should have a say in how district reserves are used.
“The teachers have already taken so much in terms of carrying the burden of these cuts over the last few years. We just want to see some collaboration and balance on how extreme the cuts are moving forward,” Boyd said.
Long Beach Unified spokesman Chris Eftychiou says the district’s 13 percent reserve fund may not be around for long.
“At the rate we’re spending, the balance will be negative or we will have no reserves by the 2014-15 school year and if Prop. 30 fails we’re projected to have a negative fund balance or no reserves as soon as next school year,” Eftychiou said.
So who’s right? The number crunchers say it’s unwise to start paying for long term expenses such as benefits out of reserve funds that grow mostly from one-time savings. Wendy Benkert of the Orange County Office of Education says the latest financial numbers show districts struggling more this year.
“The reserves have been spent out over the years because we’ve been cut, this’ll be now the fifth year in a row. The reserve levels are certainly dropping,” Benkert said.
School district officials say they understand how under the current education funding crisis reserve funds can appear to be a pot of gold.