How the Rainy Day Fund is impacting education in California

150 150 Christopher Nelson

The new constitutional amendment proposed by Gov. Brown and legislative leaders would restructure the state’s Rainy Day Fund to more consistently capture spikes in capital gains revenue for use when boom turns to bust. As the public service that commands the lion’s share of general fund expenditure, perhaps no other area stands to benefit more than K-12 education.

Why, then, are many in the education community  opposed to the amendment? The oft-heard opinion is that setting aside funds for a rainy day would give the impression that education funding is adequate.

“I think the two are unrelated,” said Dr. Christine Frazier, Superintendent of Kern County schools, which has bucked the statewide trend and sent a letter of support for the amendment to Sacramento.

“The Rainy Day Fund honors the commitment under Prop 98 to fund COLA [Cost of Living Allowance] and growth, particularly in years where the revenue does not support that funding,” Frazier said. The effects of the added fiscal discipline (or lack of it) are far-reaching.

Frazier says that when core funding gets cut in years when revenue falls short and there’s no reserve, teachers lose their jobs and that not only affects the current  year but it hurts future prospects by discouraging potential teachers from enrolling in credentialing programs. And in turn, class sizes increase.

Kern County doesn’t have the benefit of affluence, which is often how gaps in school funding can be bridged in communities where parents have the money to help.

“We’re sensitive to what the governor is saying when he argues boom and bust is not a good thing for our schools,” said Michael Hulsizer, Deputy Chief of Government Affairs for Kern County Superintendent of Schools and the author of a letter of support to the Assembly Budget Committee.

“Somebody pays the price and in the end, kids suffer the most,” he said. 

By some measures, California ranks 48th out of 50 in per pupil spending. During the worst years of recent budget cuts, state support was slashed by more than $1,000 per student. 

As previously structured, the Rainy Day Fund established under Gov. Schwarzenegger was not tied to capital gains and had few restrictions on spending any spikes in revenue. Legislators could add programs funded by the general fund, which were difficult to maintain when the inevitable cuts came.

The rationale that “we should never agree to set money aside because that says we are inadequately funded doesn’t make much sense” to Hulsizer. Both he and Frazier are quick to reiterate that lack of funding is a problem that must be addressed, but eschewing fiscal discipline is not the answer. They’re not alone in their thinking.

“A budget reserve is good governing,” said Micah Ali who is President of the Compton Unified School Board who serves as Vice President of the Los Angeles County School Board Association. “For those of us who are working to improve our schools it is comforting to know that the state government will be prepared when the inevitable next recession hits the state.”

This week the amendment passed out of both the Assembly Budget Committee with a unanimous vote and the State Senate. Now on its way to the Secretary of State, it will be on the November ballot for voters to decide its ultimate fate.


Christopher Nelson

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