June 24, 2008: Conference Committee Adopts Second Cash Flow Hit
By David Walrath
The Legislative Analyst’s Office (LAO) compromise, adopted by the Budget Conference Committee, defers $2.8 billion in February K-12 payments and provides them in April. The February principal apportionment payment would be reduced by half, and the K-3 Class Size Reduction (CSR) payment would be reduced by whatever amount is necessary to achieve a total of $2.8 billion in deferrals. Based on 2007-08 payments, the LAO anticipates that K-3 CSR payments would be reduced by about 50% in February.
SSDA recommends school districts continue to build cash reserves by not filling vacant positions, delaying other expenditures, and looking for internal borrowing opportunities.
SSDA will continue to advocate for more school district fiscal flexibility, but school districts have to prepare for the cash flow hit on the assumption there will not be new flexibility.
