06.12.09: School Finance Deferral Relief for Small Districts
By David Walrath
Deferral Cash Flow
The Small School Districts' Association (SSDA) is working on small school district cash flow relief from the school finance deferrals. The Association is working on alternative cash flow proposals as well as exemptions. With the help of Assembly Member Wes Chesbro and his staff we proposed allowing school districts to defer their contributions to the Public Employees’ Retirement System and the State Teachers’ Retirement System, similar to the state’s deferral of state funds to school districts.
This contribution deferral would have helped schools deal with the cash flow problems caused by the deferrals. Unfortunately, the Public Employees’ Retirement System raised the threat of litigation if this proposal were adopted by the Legislature. The SSDA proposal keeps PERS whole for lost investment revenue and lost interest, but this was not enough for PERS. There is no reason to pursue this proposal if it just leads to litigation.
Deferral Exemptions
SSDA also is working on better small school district exemptions from the deferrals than those that are in current law. The Legislative Analyst also is working on a small district exemption. The Conference Committee is still considering the amount of deferrals. Until the Conference Committee decides on the amount of deferrals, exemptions are not on the table. The best of all possible worlds would be less money deferred and there be no need for an exemption. That best world situation is highly unlikely.
