Governor Brown Signs Bill by Senator Hill to Ease the Cap on School Districts’ Reserve

October 11, 2017

For Immediate Release – Office of State Senator Jerry Hill – October 11, 2017

Governor Brown Signs Bill by Senator Hill to Ease the Cap on School Districts’ Reserves

Senate Bill 751 Takes Effect January 1

Sacramento – Governor Brown signed legislation today by Senator Jerry Hill to ease restrictions on how much school districts can hold in their reserve funds as savings.

The restrictions, called the reserve cap, were established in 2014 as part of a state budget trailer bill. Many school districts contend, however, that the cap is too restrictive and does not allow them to save as much as they need.

“This bill makes reasonable and appropriate changes to existing law to provide schools with adequate flexibility necessary to maintain fiscal solvency while simultaneously prioritizing the education of students they are currently serving,” said Governor Brown in a message that accompanied his

“I’m grateful for the Governor’s support on SB 751. The legislation allows school districts to save for fiscal uncertainties and prevent adverse impacts to students and teachers,” said Senator Hill, D-San Mateo and Santa Clara Counties. “Californians have not forgotten the hard lessons of the Great Recession. They approved a rainy day fund for the entire state to prevent devastating cuts when downturns occur. This legislation enables school districts to better protect themselves against economic downtuns.”

The bill also:

  • Raises the reserve cap percentage to 10 percent from the current average of 6 percent
  • Modifies the reserve cap trigger so it is significantly less likely that the reserve cap would ever become active
  • Clarifies that the cap applies only to General Fund revenue, not other accounts such as construction, cafeteria, charter school or other funds

Senator Steve Glazer, D-Orinda, joined Senator Hill to author the SB 751 with Assemblymembers Adam Gray, D-Merced, and Patrick O’Donnell, D-Long Beach, as principal co-authors.

The new law takes effect January 1.

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Resources:

Governor Brown’s signing message:
https://www.gov.ca.gov/docs/SB_751_Signing_Message_2017.pdf

Text of Senate Bill 751:
https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201720180SB751

SB 751 Fact Sheet:
http://sd13.senate.ca.gov/sites/sd13.senate.ca.gov/files/sb751_factsheet_final.pdf

Media Contact: Leslie Guevarra, 415-298-3404 cell, leslie.guevarra@sen.ca.gov