Home>Articles>California’s Financial Future Looking Shaky After 2019 Legislative Session
Senator John Moorlach (Kevin Sanders for California Globe)
Senator John Moorlach (Photo: Kevin Sanders for California Globe)

California’s Financial Future Looking Shaky After 2019 Legislative Session

‘We are at debt capacity!’

By Katy Grimes, September 23, 2019 8:37 am

‘California’s unrestricted net deficit grew by 25 percent in the last year alone’

 

Following the close of the 2019 legislative session, Sen. John Moorlach (R-Costa Mesa) provided a listing of “California’s Dirty Baker’s Dozen: Veto-Worthy Policy Proposals that Shouldn’t Be Law.”

Many of these bills California Globe covered extensively during the year:

  • AB 44 – the ban on fur
  • SB 1 – the “Trump Resist” bill which would threaten California’s water supply
  • AB 5 – the bill to take over and unionize the rideshare business and related gig economy
  • SB 276 & SB 714 – the mandatory vaccine bills removing doctors medical exemptions, and
  • AB 1482 – ignoring voters recent rejection of a statewide rent control initiative, AB 1482 imposes one anyway

Sen. Moorlach, a Certified Public Accountant by profession, regularly addresses the state’s huge and growing debt. He warns his lawmaker colleagues during committee hearings on taxing and spending bills. He warns them during Senate floor debate before voting on these bills. Yet these bad spending bills continue to be passed by a Legislature apparently unconcerned about the future financial stability of the state.

Most notably, Moorlach recently warned that California’s unrestricted net deficit grew by 25 percent in the last year alone. Moorlach explains that the unrestricted net asset (or deficit) is a summary of the state’s available assets after removing from the balance sheet fixed assets (buildings, parks, roads, etc.) minus outstanding debt obligations for these fixed assets.

Specifically, Moorlach warns about AB 48 by Assemblyman Patrick O’Donnell (D-Long Beach), which will place a $15 billion K-12 through higher education facilities bond on the March 2020 ballot. “We Are At Debt Capacity!” Moorlach said. “California’s Unrestricted Net Deficit grew by $43.8 billion in the last year alone, from $169.5 to $213.3 billion (a 25 percent increase!). If it were not for New Jersey, the Golden State would have the largest deficit of all the 50 states. California needs to improve its balance sheet before it takes on more bond debt, regardless of how noble the cause for the bond proceeds. With rising pension costs, a volatile income tax system, and a potential recession on the horizon, adding more than $700 million in new annual debt payments to the state’s general fund budget may result in additional requests for more taxes and/or significant budget cuts in future years. When California has a supposed budget surplus this year, more debt and taxes make no sense.”

Another big concern are the charter school elimination bills: AB 1505, by Assemblymembers O’Donnell, Bonta, McCarty & Smith, and co-authored by the powerful state teachers union California Teachers Association, and AB 1507, by Assemblymembers Smith, McCarty, and O’Donnell.

A powerful liaison of aggressive teacher unions and politicians supported by them produced the bills which threaten to destroy California’s wildly popular and successful charter schools, and the 630,000 school children who benefit from them. The bills would cap the number of charter schools in the state, and limit the ability of charter-school organizers to appeal anti-charter decisions by often union-controlled local school boards to county and state boards of education.

“Edging Toward Charter School Elimination: These bills effectively impose a moratorium on charter schools and limit the number and locations of resource centers that a charter school may operate, anticipating their total elimination in California,” Moorlach said. “Neither bill makes any sense to anyone, except those who wish to eliminate charter schools as competition to the incumbent monopoly of traditional public schools over a blended learning or personalized learning environment.”

Moorlach ranked California’s school districts by their cumulative unrestricted net deficit (listing below). He notes “the cumulative unrestricted net deficit for the year ended June 30, 2017 was $50.6 billion. A year later, for the year ended June 30, 2018, it is $70.8 billion. The requirement of including Other Post-Employment Benefits is the main reason the total deficit has grown by $20 billion, or 40 percent, in the last year!”

Limiting California school children’s choices will be costly in many ways, but especially in poor and minority school communities. Charter schools in California have had a very tough time because of teacher union resistance, says Lance Izumi, Director of Education Studies at the Pacific Research Institute. Izumi warned that AB 1505 will impose even higher hurdles for charter schools.

AB 1505 changes current California law, which requires proposed charter schools to have 1) financial viability, and 2) a sound academic program. The bill adds in a third criteria: the fiscal impact of the proposed charter school on the school district. If this fiscal impact is found to be negative, the school board can deny the charter school. “Given that most school districts will be able to find some type of financial impact of the proposed charter on that district, it’s going to be used to stifle any creation of charter schools throughout California,” Izumi said. “For charter schools to ‘drain’ public schools of funding, one must assume that students are the property of the regular public schools.”

“Parents and their children voluntarily choose to go to charter schools because charters often perform better, children are safer, and charters offer the type of curriculum and personalized learning that students want,” Izumi said in an interview earlier this year. And really, Izumi says the answer is easy: “School districts can keep students from leaving the regular public schools by simply doing a better job of educating them. It’s within their control.”

Yet, Izumi said charter schools really have no fiscal impact on school districts. His research concurs with Sen. Moorlach’s: the causes of school districts in fiscal distress is found in union contracts negotiated by local school boards, as well as high pension costs and retiree health care. “These are self-inflicted wounds,” Izumi says. “Using charter schools as scapegoats by districts in financial distress is factually wrong and diverts attention from the real causes, which is these actions by the school districts and the boards which approve things they cannot afford.”

 

Sen. Moorlach’s School Districts Ranking:

Rank School District Population Per Cap 2017 Chg
1 McKittrick Elementary 177 $48,698 2 1
2 Spencer Valley Elementary 484 $13,842 1 -1
3 Maple Creek Elementary 49 $6,877 5 2
4 Gorman Joint 154 $6,270 4 0
5 Oro Grande Elementary 1,170 $5,320 701 696
6 Ravendale-Termo Elementary 148 $4,566 8 2
7 Santa Clara Elementary 174 $4,146 6 -1
8 Desert Center Unified 268 $3,054 11 3
9 Little Shasta Elementary 324 $3,024 10 1
10 Alpine County Unified 1,120 $2,942 9 -1
11 Baker Valley Unified 1,031 $2,870 17 6
12 Bitterwater-Tully Elementary 134 $2,825 12 0
13 Panoche Elementary 135 $2,710 16 3
14 Cienega Union Elementary 182 $2,704 15 1
15 Saucelito Elementary 187 $2,638 7 -8
16 Winship-Robbins 616 $2,056 32 16
17 Silver Fork Elementary 255 $1,967 24 7
18 Hornbrook Elementary 695 $1,943 22 4
19 Mountain House Elementary 380 $1,914 26 7
20 Lincoln Elementary 218 $1,827 14 -6
21 Mendota Unified 13,075 $1,796 29 8
22 Orick Elementary 386 $1,652 21 -1
23 Junction Elementary 147 $1,551 28 5
24 Forks of Salmon Elementary 206 $1,489 30 6
25 Cucamonga Elementary 28,817 $1,461 23 -2
26 San Lucas Union Elementary 414 $1,445 104 78
27 Lost Hills Union Elementary 2,922 $1,417 39 12
28 Meridian Elementary 666 $1,374 36 8
29 Blochman Union Elementary 774 $1,328 42 13
30 Twin Ridges Elementary 2,572 $1,309 31 1
31 Plainsburg Union Elementary 473 $1,280 20 -11
32 Shiloh Elementary 798 $1,192 38 6
33 Camptonville Elementary 788 $1,188 33 0
34 Seiad Elementary 320 $1,175 27 -7
35 Outside Creek Elementary 758 $1,091 50 15
36 Hot Springs Elementary 332 $959 43 7
37 Island Union Elementary 1,455 $888 45 8
38 Blake Elementary 180 $879 44 6
39 Lakeside Union Elementary 2,542 $860 41 2
40 French Gulch-Whiskeytown Elem 446 $834 25 -15
41 Gravenstein Union Elementary 5,710 $825 37 -4
42 Richmond Elementary 1,031 $800 48 6
43 Montecito Union Elementary 6,529 $785 46 3
44 Laguna Joint Elementary 364 $780 34 -10
45 Richgrove Elementary 3,413 $737 60 15
46 Fort Ross Elementary 645 $731 47 1
47 Douglas City Elementary 826 $724 73 26
48 Lagunita Elementary 306 $690 57 9
49 Willow Grove Union Elementary 289 $666 51 2
50 Mountain Union Elementary 1,302 $646 56 6
51 Kirkwood Elementary 299 $613 40 -11
52 Fort Sage Unified 2,969 $607 55 3
53 Laton Joint Unified 3,958 $501 49 -4
54 Big Creek Elementary 472 $499 58 4
55 Vista del Mar Union 527 $492 19 -36
56 Bogus Elementary 360 $488 75 19
57 Trinity Center Elementary 421 $481 78 21
58 Alexander Valley Union Elementary 915 $475 53 -5
59 Linns Valley-Poso Flat Union 649 $473 120 61
60 Mark West Union Elementary 14,892 $426 70 10
61 Mupu Elementary 1,005 $412 54 -7
62 Montgomery Elementary 886 $411 68 6
63 Belleview Elementary 1,725 $395 66 3
64 Coffee Creek Elementary 220 $362 59 -5
65 Raisin City Elementary 2,150 $362 105 40
66 Kenwood 4,286 $357 80 14
67 Elkins Elementary 273 $354 74 7
68 General Shafter Elementary 1,142 $350 940 872
69 Gazelle Union Elementary 292 $329 79 10
70 Dunsmuir Joint Union High 2,454 $315 64 -6
71 Dehesa Elementary 2,374 $301 289 218
72 Harmony Union Elementary 4,490 $279 62 -10
73 Klamath River Union Elementary 473 $275 92 19
74 Waukena Joint Union Elementary 1,030 $240 85 11
75 Indian Diggings Elementary 167 $230 84 9
76 Imperial Unified 22,298 $208 478 402
77 Jefferson Elementary 206 $206 77 0
78 Stone Corral Elementary 751 $194 86 8
79 Happy Camp Union Elementary 1,312 $174 88 9
80 Fountain Valley Elementary 57,140 $170 102 22
81 Hart-Ransom Union Elementary 4,505 $168 69 -12
82 San Pasqual Valley Unified 3,629 $129 635 553
83 Flournoy Union Elementary 270 $111 82 -1
84 Merced River Union Elementary 858 $84 187 103
85 Indian Springs Elementary 220 $73 103 18
86 Big Springs Union Elementary 1,762 $57 136 50
87 North County Joint Union Elem 3,717 $46 107 20
88 Kneeland Elementary 335 $43 101 13
89 Monte Rio Union Elementary 2,298 $26 113 24
90 Bonny Doon Union Elementary 3,084 $23 111 21
91 Cuddeback Union Elementary 898 $14 83 -8
92 Armona Union Elementary 6,546 $11 125 33
93 Kit Carson Union Elementary 2,408 $10 146 53
94 Junction City Elementary 692 $6 97 3
Rank School District Population Per Cap 2017 Chg
95 Pacific Elementary 877 $3 278 183
96 Lassen View Union Elementary 2,845 ($7) 124 28
97 McCloud Union Elementary 1,321 ($11) 138 41
98 Paradise Elementary 947 ($12) 94 -4
99 Caliente Union Elementary 973 ($16) 96 -3
100 Happy Valley Elementary 1,480 ($17) 134 34
101 Palo Verde Union Elementary 2,835 ($18) 117 16
102 Winton 11,013 ($18) 160 58
103 Summerville Union High 9,905 ($20) 109 6
104 Lucerne Elementary 3,395 ($23) 123 19
105 Garfield Elementary 331 ($25) 76 -29
106 Chicago Park Elementary 1,217 ($25) 163 57
107 Alta-Dutch Flat Union Elementary 1,979 ($36) 112 5
108 Bridgeville Elementary 560 ($42) 131 23
109 Santa Ynez Valley Union High 22,222 ($47) 133 24
110 Whitmore Union Elementary 737 ($50) 129 19
111 Fieldbrook Elementary 874 ($53) 121 10
112 El Nido Elementary 1,793 ($68) 144 32
113 Three Rivers Union Elementary 2,383 ($71) 118 5
114 Burnt Ranch Elementary 741 ($72) 201 87
115 Somis Union 3,279 ($75) 122 7
116 Death Valley Unified 744 ($77) 145 29
117 Round Valley Joint Elementary 1,051 ($79) 100 -17
118 Raymond-Knowles Union Elem 1,305 ($80) 143 25
119 Wasco Union High 31,840 ($83) 99 -20
120 Wasco Union Elementary 27,978 ($88) 295 175
121 Strathmore Union Elementary 5,866 ($91) 110 -11
122 Peninsula Union 480 ($91) 161 39
123 Liberty Elementary 1,978 ($92) 194 71
124 Warner Unified 2,481 ($92) 172 48
125 Chowchilla Elementary 22,780 ($93) 132 7
126 Browns Elementary 976 ($102) 91 -35
127 Knights Ferry Elementary 648 ($106) 155 28
128 Southern Trinity Joint Unified 1,005 ($114) 230 102
129 Oak Run Elementary 609 ($117) 114 -15
130 Shaffer Union Elementary 9,317 ($118) 140 10
131 Jamestown Elementary 8,863 ($119) 149 18
132 Igo, Ono, Platina Union Elementary 1,025 ($122) 271 139
133 Big Lagoon Union Elementary 462 ($126) 127 -6
134 Lassen Union High 25,153 ($130) 147 13
135 Pleasant Valley Joint Union Elem 923 ($132) 261 126
136 South San Francisco Unified 83,655 ($138) 81 -55
137 Manchester Union Elementary 639 ($143) 176 39
138 Kashia Elementary 81 ($145) 292 154
139 Tres Pinos Union Elementary 834 ($151) 158 19
140 Oak View Union Elementary 3,079 ($153) 208 68
141 Foresthill Union Elementary 6,709 ($155) 142 1
142 Nevada City Elementary 15,578 ($160) 157 15
143 Sierra-Plumas Joint Unified 3,599 ($160) 152 9
144 Twain Harte 5,513 ($163) 98 -46
145 Pond Union Elementary 737 ($166) 52 -93
146 Columbia Union 6,069 ($181) 170 24
147 Di Giorgio Elementary 976 ($186) 90 -57
148 Cinnabar Elementary 2,699 ($187) 139 -9
149 Reeds Creek Elementary 1,291 ($189) 232 83
150 Green Point Elementary 234 ($195) 106 -44
151 Campbell Union High 239,748 ($196) 164 13
152 Big Pine Unified 1,808 ($197) 108 -44
153 Sonora Union High 39,113 ($199) 168 15
154 Rockford Elementary 1,356 ($203) 95 -59
155 Yreka Union High 17,369 ($209) 181 26
156 Junction Elementary 3,750 ($216) 219 63
157 Susanville Elementary 10,390 ($219) 135 -22
158 Wheatland 7,707 ($224) 67 -91
159 Columbine Elementary 275 ($225) 224 65
160 Atwater Elementary 36,162 ($225) 159 -1
161 Laguna Beach Unified 29,473 ($233) 180 19
162 Penn Valley Union Elementary 13,030 ($234) 184 22
163 Sonora Elementary 8,719 ($235) 167 4
164 Curtis Creek Elementary 8,974 ($242) 166 2
165 Shasta Union Elementary 2,308 ($247) 272 107
166 Big Sur Unified 467 ($248) 119 -47
167 Cutten Elementary 5,311 ($249) 130 -37
168 Black Butte Union Elementary 4,433 ($249) 367 199
169 Montague Elementary 1,955 ($250) 304 135
170 Lakeside Joint 2,733 ($252) 223 53
171 Latrobe 2,767 ($256) 197 26
172 Evergreen Union 9,440 ($257) 174 2
173 Golden Feather Union Elementary 2,787 ($258) 126 -47
174 Siskiyou Union High 15,823 ($258) 236 62
175 Anderson Union High 38,951 ($262) 154 -21
176 Pine Ridge Elementary 906 ($263) 89 -87
177 Arcohe Union Elementary 4,980 ($265) 175 -2
178 Fremont Union High 243,263 ($266) 191 13
179 Sequoia Union Elementary 2,185 ($267) 148 -31
180 Valley Home Joint Elementary 1,776 ($274) 186 6
181 Pleasant Grove Joint Union 908 ($280) 213 32
182 Sausalito Marin City 11,035 ($280) 182 0
183 San Antonio Union Elementary 1,941 ($288) 246 63
184 Modoc Joint Unified 5,983 ($289) 116 -68
185 Nevada Joint Union High 83,537 ($289) 204 19
186 Fortuna Elementary 13,711 ($289) 195 9
187 Chowchilla Union High 24,639 ($292) 190 3
188 Butteville Union Elementary 1,704 ($294) 240 52

 

For Sen. Moorlach’s last year’s full study on California’s educational fiscal rankings: https://moorlach.cssrc.us/sites/default/files/181002_CASchoolCAFRReport.pdf.

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