Home>Articles>California’s Financial Future Looking Shaky After 2019 Legislative Session

Sen. John M. W. Moorlach. (Kevin Sanders for California Globe)
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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:

RankSchool DistrictPopulationPer Cap2017Chg
1McKittrick Elementary177$48,69821
2Spencer Valley Elementary484$13,8421-1
3Maple Creek Elementary49$6,87752
4Gorman Joint154$6,27040
5Oro Grande Elementary1,170$5,320701696
6Ravendale-Termo Elementary148$4,56682
7Santa Clara Elementary174$4,1466-1
8Desert Center Unified268$3,054113
9Little Shasta Elementary324$3,024101
10Alpine County Unified1,120$2,9429-1
11Baker Valley Unified1,031$2,870176
12Bitterwater-Tully Elementary134$2,825120
13Panoche Elementary135$2,710163
14Cienega Union Elementary182$2,704151
15Saucelito Elementary187$2,6387-8
16Winship-Robbins616$2,0563216
17Silver Fork Elementary255$1,967247
18Hornbrook Elementary695$1,943224
19Mountain House Elementary380$1,914267
20Lincoln Elementary218$1,82714-6
21Mendota Unified13,075$1,796298
22Orick Elementary386$1,65221-1
23Junction Elementary147$1,551285
24Forks of Salmon Elementary206$1,489306
25Cucamonga Elementary28,817$1,46123-2
26San Lucas Union Elementary414$1,44510478
27Lost Hills Union Elementary2,922$1,4173912
28Meridian Elementary666$1,374368
29Blochman Union Elementary774$1,3284213
30Twin Ridges Elementary2,572$1,309311
31Plainsburg Union Elementary473$1,28020-11
32Shiloh Elementary798$1,192386
33Camptonville Elementary788$1,188330
34Seiad Elementary320$1,17527-7
35Outside Creek Elementary758$1,0915015
36Hot Springs Elementary332$959437
37Island Union Elementary1,455$888458
38Blake Elementary180$879446
39Lakeside Union Elementary2,542$860412
40French Gulch-Whiskeytown Elem446$83425-15
41Gravenstein Union Elementary5,710$82537-4
42Richmond Elementary1,031$800486
43Montecito Union Elementary6,529$785463
44Laguna Joint Elementary364$78034-10
45Richgrove Elementary3,413$7376015
46Fort Ross Elementary645$731471
47Douglas City Elementary826$7247326
48Lagunita Elementary306$690579
49Willow Grove Union Elementary289$666512
50Mountain Union Elementary1,302$646566
51Kirkwood Elementary299$61340-11
52Fort Sage Unified2,969$607553
53Laton Joint Unified3,958$50149-4
54Big Creek Elementary472$499584
55Vista del Mar Union527$49219-36
56Bogus Elementary360$4887519
57Trinity Center Elementary421$4817821
58Alexander Valley Union Elementary915$47553-5
59Linns Valley-Poso Flat Union649$47312061
60Mark West Union Elementary14,892$4267010
61Mupu Elementary1,005$41254-7
62Montgomery Elementary886$411686
63Belleview Elementary1,725$395663
64Coffee Creek Elementary220$36259-5
65Raisin City Elementary2,150$36210540
66Kenwood4,286$3578014
67Elkins Elementary273$354747
68General Shafter Elementary1,142$350940872
69Gazelle Union Elementary292$3297910
70Dunsmuir Joint Union High2,454$31564-6
71Dehesa Elementary2,374$301289218
72Harmony Union Elementary4,490$27962-10
73Klamath River Union Elementary473$2759219
74Waukena Joint Union Elementary1,030$2408511
75Indian Diggings Elementary167$230849
76Imperial Unified22,298$208478402
77Jefferson Elementary206$206770
78Stone Corral Elementary751$194868
79Happy Camp Union Elementary1,312$174889
80Fountain Valley Elementary57,140$17010222
81Hart-Ransom Union Elementary4,505$16869-12
82San Pasqual Valley Unified3,629$129635553
83Flournoy Union Elementary270$11182-1
84Merced River Union Elementary858$84187103
85Indian Springs Elementary220$7310318
86Big Springs Union Elementary1,762$5713650
87North County Joint Union Elem3,717$4610720
88Kneeland Elementary335$4310113
89Monte Rio Union Elementary2,298$2611324
90Bonny Doon Union Elementary3,084$2311121
91Cuddeback Union Elementary898$1483-8
92Armona Union Elementary6,546$1112533
93Kit Carson Union Elementary2,408$1014653
94Junction City Elementary692$6973
RankSchool DistrictPopulationPer Cap2017Chg
95Pacific Elementary877$3278183
96Lassen View Union Elementary2,845($7)12428
97McCloud Union Elementary1,321($11)13841
98Paradise Elementary947($12)94-4
99Caliente Union Elementary973($16)96-3
100Happy Valley Elementary1,480($17)13434
101Palo Verde Union Elementary2,835($18)11716
102Winton11,013($18)16058
103Summerville Union High9,905($20)1096
104Lucerne Elementary3,395($23)12319
105Garfield Elementary331($25)76-29
106Chicago Park Elementary1,217($25)16357
107Alta-Dutch Flat Union Elementary1,979($36)1125
108Bridgeville Elementary560($42)13123
109Santa Ynez Valley Union High22,222($47)13324
110Whitmore Union Elementary737($50)12919
111Fieldbrook Elementary874($53)12110
112El Nido Elementary1,793($68)14432
113Three Rivers Union Elementary2,383($71)1185
114Burnt Ranch Elementary741($72)20187
115Somis Union3,279($75)1227
116Death Valley Unified744($77)14529
117Round Valley Joint Elementary1,051($79)100-17
118Raymond-Knowles Union Elem1,305($80)14325
119Wasco Union High31,840($83)99-20
120Wasco Union Elementary27,978($88)295175
121Strathmore Union Elementary5,866($91)110-11
122Peninsula Union480($91)16139
123Liberty Elementary1,978($92)19471
124Warner Unified2,481($92)17248
125Chowchilla Elementary22,780($93)1327
126Browns Elementary976($102)91-35
127Knights Ferry Elementary648($106)15528
128Southern Trinity Joint Unified1,005($114)230102
129Oak Run Elementary609($117)114-15
130Shaffer Union Elementary9,317($118)14010
131Jamestown Elementary8,863($119)14918
132Igo, Ono, Platina Union Elementary1,025($122)271139
133Big Lagoon Union Elementary462($126)127-6
134Lassen Union High25,153($130)14713
135Pleasant Valley Joint Union Elem923($132)261126
136South San Francisco Unified83,655($138)81-55
137Manchester Union Elementary639($143)17639
138Kashia Elementary81($145)292154
139Tres Pinos Union Elementary834($151)15819
140Oak View Union Elementary3,079($153)20868
141Foresthill Union Elementary6,709($155)1421
142Nevada City Elementary15,578($160)15715
143Sierra-Plumas Joint Unified3,599($160)1529
144Twain Harte5,513($163)98-46
145Pond Union Elementary737($166)52-93
146Columbia Union6,069($181)17024
147Di Giorgio Elementary976($186)90-57
148Cinnabar Elementary2,699($187)139-9
149Reeds Creek Elementary1,291($189)23283
150Green Point Elementary234($195)106-44
151Campbell Union High239,748($196)16413
152Big Pine Unified1,808($197)108-44
153Sonora Union High39,113($199)16815
154Rockford Elementary1,356($203)95-59
155Yreka Union High17,369($209)18126
156Junction Elementary3,750($216)21963
157Susanville Elementary10,390($219)135-22
158Wheatland7,707($224)67-91
159Columbine Elementary275($225)22465
160Atwater Elementary36,162($225)159-1
161Laguna Beach Unified29,473($233)18019
162Penn Valley Union Elementary13,030($234)18422
163Sonora Elementary8,719($235)1674
164Curtis Creek Elementary8,974($242)1662
165Shasta Union Elementary2,308($247)272107
166Big Sur Unified467($248)119-47
167Cutten Elementary5,311($249)130-37
168Black Butte Union Elementary4,433($249)367199
169Montague Elementary1,955($250)304135
170Lakeside Joint2,733($252)22353
171Latrobe2,767($256)19726
172Evergreen Union9,440($257)1742
173Golden Feather Union Elementary2,787($258)126-47
174Siskiyou Union High15,823($258)23662
175Anderson Union High38,951($262)154-21
176Pine Ridge Elementary906($263)89-87
177Arcohe Union Elementary4,980($265)175-2
178Fremont Union High243,263($266)19113
179Sequoia Union Elementary2,185($267)148-31
180Valley Home Joint Elementary1,776($274)1866
181Pleasant Grove Joint Union908($280)21332
182Sausalito Marin City11,035($280)1820
183San Antonio Union Elementary1,941($288)24663
184Modoc Joint Unified5,983($289)116-68
185Nevada Joint Union High83,537($289)20419
186Fortuna Elementary13,711($289)1959
187Chowchilla Union High24,639($292)1903
188Butteville Union Elementary1,704($294)24052

 

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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