Lawsuit Filed to Enforce Proposition 98 Guarantee

The California Teachers Association (CTA) announced August 9, 2005, that it is suing Governor Arnold Schwarzenegger and Director of Finance Tom Campbell to enforce state law related to the Proposition 98 (Prop 98) minimum school funding guarantee.At issue is the 2004-05 State Budget deal to suspend Proposition 98�but to limit any cut to $2.0 billion, as codified in SB 1101 (Chapter 213/2004). With state tax revenues coming in much higher than expected in 2004-05, the Prop 98 minimum funding level grew, resulting in Prop 98 funding being $3.8 billion lower than the guarantee. Thus, the lawsuit contends that the state must appropriate another $1.8 billion for K 14 education in 2004-05.

In addition, the lawsuit asserts that the Prop 98 guarantee for 2005-06 was calculated using the “unlawfully low” funding provided in 2004-05–which affected the base and lowered the 2005-06 guarantee by another $1.3 billion.

The plaintiffs in the case include the Executive Officers of the CTA, State Superintendent Jack O�Connell, and three parents of children �affected by the failure to honor the agreement.� The plaintiffs assert that the failure to adequately fund public education as required by Proposition 98 in the State Constitution has had real effects on the schools, including: school closures; increased class sizes; program cuts; layoffs of teachers, nurses, counselors, and librarians; and loss of basic textbooks and materials.

State Superintendent Jack O�Connell held a press conference at a Sacramento elementary school to announce the filing of the lawsuit. David Sanchez, Vice President of the CTA, stated that the lawsuit has the �blessing� of the Education Coalition. The Administration has 30 days to respond to the filing and a hearing is expected within the next three to four months as determined by the court.

At the same time the press conference was occurring in Sacramento, Department of Finance Director Tom Campbell, along with the Governor�s Senior Education Advisor, Margaret Fortune, and Assembly Republic Leader Kevin McCarthy (R-Bakersfield) launched a statewide tour in Bakersfield to promote the �Governor�s Reform Agenda,� which includes support for Propositions 74 (teacher tenure), 76 (California Live Within Your Means) and 77 (redistricting); and to tout the Governor�s $3 billion increase in education funding provided in the 2005-06 budget. The event is the first of many weekly events planned until the November 8 special election.

Legislature Returns to Sacramento for the Home Stretch

The Legislature reconvened on Monday, August 15, 2005, to complete their legislative activity for the 2005 session. The appropriations committees in both houses of the Legislature will hear more than 300 bills as they face their final hurdle through legislative fiscal committees. Legislation that is approved by the fiscal committees will be referred to the floor of each house for final action before moving on to the Governor for his consideration.

The Legislature will conclude its business on September 9, 2005, when it is scheduled to adjourn for the year. Once the Legislature adjourns, the Governor will have until October 9 to sign or veto legislation that has reached his desk. Potentially overshadowing the traditional end-of-session schedule are negotiations for a �deal� between the Legislature and the Governor on a package of bills that would replace some of the propositions slated for the November 8 special election, including, the �California Live Within Our Means� Act.

Following are some of the bills affecting California Community Colleges that were considered by the Senate and Assembly Appropriations Committees. Please note that bills that have not made it to the Appropriations Committee of the opposite house are now considered to be two-year bills and may not be heard again until the Legislature returns to Sacramento in 2006. Appropriations committees must approve bills no later than August 26 or face becoming two-year bills.

AB 162 (Leslie, R-Tahoe City) would require the Department of General Services and the Board of Governors of the California Community Colleges to enter into a collaborative process to improve the quality and efficiency of community college buildings and to provide training to persons concerning the plan review process.

AB 473 (Liu, D-La Canada Flintridge) would direct the community college Board of Governors to develop a rational and transparent methodology for recommending adjustments in mandatory systemwide resident student fees. Also, an audit fee shall not exceed 150% of the per-unit student fee charged to students who enroll in the course for credit.

AB 967 (Canciamilla, D-Pittsburg) would exempt from an enrollment cap on concurrent enrollment at community colleges, a student recommended by his or her principal for enrollment in a college level advanced scholastic summer session course, or in a vocational community college summer session course.

AB 982 (Laird, D-Santa Cruz) would delete the exemption of low-income students from paying a health service fee.

AB 1070 (Cogdill, R-Modesto) would authorize a community college district to charge any enrolled student a fee to recover the costs of replacing or repairing instructional equipment that is owned or leased by the district and that has been lost or damaged by the student.

AB 1280 (Maze, R-Visalia) would establish the California Community College Baccalaureate Partnership Act Program. Under the program, the Chancellor�s Office would be authorized to annually award two grants, not to exceed $50,000 each, to a collaborative, composed of at least one community college and at least one baccalaureate degree-granting institution, formed for the purpose of offering baccalaureate degree programs on the participating community college campus.

AB 1366 (Lieber, D-Mountain View) would add the Chancellor of the California Community College system or his or her designee and a member of a community college district governing board chosen by the Chancellor to the Fiscal Crisis and Management Assistance Team (FCMAT) governing board, thus making community college districts eligible to request assistance from FCMAT.

SB 361 (Scott, D-Altadena) would delete, as of July 1, 2006, the provisions that establish the current community college funding system for allocating state general apportionment revenues to districts. A new funding formula would become effective July 1, 2006, that would address funding needs related to equalization, growth, noncredit, rural colleges, and the funding for districts of various student enrollments.

SB 672 (Cox, R-Fair Oaks) would authorize any governing board of a community college district that provides classes for inmates, including inmates of state correctional facilities, to include the units of full time equivalent students generated in those classes for purposes of state apportionments.

SB 724 (Scott, D-Altadena) would authorize the California State University to award the Doctor of Education (Ed.D.) degree, focused on preparing administrative leaders for California K-12 public schools and California community colleges.

SB 794 (Scott, D-Altadena) would require the Board of Governors of the California Community Colleges to assist economic and workforce regional development centers and consortia, including middle and junior high schools or high schools, to improve linkages and career technical education pathways between high schools and community colleges. This bill may be amended to contain the $37.4 million set-aside in the 2005-06 State Budget by the Governor for Career Technical Education.

Workers� Compensation Rate Continues to Trend Downward

Over the past couple of years, we have reported on the changes made to the Workers� Compensation system in California and how those changes would affect school employers. The latest data released by the State Insurance Commissioner reports a continuation of the trend toward lower rates for insured employers. While most school districts are not fully insured, but rather self-insure or participate in Joint Powers Authorities, monitoring what happens in the insured world can still be helpful and instructive.

The message from the Insurance Commissioner is clear: Rates continue to fall, but not as fast as the recent claims history would indicate. The reported 14.6% average rate reduction posted by carriers brings the cumulative average downward adjustment to 26.78%. But at the same time, the Insurance Commissioner has recommended reductions of 36.5%.

The Insurance Commissioner also points out that claims paid relative to premiums collected were an astounding 87% in 2002 and have dropped to 41% in 2005. This dramatic reduction in claims has created the aforementioned savings, as well as the Commissioner�s concern that savings are not flowing through to employers fast enough.

It is clear that reform legislation, particularly SB 899 (Poochigian, R-Fresno), has changed the fundamental economics of Workers� Compensation. Employers and JPAs that implement the changes allowed by the reform laws will save money. The substance of the program and the cost drivers are the same whether you are insured or self-insured. Remember that the numbers cited above are averages and that some industries have seen costs fall faster than others, so don�t fixate on the numbers . . . look to your program. Be sure you are effectively implementing those fundamental changes in identification, treatment, and rehabilitation that are allowed by the reform legislation. And if you are not seeing at least some cost reduction, you should ask why.