Ask SSC . . .
Do Community Colleges Need to Prepare a Collective Bargaining Disclosure or Certification Before Approving a New Agreement?
Q. One of the candidates running for our Board of Trustees used to be on the board of education for an elementary school district and was asking to see the “AB 1200 Disclosure” for our recent settlement with our faculty union. She said that her previous district prepared this along with a “Certification” for the last settlement that the board ratified with the teachers’ union. I had not heard of these items before, but I did some research and now I understand that they are required for K-12 school districts. Are they also required for community college districts?
A. By the early 1990s there had been a number of K-12 school districts that had significant enough fiscal crises to require an emergency apportionment from the state most notably the Richmond Unified School District (which, by the way, changed its name to the West Contra Costa Unified School District after this). Districts that receive an emergency apportionment lose local control of the district—the powers of the Board and the superintendent are all vested in one person—a state-appointed administrator for the district.
It was clear to the state’s policymakers at that time that there needed to be ways for identifying fiscal problems earlier on so that there would be a chance to resolve them before getting to the point of needing a loan from the state. AB 1200 (Chapter 1213/1991) enacted a number of measures that required additional reporting requirements from school districts to county offices of education and provided additional oversight powers to county offices of education and the state for fiscal matters in school districts. Earlier this decade, after yet more school districts became fiscally insolvent and required state loans, AB 2756 (Chapter 52/2004) was enacted to further strengthen the reporting requirements of school districts and the powers of oversight agencies when it came to fiscal matters.
Through the enactment of these two laws, and other laws over the years that have made more minor changes to the relevant code sections, all K-12 school districts are required to meet certain reporting requirements to the county office of education, such as:
· Providing additional updates to the budget at particular points during the year
· Including a projection in each version of the budget that provides the financial picture for the next two fiscal years—in total, a three-year budget
· Including a monthly cash flow report in each budget update that shows actual inflows, outflows, and balances to date, with projections for the rest of the fiscal year
· Preparing a worksheet and set of questions, referred to as the “Criteria and Standards”, testing for possible areas of fiscal concern
· Including with each budget update a certification page indicating that the district’s budget is either:
o Positive, meaning that the district will meet its obligations (including maintaining its minimum reserve levels) for all three fiscal years
o Qualified, meaning that the district may not meet its obligations (including maintaining its minimum reserve levels) for all three fiscal years
o Negative, meaning that the district will not meet its obligations and maintain its minimum reserve levels for the current and next fiscal year
· Providing additional reports to the county office of education as required if the district’s budget is qualified or negative
In particular, when it comes to collective bargaining agreements, before the Board ratifies a tentative agreement, all K-12 school districts are required to prepare what’s referred to as an “AB 1200 Disclosure” document. It outlines the provisions of the tentative agreement and the costs incurred for the agreement for the current year and for additional years included in the life of the agreement. This includes step and column movement cost increases, health and welfare benefit premium increases paid by the district, and other items of cost—such as lowering class sizes and caseloads—in addition to any salary increases that are provided. This information is required to be disclosed at a public meeting of the school board before the agreement is ratified.
And, for K-12 school districts that have a qualified or negative budget, this disclosure must be provided to the county office of education at least ten days before the Board takes action so that the county office of education can review and publicly respond to the tentative agreement.
Another significant requirement with respect to collective bargaining is that, for each successor agreement, before the Board can take action, the Superintendent and the Chief Business Official of the district must sign what’s called a “Certification” form, to certify that the district can afford the cost of the collective bargaining agreement for the life of the agreement. This means, for most successor agreements, that the AB 1200 Disclosure form proves that the district can afford the cost of the agreement for not only the current year but also the following years. And, if the district cannot afford the cost of the agreement, the Board is required to take action to make the budget cuts that are necessary to afford the agreement before, or at the same time as, ratifying the agreement.
Conclusion
According to legal opinions, one of which has come from the Chancellor’s Office, the above provisions do not apply to community colleges. This is one reason why SB 1123 (Wiggins, D-Santa Rosa), which is pending the Governor’s signature, applies to community colleges and not K-12 school districts. This bill would require all community colleges to prepare a statement of the actuarial impact on future annual costs before authorizing changes in postemployment benefits. For K-12 school districts, this is already done under the AB 1200 Disclosure requirement.
Recommendations
Even though AB 1200, AB 2756, and related provisions do not apply to community colleges, we have covered them here in greater detail because we believe that there is merit to the idea of preparing multiyear projections and monthly cash flow projections with each budget submitted to the Board. Both of these projections can provide a district with early warning signs of a fiscal issue and allow the Board to take action early on to avert it.
In addition, we believe that the idea of preparing a multiyear projection to look at the cost of a tentative agreement should be done during collective bargaining—before the tentative agreement is struck at the table—so that the board does not ratify a tentative agreement that perhaps looks affordable in the current year but could cause a serious fiscal issue in a subsequent year.
There have been several community college districts that have had fiscal crises in recent years, one of which did require a loan from the state and lost local control as a result. This is an outcome that is not good for anyone—the state, the local community, and the students of that community college. Community colleges would be well served by modeling the reporting requirements of K-12 school districts in order to avert a fiscal crisis, and the interventions that are available through oversight agencies as a safety net once they are in a fiscal crisis in order to recover locally and avoid state receivership.
Even though these are not requirements of community colleges, preparing the multiyear projections, the cash flow projections, and the disclosure information for tentative collective bargaining agreements could be a wise choice for a community college district to make in order to ensure that it maintains fiscal solvency and local control.
—Sheila G. Vickers