Del Mar Union School District board passes resolution against reserve cap

By Karen Billing

Like the action recently taken by the San Dieguito Union High School District board, the Del Mar Union School District board approved a resolution Aug. 27 opposing the cap on school district reserves proposed by new legislation in the state.

The local reserves cap is part of the state’s “Rainy Day Fund.” Proposition 2 will go out to voters on the November ballot, and if it passes and the state’s Rainy Day Fund is established, as soon as even $1 is put into the fund, school districts will be required to spend down their reserves.

In June, Governor Jerry Brown signed into law SB 858, the education budget trailer bill that requires districts to spend reserve balances down to no more than two to three times the minimum level of statutory reserve for economic uncertainties.

In Del Mar’s case, its reserves could not be in excess of 6 percent of its total general fund expenditures. DMUSD maintains a reserve balance of about 15 percent — $11.5 million — to ensure fiscal solvency at all times. The reserve is made up of $1.3 million for “economic uncertainties,” said Cathy Birks, assistant superintendent of business services, and $7.3 million in unassigned/unappropriated expenditures.

“I don’t know any districts not opposed to the reserves cap. It’s of particular interest to a district like ours that relies heavily on reserves in uncertain times,” DMUSD Superintendent Holly McClurg said.

McClurg said their reserves were one reason why they didn’t have to “dismantle” their educational system during the last economic downturn. Birks said that if a cap had been in place, they would be in a very difficult position.

Trustee Scott Wooden said he believes the cap is “ridiculous” and the district should have the authority to manage its funds.

The resolution passed unanimously.