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SB 1457: School District Liabilities (2006)

Summary

SB 1457 (2006) would have:

  • Required the CA Department of Education to develop standards and criteria governing the actuarial studies of school district liability in accordance with Governmental Accounting Standards Board (GASB) Statement 45.
  • Required County Superintendents to determine whether each county budget covers nonpension liabilities and if not, what amount is necessary to cover the unfunded liabilities.
  • Required School Districts to develop a 30-year plan, based on GASB 45 studies to fund all currently unfunded nonpension benefits liabilities.
    • These plans should recognize, 1) the annual liability accrued each year and 2) any existing liability for current and past employees

  • Required the CA Department of Education to submit to the substantive legislative committees (Education, Budget), the Legislative Analyst’s Office, and Department of Finance reports that detail:

    • outstanding nonpension liabilities, by district
    • normal costs of nonpension liabilities, as defined by GASB 45
    • actuarial cost of current and retired employees
    • amount and manner of funding for prefunded benefits

 

Final Status and Text

SB 1457 is no longer active. Its final status was:
Did not pass the Legislature

You can read its final text on the Legislature's Bill Information site.

Background Information

School districts all over the state are exposed to potentially crippling financial liabilities as a result of unfunded nonpension retirement benefits.  In an effort to remain competitive, many school districts have obligated themselves to nonpension retirement benefits (primarily health care) without a plan to fund those obligations. 

Problem:
Until recently, many of these districts have simply paid for the benefits as they were claimed.  This pay-as-you-go methodology has led to overwhelming liabilities that, if claimed, could bankrupt many of the state’s largest school districts.  Fresno Unified is currently estimated to have an unfunded liability in the neighborhood of $1 Billion, more than twice the district’s annual revenue.  LA Unified has recently been estimated to carry an unfunded liability approaching $10 Billion.