Commentary

I recently introduced myself at an Epoch Times function as someone who watches train wrecks in slow motion.

For example, I warned of the $1.69 billion portfolio loss and resulting bankruptcy of Orange County, California, back in 1994, as well as the dramatically increasing defined benefit pension formulas enabled by the state Legislature that have been choking out municipality budgets in the Golden State since 1999.

On Aug. 28, 2018, near the close of the legislative session, Assembly Bill 3120 was brought up for a vote on the California Senate floor. It would extend the statute of limitations for suing for damages due to childhood sexual assault.

I would be the only state senator to argue against this bill. Before addressing this bill that day, I had an occasion or two to express my concerns to my 39 Senate colleagues about California’s school districts and their fiscal status. The majority of these roughly 1,000 districts have unrestricted net deficits on their statements of net position (balance sheets).

Because the Legislature approves hundreds of bills at the close of the session, I kept my remarks brief. Here is a condensed transcript of my comments:

“I rise in opposition to A.B. 3120. I mentioned a couple times the financial condition of our school districts. It’s dismal.

“And extending the statute of limitations on childhood sexual assault civil claims is righteous, it makes sense. But it may devastate certain districts in our state and it will make obtaining insurance next to impossible.

“It could be the straw that also breaks the backs of schools and numerous businesses and nonprofits.

“And here we have a bill that hammers potentially a lot of agencies that have kind of thought they were through and done, and now we’re opening up a tough issue, and it could be fiscally detrimental to many, and I would caution [against] an ‘aye’ vote. I would recommend a ‘no’ vote.

“Thank you, Madame President.”

The bill was vetoed by then-Gov. Jerry Brown. He was very aware of the potential costs to state agencies.

However, Gov. Gavin Newsom signed a similar bill, Assembly Bill 218, in 2019.

Well, as I warned, train wrecks are occurring. The Los Angeles Unified School District recently announced that it will be issuing $500 million in bonds to pay for these newly generated lawsuit settlements. This already cash-strapped district will find it difficult to make the annual principal and interest payments.

Los Angeles County will be issuing $4 billion in bonds for the same reason. It is near the bottom in fiscal rankings of California’s counties. Who knows what to expect from other municipalities in the coming months and years as more train wrecks in slow motion are occurring? Contact any California school district to see if it is going to court or simply settling. And then ask how it plans on paying these costs.

California is not alone in extending the statute of limitations unilaterally and catching agencies uninsured and underfunded. The Missouri General Assembly did just that in February.

California now finds itself with a massive budget deficit. So it will be in no shape to offer fiscal relief. The state has already stopped paying down what Brown referred to as California’s “wall of debt” by skipping payments for two years on the state’s other post-employment benefits.

Additional borrowing means that California is one of only two states that have not repaid the federal government for unemployment benefit funding loans. The Golden State has dropped to 43rd place from 41st during the past six years, based on a per capita ranking of unrestricted net positions.

Predicting train wrecks in slow motion has been relatively easy of late. And trying to be “righteous,” when it is obviously unaffordable, has become fiscally detrimental to California’s 944 school districts, 73 community college districts, 482 cities, and 58 counties. Their fiscal health will be in more jeopardy over the coming months and years.

Such is the price of a poor conductor running the train. Some say that “as California goes, so goes the nation.” Unless smarter fiscal leaders in this state capitol prevail, you can join me in watching train wrecks in slow motion.

Correction: A previous version of this article misstated the name of the bill signed by Gov. Gavin Newsom. The Epoch Times regrets the error.