California agencies are trying to figure out the implications of a vague executive order issued by Gov. Gavin Newsom in September that orders many policy decisions to be made with the need to “mitigate climate change” kept in mind.

A recent Sacramento Bee story suggested that among the most vexed were the California Public Employees’ Retirement System and the California State Teachers’ Retirement System, the two pension giants with estimated unfunded liabilities of $136 billion and $107 billion, respectively, according to 2018 data.

The Bee reported that while the Newsom administration wasn’t ordering CalPERS and CalSTRS to divest from firms involved in fossil fuel, it was requiring them to make new investment decisions that reflect “the increased risks to the economy and physical environment due to climate change.”

Newsom thinks fossil fuel companies are in trouble

This reflects the assumption of the Newsom administration that there will be a rapid shift away from fossil fuels – a view that many hedge funds, mutual funds and large institutional investors don’t share. Large energy corporations remain popular with their stock pickers despite global warming fears. And contrary to the idea that these companies are in decline, some investors see fracking continuing to increase oil production in the U.S. for years to come. Last week, for example, the Motley Fool investment website strongly recommended buying ExxonMobil in 2020, noting that its annual divided “has increased more than 100 percent over the past 10 years.”

Newsom’s edict is producing heartburn with some members of the CalPERS board. That’s because, as the Bee noted, “pension systems have a financial obligation to earn as much as cash as possible to provide retirement security for millions of government employees.”

Former Garden Grove Unified manager Margaret Brown, a CalSTRS critic who won election to the board in December 2017, wrote on Twitter that “unless the governor is willing to take even more $$$ from over-taxed California citizens, Newsom should step back.” 

Corona police Sgt. Jason Perez upset CalPERS Board President Priva Mathur in the October 2018 election after running a campaign that blasted Mathur and other trustees for not focusing solely on returns in their investment decisions.

But the CalPERS and CalSTRS boards have a history of using investments for decades to make political statements. In September, state Treasurer Fiona Ma – who sits on both boards – strongly endorsed such investment activism.

CalPERS quietly shifting from low-risk ‘passive investing’

That means CalPERS and CalSTRS executives are under heavy pressure to improve returns while making investments that can be defended as socially responsible.

The Naked Capitalism website reported in October that this pressure may have led to CalPERS making a major shift in investing part of its portfolio. Instead of traditional “passive equity investing” in index funds that track the S&P 500 or other large categories of stocks and emphasize diversified portfolios, CalPERS has begun to adopt a more aggressive “factor investing” approach that has a chance of generating bigger returns by focusing on industries with better prospects for short- and medium-term gains, among its many tenets. The approach is also somewhat riskier than using index funds.

Reporter Yves Smith wrote that this was a major shift in investment strategy on a par with “CalPERS’ renouncement of hedge funds” in 2014.

The website, which is run by veterans of the global financial industry, has broken a series of stories about CalPERS in recent years.

In August 2018, it revealed that CalPERS CEO Marcia Frost had misrepresented her academic background and didn’t have a college degree.

This August, it offered evidence that CalPERS was hiding a negative audit of its hiring practices that had been triggered in part by the agency’s failure to vet Frost’s claims.

Gov. Gavin Newsom and fellow Democratic lawmakers have expressed no contrition for their failed attempt to force President Donald Trump to release five years of tax returns to gain access to the California ballot in the 2020 general election.

The California Supreme Court recently ruled unanimously that Senate Bill 27, signed by Newsom in July, violated the state Constitution. The opinion by Chief Justice Tani Cantil-Sakauye at times had an incredulous tone, noting that advocates appeared unaware of SB27’s obvious conflict with Proposition 4. That’s a 1972 amendment to the California Constitution easily passed by state voters that requires presidential primaries must be open to all “recognized” candidates.

Further reflecting the state high court’s view that the law was frivolous, the unanimous verdict was delivered just 15 days after justices heard testimony in the case. Court watchers said that was highly unusual.

A federal judge had already ruled the law violated the U.S. Constitution in September. That decision was appealed by Secretary of State Alex Padilla, but the appeal was dropped after the state Supreme Court’s ruling.

Nevertheless, a spokesman for Newsom continued to depict the now-void law as well-intentioned.

Jesse Melgar told the San Francisco Chronicle that the governor “would continue to urge all candidates to voluntarily release their tax returns. … Congress and other states can and should take action to require presidential candidates to disclose their tax returns.”

Padilla issued a statement expressing disappointment with the state high court’s decision but also declaring “the movement for greater transparency will endure. The history of our democracy is on the side of more transparency, not less.”

‘Ridiculous’ bill said to reflect ‘arrogance and hypocrisy’

Defenses of the law were scoffed at by opinion writers.

The Sacramento Bee editorial board – which had ripped SB27 as “silly and destructive” when Newsom signed it into law – wrote that the measure  “was so ridiculous and flawed that even California’s justices could barely conceal their disdain.” 

The Southern California Newspaper Group’s editorial noted that the state high court “quoted former Gov. Jerry Brown’s veto of a similar bill in 2017: ‘Today we require tax returns, but what would be next? Five years of health records? A certified birth certificate? High school report cards?’

“Democratic lawmakers and a new governor refused to learn from that message. They tried again and embarrassed themselves. They richly deserved the court’s smackdown.”

The Los Angeles Times editorial board wrote that the tax-returns law “accomplished only one thing: giving Trump more ammunition against the state he loves to mock.”

Times columnist George Skelton was the harshest critic of all, noting that many of the Democrats who claimed the moral high ground in backing the tax-returns requirement were not transparent about their own finances.

“This is not about whether Trump should release his federal tax returns,” he wrote. “Rather, it’s about Democrats enacting a blatantly unconstitutional law with a straight face for purely political reasons. It’s about arrogance and hypocrisy.”

Part of SB27 that was reportedly included at Newsom’s behest remains intact. It’s the requirement that gubernatorial candidates provide five years of tax returns to qualify for the ballot beginning with the 2022 election.

The bill was introduced by Sen. Mike McGuire, D-Healdsburg, and Sen. Scott Wiener, D-San Francisco. It passed in Senate on a 29-10 vote and in the Assembly on a 57-17 vote in early July.

Gov. Gavin Newsom has announced an immediate suspension of permits allowing new hydraulic fracturing and steam-injected oil drilling – the latest in a series of moves in the past week underscoring California’s determination to be seen as a leader in climate change efforts.

“These are necessary steps to strengthen oversight of oil and gas extraction as we phase out our dependence on fossil fuels and focus on clean energy sources,” Newsom said in a statement released by his office.

While Newsom’s predecessor, Jerry Brown, also used his job to promote the Golden State as a leader in the effort to reduce the greenhouse gas emissions believed to be a primary cause of global warming, he opposed a fracking moratorium. Brown’s aides noted the economic benefits of being the third-largest oil-producing state – home to 72,000 wells and 350,000-plus good-paying oil-related jobs. Brown may also have been intrigued by disputed reports in 2013 that the Golden State was sitting on massive oil reserves larger than those of Saudi Arabia.

Catherine Reheis-Boyd, president of the Western States Petroleum Association, pushed back hard at Newsom’s assertion that California had no choice but to crack down on unsafe drilling practices.

“Multiple state agencies already validate our protection of health, safety and the environment during production,” she said in a statement. Reheis-Boyd joined several Republican officials in warning of severe economic consequences of what they depicted as an end to new oil drilling.

State may require buffer zones around many oil wells

But the obstacles Newsom plans to add to gas and oil exploration don’t stop with a ban on the two extraction techniques. The Los Angeles Times reported that he “plans to study the possible adoption of buffer zones around oil wells in or near residential neighborhoods, schools, hospitals and other facilities that could be exposed to hazardous fumes” – a move with the potential to sharply add to regulatory burdens of owners of the wells.

Other moves that Newsom has announced in the last week include:

• The state will no longer purchase gas-powered sedans. Law-enforcement agencies are exempted.

• The state will only buy vehicles from automakers that agreed to follow California’s vehicle-emission rules rather than the weaker rules backed by the Trump administration. So far, Ford, Honda, Volkswagen and BMW have sided with California. General Motors, Toyota, Nissan, Mazda, Subaru, Hyundai, Kia and Fiat Chrysler last month said they would follow the weaker federal standards.

• The Newsom administration has formally asked the California Public Utilities Commission to permanently close the Aliso Canyon natural gas storage facility in Porter Ranch as soon as feasible. The facility has been the target of intense protests by its neighbors and environmentalists since a 2015 disaster resulted in among the largest releases of methane gas in world history – an immense leak that took nearly four months to stop and forced the evacuation of nearly 3,000 households.

Environmental groups hailed Newsom’s series of moves – especially what they depicted as the beginning of the end of fracking in the state.

Livermore lab experts must OK new fracking permits

But the governor’s announcement left open the possibility that new fracking permits could be – if independent experts from the Lawrence Livermore National Laboratory attested to their safety.

That’s not necessarily a long shot. Even as greens spent years depicting hydraulic fracturing as dangerous and destructive, several Cabinet members in the Obama administration said it was akin to other heavy industries – mostly safe if properly regulated.

In 2015, U.S. Interior Secretary Sally Jewell told KQED, the Northern California PBS channel, that local moratoriums on fracking approved by several cities in the state were the “wrong way to go.”

“There is a lot of misinformation about fracking,” she said. “I think that localized efforts or statewide efforts in many cases don’t understand the science behind it and I think there needs to be more science.”

But Newsom said he didn’t agree with this benign view of fracking while campaigning for governor in 2018 and promised a crackdown if elected.

The news that Apple had pledged to give $2.5 billion to address housing needs in the San Francisco-Silicon Valley region and California in general – on top of $1 billion each previously promised by Google and Facebook – led to praise from politicians as well as from civic groups and housing nonprofits. Gov. Gavin Newsom called the announcement “proof that Apple is serious about solving this issue.”

But news analysis pieces prompted by the announcement were downbeat on the likelihood that it would bring any significant relief to a housing market that is so expensive that nearly half of Bay Area residents say they want to move – much less “solve” the crisis.

Leslye Corsiglia, executive director of the San Jose-based housing advocacy group SV@Home, told the San Francisco Chronicle, “It’s really great to get all this land and money, but in order to get units under construction and moving forward, we need to get project approvals. That does require policy and advocacy work to get the votes to move forward.”

Getting projects approved can take many years

The difficulty of getting projects approved in the Bay Area and Silicon Valley was cited in virtually all coverage of Apple’s pronouncement. Some cited the fate of the Vallco mall in Cupertino, less than a mile from where Apple opened its $3.6 billion headquarters in 2017.

Developer Sand Hill Property Co. acquired the mostly vacant 58-acre mall in 2014. But despite the region’s housing shortage, Sand Hill faced bitter opposition from the Cupertino City Council and local activists to its plans to build 2,400 residential units (half considered affordable), 400,000 square feet of retail space and 1.8 million square feet of office space on the site.

The $4 billion project was rejected first by local planners and then by voters in 2016. In early 2018, after state officials listed Cupertino as one of the hundreds of cities in California that had not built enough housing, Cupertino Mayor Darcy Paul defiantly said his city would not be pressured to respond to a housing crisis that he suggested was exaggerated.

City officials finally gave approval to the project a year ago after an analysis concluded that under Senate Bill 35 – the measure by Sen. Scott Wiener, D-San Francisco, that bars cities from rejecting certain projects that are properly zoned and include affordable housing – they had no choice. But because of further foot-dragging and legal threats, demolition of the main mall building was delayed until Oct. 2018 – four years after Signal Hall bought the property.

‘Affordable’ housing costs $700,000 in Bay Area

The second reason that Apple’s pledge was downplayed has to do with the extreme cost of building even what’s considered affordable housing in the Bay Area. While the average cost for a subsidized housing unit in California is about $420,000, housing officials say the cost is about $700,000 in the Bay Area and Silicon Valley.

If all $4.5 billion pledged by Apple, Google and Facebook were spent on such housing, that would add about 6,300 homes. Housing advocates say at least 54,000 such units are needed in the region – and far more if there is going to be enough supply to actually bring down rents that average more than $2,500 for small studio units.

Apple plans to provide a $1 billion line of credit for affordable housing projects. It also will set up a $1 billion fund to help first-time home buyers with down payments.

“We know the course we are on is unsustainable, and Apple is committed to being part of the solution,” Apple CEO Tim Cook said in a statement.

Nonetheless, the view that Apple was addressing a problem its explosive growth helped create was common – especially among progressives who see tech giants as a malign force. Sen. Bernie Sanders, the Vermont independent who is running for the Democratic presidential nomination said Apple’s announcement  “is an effort to distract from the fact that it has helped create California’s housing crisis.”

A scathing audit on school funding that found the state did not meet promises made six years ago to help English language learners, foster children and students from poor families sets up a 2020 test of the clout of the California Teachers Association and the California Federation of Teachers – and of the willingness of Gov. Gavin Newsom to take on the unions who were early backers of his successful 2018 candidacy. 

State Auditor Elaine Howle’s review focused on how school districts in San Diego, Oakland and Clovis had implemented the Local Control Funding Formula, which was adopted by the Legislature in 2013 at the behest of then-Gov. Jerry Brown. The governor and then-Senate President Darrell Steinberg, D-Sacramento, were among several leaders who said the LCFF would be a game changer by getting additional assets to struggling students.

But Howle found instead that billions in extra funds the formula directed to districts with high percentages of English learners, foster kids and poor families had been used for general needs – including raises for teachers. She concluded there was little or no evidence that the LCFF had boosted these students’ performance.

“In general, we determined that the state’s approach [to Local Control] has not ensured that funding is benefiting students as intended,” Howle wrote.

Howle’s finding confirmed all the major criticisms of the formula that have been raised by education reformers and by civil rights lawyers who have repeatedly sued Los Angeles Unified over its treatment of poor minority students. 

Bill to track school funding couldn’t even get a hearing

But these groups have never gotten far with Local Control changes. Last spring, Assemblywoman Shirley Weber, the San Diego Democrat who pushed for the audit, couldn’t even get Assembly Education Committee Chairman Patrick O’Donnell, D-Long Beach, to hold a hearing on her bill to require disclosure of how LCFF dollars are being used.

Howle’s audit gives Weber new evidence to push for tracking such spending, and she has said fixing Local Control is her top priority in 2020. But O’Donnell, a former teacher who is close to the CTA and CFT, is unlikely to drop his opposition to tracking the funding.

A key question is likely to be what the governor does. While Newsom won the early endorsements of the two teacher unions, he spent the 2018 campaign telling editorial boards and the Los Angeles and Silicon Valley billionaires who back education reform that he too wanted to fix Local Control to ensure it helped struggling students and had proper accountability protections.

But any attempt to get school districts to stop spending LCFF dollars on teacher compensation – and on rapidly growing teacher pension costs – will go directly against the CTA and the CFT. They already see available school funding as inadequate and are both pushing for billions of dollars in tax hikes in two measures expected to be on the ballot in November 2020. They also won changes that will make it more difficult for charter schools to be approved or renewed using the argument that charters were diverting funding from regular public schools at a time when those schools are desperately underfunded. They are unlikely to accept the notion that the audit must be acted on.

Meanwhile, Newsom has so far used his political capital to advance an education reform that teachers unions also may question. But the reform – using metrics to track the performance of students throughout their K-12 journey – isn’t nearly as contentious as the state forcing many school districts to reorient their Local Control spending and stop using it for raises and pension bills.

The Trump administration’s efforts to bend California to its will on a variety of fronts have been mixed at best. Last week, for example, a panel of judges from the 9th U.S. Circuit Court of Appeals affirmed yet again that federal funding to state law enforcement agencies couldn’t be linked to their assistance in deporting illegal immigrants. Judges have ruled for the state and against the federal government in cases involving other immigration issues and environmental policies.

But the White House can claim a substantial win on vehicle emissions. Last week, many of the largest automakers in the world sided with President Donald Trump in his view that it’s not good for the U.S. economy for the nation’s largest state to have tougher rules on vehicle emissions and miles per gallon than those set by the federal government.

General Motors, Toyota, Nissan, Mazda, Subaru, Hyundai, Kia and Fiat Chrysler are backing Trump’s attempt to end the waiver that California has had for more than 50 years allowing it to set tougher standards on emissions for vehicles sold in the state. Twelve other states – Connecticut, Delaware, Maine, Maryland, Massachusetts, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, Vermont and Washington – have adopted the Golden State’s rules.

The fight was triggered by the Trump administration’s decision to scrap rules set by President Barack Obama that required automakers to have their vehicles average 55 miles per gallon by 2025. This led California Gov. Gavin Newsom to reach out to automakers to seek their voluntary compliance with tougher standards, winning support in July from Ford, Honda, Volkswagen and BMW for a plan under which their fleets would average 50 miles per gallon by 2026 – weaker than what Obama wanted but much tougher than Trump’s rules, which would set 37 miles per gallon as the industry standard.

Newsom said then that he was “very confident” other automakers would accept California’s standards. Instead, the largest automakers in the U.S., Japan and South Korea have sided with Trump in filing arguments with the U.S. Court of Appeals for the District of Columbia, which is considering a lawsuit from California and 22 other states seeking to uphold the Obama administration’s fuel-efficiency rules.

The automakers and the National Automobile Dealers Association said that they needed “the certainty that states cannot interfere with federal fuel economy standards.”

Newsom, Brown decry Trump’s global warming skepticism

Obama, Newsom and most climate scientists see requiring higher gas mileage standards as the easiest way to reduce the greenhouse gas emissions that build up in the atmosphere and cause global warming. Vehicle emissions in recent years have passed power plant emissions as the single biggest generator of greenhouse gases.

Trump rejects the conventional wisdom about greenhouse gases. As the New York Times reported Saturday, he has “directed the Environmental Protection Agency to roll back nearly every federal policy designed to curb the heat-trapping fossil-fuel pollution that is the chief cause of global warming.”

In the report, Newsom told the Times that the state’s recent history of devastating wildfires was directly related to climate change.

“We’re waging war against the most destructive fires in our state’s history, and Trump is conducting a full-on assault against the antidote,” Newsom said.

Newsom’s predecessor, Jerry Brown, framed the issue even more dramatically in testimony to Congress last week.

“The seas are rising, diseases are spreading, fires are burning, hundreds of thousands of people are leaving their homes,” he said. “California is burning while the deniers fight the standards that can help us all. This is life-and-death stuff.”

The political pressure on Gov. Gavin Newsom, the Legislature and the California Public Utilities Commission to break up Pacific Gas & Electric has grown rapidly since PG&E ordered power outages from Oct. 9-12 that affected more than 2 million people in response to the fire threat posed by heavy winds.

The utility began another planned outage Wednesday that affected 178,000 homes and businesses — once again saying it had no choice because gusty winds could cause its infrastructure to spark fast-moving wildfires.

But the idea that one of the great wealth-producing regions in the world can’t keep the lights on infuriated many in Silicon Valley and the Bay Area. San Jose Mayor Sam Liccardo said his city was interested in buying all or part of PG&E and turning it into a municipal utility. “I’ve seen better-organized riots,” Liccardo said of PG&E’s preparations for the Oct. 9-12 outages.

San Francisco has sought parts of PG&E for months. On Oct. 9, Mayor London Breed offered PG&E $2.5 billion for its energy infrastructure serving her city. The utility rejected the offer.

Meanwhile, Newsom’s Oct. 14 call for PG&E to provide residential customers affected by the Oct. 9-12 outage a credit or rebate of $100 and small businesses $250 was rejected Tuesday by the utility. This was seen as an effort by the governor not just to get PG&E to pay for the mass inconvenience it had caused but to create an economic disincentive to the utility imposing outages even when fire risks were only moderate.

Will Newsom drop support for PG&E getting out of bankruptcy?

Newsom is in a difficult situation that could lead him to abandon his support for PG&E emerging from its Chapter 11 bankruptcy, which was declared in January after the utility acknowledged it faced $30 billion or more in wildfire liabilities. The utility must do so by July 2020 to be eligible for a $26 billion wildfire relief fund the Legislature passed this summer to help utilities deal with the massive cost of fires. 

As recently as November 2018, support for PG&E among state lawmakers was significant enough that Assemblyman Chris Holden, D-Pasadena, told reporters he would carry a bill to protect the utility from wildfire liabilities. But such support is no longer evident in the Capitol. Newsom’s recent descriptions of PG&E as greedy, incompetent and untrustworthy resemble the longtime rhetoric of the utility’s harshest critics, such as state Sen. Jerry Hill, D-San Mateo.

Pundits from several state newspapers and news websites have speculated that Newsom’s political future depends on how he handles the PG&E crisis. They noted that Gov. Gray Davis was so hurt by rolling blackouts in the winter of 2000-2001 that a Republican-led effort to replace him in 2003 rapidly caught fire and culminated with Arnold Schwarzenegger replacing Davis.

“I’ve seen this movie before,’’ Garry South, a Democratic strategist and a top aide to Gov. Davis, told Politico California.

But even if Newsom deftly handles the PG&E matter, he could still face blowback over what some experts expect to be a series of big increases in power bills from utilities overwhelmed by the cost of wildfires and of preparing for them in an era of hot, dry conditions. California’s rates are already 50 percent higher than the national average, according to data from August.

As South told Politico, Californians may not have had cause to blame Gov. Davis for the 2000-2001 blackouts. But when bad things happened that affected the basics of modern life, they blamed the person in charge, he said. 

Eleven months after leading a successful campaign against a ballot measure that would have repealed fuel tax hikes approved by the Legislature in 2017, Gov. Gavin Newsom is facing bipartisan criticism over his administration’s decision to cancel three road projects in the Central Valley and San Luis Obispo County.

Newsom has rejected the criticism that he had engaged in a “bait and switch” because he previously emphasized to voters in 2018 that at least 60 percent of the $5.2 billion generated annually by the 2017 tax hikes would go to roads and bridges, as specified in Senate Bill 1.

But his Sept. 20 executive order directed state transportation officials “to leverage the more than $5 billion in annual … spending for construction, operations and maintenance to help reverse the trend of increased fuel consumption and reduce greenhouse gas emissions” and to “reduce congestion through innovative strategies designed to encourage people to shift from cars to other modes of transportation.” 

Soon after, Caltrans – citing Newsom’s order – said the three road projects had been subject to “deletion” from a list of scheduled work at a savings of $32.5 million. It also said other road projects had been reduced in scope, creating a total savings of $61.3 million “to be held in reserve for priority rail projects and other priorities aligned with [the governor’s] executive order.”

Assemblyman Rendon says voters remembered ‘clear promises’

This led to criticism not only from Republican officials in the Central Valley and San Luis Obispo but from Assembly Speaker Anthony Rendon, D-Lakewood.

Gas taxes were raised “with some clear promises … that this money would be used … almost exclusively for roads and repairs,” he told the Los Angeles Times. “Now is not the time to go back on those promises.”

But Newsom said he would honor Senate Bill 1 exactly as it was written and said critics shouldn’t “conflate” his Sept. 20 executive order with the state’s “locked in” commitment to fix roads and bridges.

Nevertheless, Democrats in the Legislature have good reason to be wary about fallout from their support of the 2017 gas tax hike. One of their few setbacks in recent years as they have established lopsided majorities in the Assembly and Senate came in June 2018 when state Sen. Josh Newman, D-Fullerton, was recalled easily after a campaign that focused on his vote for the gas tax hike.

But the potency of the issue has been evident longer than that. In 2002, 69 percent of state voters backed Proposition 42, which made it more difficult for gas taxes to be shifted for use on general needs. In 2006, 77 percent of state voters supported Proposition 1A, which added even more restrictions.

Gas tax revenue diverted to general uses in 2010

Yet these measures were unable to block Gov. Arnold Schwarzenegger and the Legislature from raiding gas taxes again in 2010. Facing a huge budget deficit after the Great Recession had led to a nearly 20 percent drop in state revenue, the Republican governor and Democratic lawmakers and their lawyers came up with a plan to end state sales taxes on gasoline while sharply increasing excise taxes. Because the “gas tax swap” didn’t increase revenue, it was allowed to be enacted on a simple majority vote.

And since there were far fewer restrictions on gas excise taxes than gas sales taxes, lawmakers were able to take $1.8 billion in annual gas excise revenue for general uses.

Senate Bill 1 in 2017 eliminated the law setting up the tax swap.

In an effort to portray a far-reaching bill as a compromise between charter schools and teacher unions, Gov. Gavin Newsom invited leaders of both groups as well as state Superintendent of Public Instruction Tony Thurman to recent signing ceremonies for Assembly Bill 1505.

In remarks at the event, Myrna Castrejón, president and CEO of the California Charter Schools Association, asserted that the new law “affirms that high-quality charter schools are here to stay and that the charter model — one that embraces accountability in exchange for the flexibility to innovate — is worth protecting and is of tremendous value to the students we serve.”

But what Newsom and Castrejón sought to depict as a balancing act was instead seen in most news coverage as the biggest blow yet to the California charter school movement, which began slowly in 1992 but now includes 1,300 schools that educate about 660,000 of the state’s K-12 students.

One modification to the original bill by Assemblyman Patrick O’Donnell, D-Long Beach, was a huge win for charter schools. It allows charter applicants and charters seeking renewals to appeal rejections from local school boards to county and state officials. A provision on requiring all charter teachers have formal credentials was revised to give charter schools until 2025 to comply.

Trustees can cite fiscal concerns in opposing charters

But the single most important part of the new law is the provision most sought by teacher unions and most feared by charter advocates. That is language that allows district boards to reject charters solely on financial grounds.

In an era in which annual school spending has soared — up from about $67 billion in 2014 to a record $102 billion now, a 52 percent increase — it would nominally appear that charters don’t have much to worry about from such a provision. Yet many state school districts are struggling to make ends meet now as much as they did during the Great Recession a decade ago, when state spending plunged nearly 20 percent in a single year.

Analysts say one reason districts are in trouble has to do with the increase in special-education students, who cost significantly more to educate and whose statewide budget got a 21 percent boost in May.

But the main headache is the enormous cost of the Legislature’s 2014 bailout of the California State Teachers’ Retirement System. It mandates that districts increase their CalSTRS payments by 132 percent from 2014-15 to 2020-21. Yet partly because of a significant increase in the number of retiring teachers getting pensions, the actual hit on district budgets over that span is much worse — 196 percent, the Legislative Analyst’s Office said earlier this year.

Pension bailout eating up surge in school funding

This has had the effect of pushing the total cost of compensation to 90 percent or more of the operating budgets in some districts, with by far the state’s largest district — Los Angeles Unified — among the hardest-hit. In May, LAUSD officials warned that a state takeover by 2022 was likely unless voters approved a parcel tax. Voters opposed the tax despite a heavy lobbying campaign. LAUSD’s fiscal reserves may not even cover the next three years unless state education spending keeps going up, district watchers warn.

But the problems are statewide. The state’s Fiscal Crisis & Management Assistance Team — which helps districts in distress — has had to focus on problems in the counties of San Diego, Sacramento, Oakland and more.

In response, a union-led coalition is seeking to qualify a November 2020 ballot measure modifying Proposition 13, the state’s famous 1978 tax-limitation law. It would allow the valuation of commercial properties to go up each year to reflect their value instead of the maximum 2 percent increase allowed under Proposition 13, generating potentially $5 billion or more in new annual funds for schools. 

The coalition had already qualified a similar measure for the 2020 in fall of last year, but decided to withdraw it because of the fear that its harsh potential effects on small businesses would make it a hard sell.

Rushing to meet last week’s deadline for filing amicus briefs, dozens of local governments and other groups in California have jointly and separately beseeched the high court to uphold laws targeting sleeping in public. Such laws are seen as a key way to crack down homelessness.

The flood of legal filings came in support of an appeal to the U.S. Supreme Court filed by the city of Boise, Idaho. The city opposes a September 2018 ruling by a three-judge panel of the 9th U.S Circuit Court of Appeals that held that just as governments “may not criminalize the state of being ‘homeless in public places,’ [the city of Boise] may not criminalize conduct that is an unavoidable consequence of being homeless — namely sitting, lying or sleeping on the streets.”

In July, Boise hired attorneys Ted Olson and Theane Evangelis of the Los Angeles-based law firm Gibson, Dunn & Crutcher for its appeal. The attorneys sought amicus briefs from affected local governments and stakeholders in the states bound by the 9th U.S. Circuit’s ruling: Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon and Washington.

Lawyers for Boise say court overreached

Olson’s and Evangelis’ argued that the Boise ruling could create never-ending legal fighting by taking away a tool communities need to deal with homelessness, as well as create massive new fiscal obligations.

As CalWatchdog reported last week, the L.A. County Board of Supervisors backed joining an amicus brief prepared by the California State Association of Counties. Among the other government bodies that decided to back Boise:

• The city of Los Angeles. City Attorney Mike Feuer said last week that the ruling “could place the city at risk of litigation as leaders strive to fashion the humane, practical solutions this crisis urgently demands.” Mayor Eric Garcetti, an outspoken advocate of what he sees as a humane approach to homelessness, did not support Feuer’s decision.

• Riverside, Orange and Fresno Counties.

• The cities of Sacramento, Fullerton, Torrance and Newport Beach.

The decisions reflect a rift between high-profile politicians like Garcetti, Gov. Gavin Newsom and Sacramento Mayor Darrell Steinberg who call for a compassion-first approach on homelessness and politicians who are responding to frustration and anger from their constituents over homeless encampments disrupting neighborhoods. Homelessness has gotten steadily worse in most California cities over the last dozen years, fueled initially by the Great Recession and then by the high cost of housing.

But the Boise ruling also is unpopular across the West. The Idaho Statesman reported that 20 amicus briefs supported by 81 different groups from a range of states had been filed with the U.S. Supreme Court.

Plaintiffs’ lawyers doubt high court will take case

The newspaper noted that one was filed by MaryRose Courtney, whose brother is homeless and mentally ill, and the Ketchum-Downtown YMCA in Los Angeles. Unlike many of the briefs, it didn’t focus on the fiscal and quality-of-life headaches that could result from the Boise ruling. Instead, Courtney challenged the notion that tolerating sleeping in public was humane.

This approach is “leading to more aggressive policing, as police prohibited from enforcing anti-camping laws turn to arresting homeless people for more serious offenses like public urination, public defecation and public nudity,” she wrote. “Court rulings like the 9th Circuit’s in this case do far more harm than good because they lead to deregulation and generate apathy and inaction, as well as a sense of frustration that discourages further efforts to help the homeless.”

But plaintiffs’ lawyers from Idaho Legal Aid Services and the National Law Center on Homelessness & Poverty told the Statesman that they were skeptical the Supreme Court would take up the case because the ruling by the panel of 9th Circuit judges was based on earlier court rulings on homeless ordinances that had not been overturned. 

Plaintiffs have four weeks to prepare a response to the amicus briefs.

If the high court decides to take up the case, a hearing is expected in the spring with a ruling by the end of the court’s term in June, the Statesman reported.