California school districts must file “interim reports” certifying their ability to meet financial obligations. The most recent report lists 46 school districts — including Los Angeles and Oakland — potentially unable to meet financial obligations during the current fiscal year or next two fiscal years. That’s despite a long bull market, 30 percent income tax increase, and >50 percent increase in spending on schools since 2010.
With so many districts already in trouble, the next governor and legislature had better get prepared. That’s because the number of troubled California school districts explodes during bear markets, quadrupling after the dot-com bust at the turn of the century and sextupling after the 2008 financial crisis. With so many districts already in trouble despite a big increase in spending, just imagine the consequences when the current bull market ends.