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Governor Sweeps Funds Out From|Under California’s 58 Trial Courts

SAN FRANCISCO (CN) - In a move that caught the judiciary off guard, California's Department of Finance revealed intentions to sweep the fund balances of all 58 trial courts a year earlier than originally agreed.

Judge Steven Jahr, director of the judiciary's administrative agency urged immediate action from the courts in a letter sent out Wednesday, calling the plan "a potential crisis that would further cripple our justice system."

He said the department contacted him a week ago saying the governor plans to cut an additional $200 million from the judiciary's budget for the courts.

That money must be offset by court reserve funds, essentially the piggy banks of saved funds that trial courts use to tide them over in lean years, forcing the courts to spend that money by the end of June. But those funds are sometimes committed in advance and judges argue they are not as liquid as they might appear.

"Essentially, any fund balance over one percent will be swept effective July 1, 2013," Jahr wrote. After June 2013, courts will only be able to keep one percent of their funds in reserve for emergencies.

H.D. Palmer with the Department of Finance said nothing is definite.

"Decisions on the budget are still being made, and no decisions are final at this time," he said.

The battle over reserve funds has been ongoing since May, when Governor Jerry Brown unveiled the plan in his revised budget package to sweep all but one percent of trial court reserves into one pot.

The news threw the judiciary into a panic, and judges took to the Legislature to argue aggressively that fund balances are not meant to be used to offset the governor's budget cuts.

When the governor's plan to take away the courts' reserve funds was revealed in May, Presiding Judge David Rosenberg of Yolo County said, "There is a vast, misunderstanding of the trial court fund balances, what they call reserves. It's not like money sitting in a savings account that we can just tap into and use."

He said that most courts have already committed their fund balances to obligations like paying commissioners, whose salaries are reimbursed by the federal government. If they are unable to pay commissioners because that money is being redirected elsewhere, certain court departments will be forced to close.

Reacting to the latest setback for the courts, Jahr said the judiciary has always operated on the assumption that the governor would give the courts two years before they were required to spend almost the entire amount of their savings. But it appears the Department of Finance had a different interpretation.

"I immediately sought a meeting with the Director of Finance to correct this communication based on the agreement that had been reached with the Administration and included in the Budget Act language," Jahr wrote. "That agreement, to protect the interests of the public against assaults on funding the branch, was that those reserves remained in the hands of the trial courts to use, in their sound discretion for an added year, to minimize the impact of the overwhelming reductions on their essential court operations."

Jahr said Chief Justice Tani Cantil-Sakauye will meet with the governor on December 12 "to communicate the dire consequences of this potential action and the need to reaffirm the commitment of our sister branches for the two-year spend-down of reserves."

Meanwhile, Presiding Judge Laurie Earl of Sacramento will be leading the state's presiding judges in further negotiations.

"We need to have a discussion with governor and Department of Finance to educate them on the impact this will have not just on the employees of our courts but the citizens of our community. The presiding judges will be involved in those discussions," she said in an interview late Wednesday. "What I hope we don't have though is another budget fight similar to what we went through last year but it looks like it might be."

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