Record California school districts in "financial jeopardy"

Reuters News
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Posted: May 24, 2012 2:20 PM
Record California school districts in "financial jeopardy"

SAN FRANCISCO (Reuters) - A record 188 school districts in California are in "financial jeopardy," the office of the state's top schools official said on Monday, just a week after Governor Jerry Brown warned of the potential for deep cuts in education spending.

Another 61 local education agencies have been added since February by the state superintendent of public instruction's office to its list of districts with either negative or qualified certifications. Local education agencies include school districts, county offices of education and joint powers agencies.

The 188 districts have an enrollment of 2.6 million students.

California, which is the most populous U.S. state, has 6.2 million students enrolled across 1,037 local education agencies.

"This is the kind of record no one wants to set," State Superintendent of Public Instruction Tom Torlakson said in a statement.

His office grades school district finances with positive, qualified and negative certifications.

A district receives a positive certification if it is judged to meet its financial obligations for the current or following two fiscal years.

A district receives a qualified certification if it may not meet its financial obligations for the current or following two fiscal years.

A negative certification means a district has been deemed unable to meet its financial obligations for the rest of the current fiscal year or for the following fiscal year, which allows the state superintendent's office to intervene in district finances.

"Across California, parents, teachers, and administrators are increasingly wondering how to keep their schools' lights on, their bills paid, and their doors open," Torlakson said.

School district officials across California are preparing for a worst-case scenario in the governor's budget plan by preparing teachers and non-teaching staff for the possibility of layoffs along with other cost-cutting moves.

A week ago, Brown unveiled a revised budget plan that projects a $15.7 billion deficit, compared with a $9.2 billion shortfall forecast in January.

To close the deficit, Brown proposed deep cuts to spending on healthcare, social service and welfare programs along with reduced pay for state employees.

He included new revenue in his budget plan, assuming voters in November will approve a ballot measure to raise the state's sales tax and increase income taxes on wealthy taxpayers.

If voters reject the measure, Brown warned that an additional $6.1 billion in spending cuts would be required after the election, with $5.5 billion of the cuts falling on schools and community colleges.

Last week, Moody's Investors Service, in a report on Brown's budget plan, took note of school districts being at risk of "trigger cuts" if voters reject the tax measure.

The $5.5 billion of spending cuts that could strike education spending is $660 million more than the cuts Brown outlined in his initial budget plan in January, Moody's said.

"As a practical matter, implementing a mid-year cut of such magnitude would be highly challenging," Moody's said.

(Reporting by Jim Christie; Editing by Jan Paschal)