Sharp rise in Calif. schools facing fiscal crisis

SAN FRANCISCO -- California education officials Tuesday reported a sharp jump in the number of school districts facing severe financial stress because of the state's budget crisis.

A record 174 districts, including four central San Joaquin Valley school districts, may not be able to meet their financial obligations over the next two years, a 38% increase since January, according to the California Department of Education, which released the semiannual report on district finances.

"The economic picture for our schools regrettably is bleak," said Jack O'Connell, the state superintendent of public instruction. "This clearly is a result of inadequate funding of our schools. The lack of funding is hurting our children, our schools, our neighborhoods and our future."

The 174 districts on the state's fiscal early warning list represent about 16% of California's 1,077 local education agencies. The number of listed districts grew from 126 in January and 108 in June 2009.

Fourteen of the districts received a "negative certification," which means they may not be able to pay their bills in the current or next fiscal year. The other 160 districts received "qualified certification," which means they may have trouble meeting their obligations in the next two fiscal years.

One of the Valley school districts climbed out of the "negative certification" category but remains on the watch list.

Orange Center Elementary School District's superintendent said the district now is in better financial shape after officials recently concluded negotiations with employees.

Orange Center has made across-the-board salary cuts, created three furlough days next year and reduced benefit costs, said John Stahl, the superintendent.

For Parlier and Golden Plains unified school districts in Fresno County, the qualified status was a way of showing that the districts are unsure whether they will have the reserves available two years from now, said Jamie Perry, senior director of district financial services for the Fresno County Office of Education.

The budget status reports are issued twice each year.

West Park Elementary School District, southwest of Fresno, was removed from the list of "qualified" districts and is now in positive certification after the first status report was released earlier this year.

Superintendent Ralph Vigil said the district laid off employees at its charter school, froze salaries and reduced contracts for services.

"This time around was probably one of our hardest hits," he said.

O'Connell warned that the finances of California school districts will worsen if the state makes further cuts to education as Gov. Arnold Schwarzenegger has proposed in his 2010-11 budget.

Districts also are running out of federal stimulus funds that helped them avoid painful cuts over the past year, he added.

Districts that can't meet their financial obligations can apply for a state loan but must give up control of their school systems to the state.

Six districts that ran out of financial options are currently under state receivership.

Public education in California has received $17 billion less than anticipated over the past two years, leading to teacher layoffs, larger class sizes, shortened school years and cuts to summer school, libraries and extracurricular activities, officials said.

"These unprecedented cuts are changing the face of education for an entire generation of students," said Frank Pugh, president of the California School Boards Association.