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School district's failure points to a more fundamental syndrome

By Dan Walters -- Sacramento Bee Columnist

Published 2:15 am PDT Sunday, June 27, 2004

The Legislature last week performed a task that has become increasingly - and disturbingly - common: authorizing an emergency loan to keep a financially troubled school district from shutting its doors. The latest example of the syndrome is Vallejo City Unified, which has a $20 million deficit and would have run out of operating cash in just a few weeks had it not received the $60 million loan, the second-highest such bailout in state history. It was the seventh state takeover of a school district since 1991, but the pace of failure is quickening, and dozens of districts are flirting with disaster.

The silver lining on this otherwise dark situation is that Gov. Arnold Schwarzenegger and his fellow Republicans didn't just roll over when Democrats sought the bailout loan for Vallejo. They refused to grant the loan until Democrats agreed to pass a reform measure that will allow authorities to identify troubled districts and intervene before they descend into virtual bankruptcy and that will bring some regularity to the emergency loans. Democrats have been reluctant to improve school district oversight because of the almost universal nature of these crises: They involve districts that serve nonwhite and usually urban populations with school boards that have been politically captured by unions and induced to spend money that they cannot truly afford. Closer supervision could make it more difficult for the politically powerful California Teachers Association and other unions to have their way with these boards.

A clue to that political dynamic is found in what happened after the state granted a $100 million loan ($65 million of which has been tapped) to the Oakland Unified School District last year and took over its administration. Oakland had amassed a $60 million deficit, largely due to its hiring of several hundred teachers and raising teacher salaries by 24 percent. And, emulating the state's own funny-money budget practices, Oakland officials had covered up the deficits with phony numbers.

2009 Update: Oakland regained local control in June, 2009 and adopted this budget.

The Fiscal Crisis and Management Assistance Team, a Bakersfield-based agency created in 1991 to help troubled districts, issued a critical report on Oakland schools five years ago, but the district did not heed its advice. FCMAT was called in again after the state takeover to analyze the district's finances and management, pinpoint causes of its distress and recommend corrections. And inevitably, it zeroed in on Oakland's irresponsible spending policies - which angered unions and their political sycophants.

Assemblywoman Jackie Goldberg, D-Los Angeles, a former teacher with very close ties to school unions, demanded an audit of FCMAT's operations by the State Auditor's Office - clearly hoping that it would produce ammunition for a political assault that would bring the agency to heel.

Ironically, the audit report was issued just as the Vallejo matter was reaching its climax in the Capitol - with Democrats pushing for a bailout loan and Republicans insisting on broader reform. And the audit was a complete vindication for FCMAT, much to the dismay of its political enemies. The auditor found, essentially, that the agency does exactly what it was intended to do and is very careful about spending money. In fact, the audit suggested that more school district failures could be averted if FCMAT's recommendations were followed.

Despite the propaganda by the unions and apologists for the failing districts, there's no intrinsic reason for the syndrome. While state and local financing for schools is not lavish, it's adequate to do the job if school boards and administrators are prudent - as demonstrated by the fact that the vast majority of districts don't get into trouble.

Districts fall into crisis for exactly the same reasons the state has run up tens of billions of dollars in deficits over the past three years: spending money they don't have in response to political pressure. Then-Gov. Gray Davis and the Legislature diverted billions of dollars into permanent new spending and tax cuts after receiving a one-time windfall of income tax money from gyrations in the high-tech stock market. Schwarzenegger was elected on his promise to bring the same kind of adult supervision to the state that the state, ironically enough, must provide to districts.


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Last modified: December, 2004

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