California Lawmakers Offer Oakland a Bailout, But District May Pass
By Reagan Walker
California lawmakers have approved special legislation offering a $10-million bailout loan for the Oakland public schools.
Officials of the troubled school system said last week, however, that they were not interested in the offer and had made other arrangements for financing their projected deficit.
The bill was the most significant of a number of education-related measures approved by the legislature before it adjourned its 1989 session Sept. 15.
The Oakland measure allows state Superintendent of Public Instruction Bill Honig to appoint a "monitor/trustee" with limited powers to review the district's actions.
If the Oakland board decides to ac4cept the state loan, the trustee would gain greater oversight powers. That would create a situation similar to financial bailouts that other California districts have accepted in the past.
Even if the board rejects the loan, however, Mr. Honig could appoint a full-fledged trustee if he judged that the district had "displayed bad faith" in its recovery efforts, state officials said. The new bill makes Oakland the only school district in the state to be subject to that potential sanction.
The original version of the bill, sponsored by Assemblyman Elihu Harris of Oakland, would have forced the district to accept both the loan and the trustee. Amendments produced the final version, which passed in both the Assembly and the Senate by overwhelming margins.
The Oakland district has been plagued by charges of corruption and thievery and faces a budget deficit of up to $20 million.
In the last six months, police have charged eight school employees with crimes ranging from grand theft to forgery. The school board has been subpoenaed by an Alameda County grand jury, while an investigation by The Oakland Tribune has produced allegations of a system of patronage run by top school officials. (See Education Week, Sept. 13, 1989.)
A group of parents began circulating petitions this month seeking recalls of all seven board members.
"You've got a disintegrating school district, and the kids are suffering," Mr. Honig told local reporters. "Somebody's got to prick the boil."
The district, meanwhile, has gone ahead with a plan to finance its deficit through the sale of "certificates of participation," using school property as collateral.
Certificates worth $13.5 million were sold this month, and the district has submitted what it contends is a balanced budget to the Alameda County superintendent for approval.
The county superintendent is responsible under state law for approving the Oakland budget.
Both William Berck, the county superintendent, and Mr. Honig have said they will not approve a budget balanced with certificates of participation, which they say are intended only for capital construction and other one-time expenditures.
Sherri Willis, a spokesman for the Oakland schools, said last week that the district's financing plan "is just a better deal." She noted that the interest rate on the certificates is two points lower than the rate on the bailout loan.
"Now we just have to wait and see whether or not our budget will be accepted by the county superintendent," she said.
In other action, the California legislators approved two separate, nearly identical versions of a bill to provide textbook publishers more flexibility in submitting materials for adoption by the state board of education.
The measure had provoked a nationally watched battle that pitted Mr. Honig and other prominent educators against publishers and a leading textbook critic. But the two sides agreed on a compromise, embodied in the bills, that would allow publishers to submit materials more frequently, while retaining the board's authority to review them. (See Education Week, May 21, 1989.)
Despite the agreement, however, the state board voted to oppose the measures. Among other objections, the board contended that a provision requiring it to state its reasons for rejecting textbooks might "invite litigation by publishers of rejected materials."
Other measures approved by the lawmakers would:
- Transfer supervision of private vocational schools and other postsecondary training institutions from the state education department to a new agency.
The bill would create a 20-member Council for Private and Vocational Education to license and regulate private postsecondary schools, especially those that are not accredited by professional associations.
Public K-12 vocational education would not be affected by the bill.
- Authorize $400,000 for programs encouraging parental involvement in schools, with specific emphasis on poorly performing schools.
- Give Hispanics and other minorities more political clout in local school-board elections by requiring nine school districts with large minority populations to hold elections within specific electoral districts, rather than at-large.
- Require all middle- and high-school students to receive aids-prevention instruction unless their parents specifically objected to it.
- Require districts to inform teachers about students who had caused physical injury to anyone within the last three years, and increase the penalty for crimes committed against school employees.
As of last week, Gov. George Deukmejian had not acted on any of the bills.
Staff Writer William Snider contributed to this story.