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Judge Halts Plan To Close Schools In Calif. District

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A California judge last week averted the bankrupt Richmond school district's planned shutdown of its schools by ordering the state to do whatever is necessary to keep the system operating.

Judge Ellen S. James of Superior Court in Contra Costa County ruled that the state, by allowing Richmond schools to close six weeks early, would be failing to meet its constitutional obligation to provide students there with a public education "basically equivalent" to that offered elsewhere in the state.

The judge ordered the state to ensure that students in the Richmond Unified School District "are not deprived of six weeks of public education while others within the state are not so deprived."

"How these defendants accomplish this is up to the discretion of the defendants," Judge James said.

Education-finance experts said last week that the judge's decision was the first in which a court had ordered a state to maintain a struggling district. Analysts cited the ruling as a major precedent for California, where at least 20 districts are financially troubled, and potentially for other states, which now may see themselves as having a greater stake in the financial well-being of districts.

Politically, the decision was seen as a setback for Gov. Pete Wilson, who had vowed not to sign any legislation bailing out Richmond unless it granted broad financial powers, including the right to suspend union contracts, to a state administrator for the district.

Governor Wilson responded to the court decision last week by filing an appeal. The ruling, his spokesman said, sets a bad precedent and gives districts the go-ahead to spend recklessly with assurances that they will be backed up by the state, which already faces a record $12.6-billion deficit.

Ed Foglia, president of the California Teachers Association, called the judge's intervention "good news" and accused Governor Wilson of valuing the suspension of collective bargaining over the welfare of Richmond students.

Superintendent of Public Instruction Bill Honig and State Controller Gray Davis, meanwhile, last week announced a plan to provide the district with a loan of $19 million to see it through the remainder of the year.

Judge James on Thursday approved the loan plan, which gives a state trustee broad powers to oversee district finances.

Last-Minute Reprieve

More than 200 people, many wearing black arm bands, crowded the courtroom last Monday and cheered Judge James's decision, which came on a class action against the district and state that named as plaintiffs 11 parents and their 19 children.

The decision was issued one day before Richmond had planned to close its 47 regular schools and five alternative sites because it could not meet another payroll. The district filed for bankruptcy protection last month under Chapter 9 of the U.S. Bankruptcy Code.

School employees, who two weeks ago had sent notices of the school closings home with the district's 31,500 students, were called in early Tuesday morning to print and distribute an equal number of notices saying the schools would stay open. Callers to district offices heard recorded accounts of the judge's decision, and schools were in session as usual on Wednesday, which otherwise would have been the first day of an extended summer break.

"This clearly was a last-minute reprieve," said Michael Harris of the San Francisco Lawyers Committee for Urban Affairs, who was one of two laywers representing the parents in the suit.

The school board of the Richmond district, which once had been hailed as a national model for parental choice and other school reforms, last week considered plans to reorganize and to slash next year's budget from $146 million to $112 million.

For this year, the district plans to make up its projected deficit of $23.5 million through the $19-million state loan and through the receipt of $4.3 million in desegregation funds that previously had been withheld by the state.

Mr. Wilson filed an appeal to the superior court's decision last week, and the California attorney general's office, which is representing the Governor, announced that it would ask the state supreme court to take the case directly.

Signal for Irresponsibility?

"The court is requiring the state to bail out Richmond regardless of the circumstances that have led to their bankruptcy," said Bill Livingstone, a spokesman for the Governor, adding that "local authorities have horribly mismanaged the district."

The superior court's decision "sends a signal to all other school districts that they do not have to be fiscally responsible and can over-spend to the point of bankruptcy and not have to worry, because the state is required to pay their bills," Mr. Livingstone said.

The state lent Richmond Unified $9 million last year, yet "they failed to take the steps necessary to ensure they will not continue to operate at a deficit," the spokesman said. The state already fulfilled its obligations to Richmond this year by giving the district its regular allotment of state aid, he argued.

Mr. Livingstone said the Governor, by appealing the case, does not have to give state money to the district until the appeal is decided. Mr. Wilson cannot prevent the state superintendent and controller from providing funds to the district, however.

Even if Governor Wilson wins his appeal, two other suits on funding for the Richmond schools are still pending.

The first, filed last month on behalf of 17 students by the cta, claims that the state provides Richmond with less money per student than similar districts, and asks for equitable funding.

The second, filed against the state by a Richmond group called Parents and Advocates of Special Education, asserts that closing the district's schools would deprive its 3,400 handicapped children of federally funded and guaranteed special education.

'Bare-Bones' Program

The plan devised last week by Mr. Honig and Mr. Davis provides that the $19-million loan be paid back with interest over 10 years. The loan, to be taken out of state funds for various education programs, is enough to support "a bare-bones educational program" in the district until the end of the year, according to William L. Rukeyser, a spokesman for the state education department.

The loan agreement incorporates provisions that Assemblyman Robert J. Campbell of Richmond had included in a rescue bill that had withered this spring under the threat of a veto. The provisions include the assignment to a state trustee of all powers--except for the authority to suspend collective bargaining--needed to carry out the loan plan.

"This is not a bailout," Mr. Rukeyser said. "It is a loan that will be repaid, and it is designed to enforce prudent management."

Mr. Honig has laid the blame for Richmond Unified's financial woes squarely on the shoulders of the former superintendent, Walter L. Marks, who, Mr. Rukeyser said, "spent them into oblivion."

Mr. Marks, who is now superintendent of the Kansas City, Mo., schools, has declined all comment on the Richmond case.

Although Judge James's decision technically was binding only in the Richmond case, policy analysts said the precedent it sets may be felt throughout California and the nation as a whole.

"If this stands, the state government will become even more intrusive and increase its regulations concerning school budget practices," predicted Michael W. Kirst, a professor of education at Stanford University and co-director of Policy Analysis for California Education.

Mr. Kirst said the court decision shatters the assumption that districts will have to address deficits through budget cuts, and removes from district boards the option of closing early in response to overwhelming shortages of funds.

Allan R. Odden, a professor of education at the University of Southern California who also serves as co-director of pace, noted that the district had operated several years without having its annual budgets certified by Richmond County officials, as required by state law. He suggested that the state may need to step in as soon as a district fails to submit balanced budgets for certification.

Elsewhere, "states might begin to watch more carefully the fiscal vitality of their districts to try to preclude court involvement in these things," said C. Kent McGuire, an assistant professor of education at the University of Colorado at Denver and a consultant to the Education Commission of the States on finance issues.

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