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Published in Print: July 9, 2003, as Education Aid Falls Hostage To California Budget Impasse

Education Aid Falls Hostage To California Budget Impasse

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California school leaders are bracing for what is turning out to be a perfect political storm.

As the legislature missed the June 30 state constitutional deadline to approve a budget, State Controller Steve Westly announced that, in accordance with a court order, he would withhold about a third of state education funding from districts until a budget had been approved.

In addition, Mr. Westly will withhold the salaries of legislators and their staffs in the hope of pressuring lawmakers to reach a consensus on the budget.

The total education aid to be withheld amounts to about one-third of districts' state allotments, totaling $250 million or more each month. Those funds include state aid for special education, charter schools, after-school programs, and a host of other programs.

Local districts will, however, receive the state's basic per- pupil education grants.

Districts will begin seeing the impact by about mid- July, said Rick Miller, a spokesman for the state department of education.

The reduction in funding will most immediately affect schools and districts that run on year-round calendars, Mr. Miller said last week. But other districts will quickly see an impact on their ability to hire special education teachers and order supplies, among other tasks, as they prepare for the 2003-04 school year.

If the standoff continues for weeks or months, districts will likely use up their financial reserves, said Kevin Gordon, the executive director of the California Association of School Business Officers. Then they would be forced to cancel programs or maybe even shut down, he said.

"Perhaps the pressure of school services' closing is the only thing that can inject sanity" into the budget process, he said.

Growing Storm

Several factors surrounding California's budget crisis are combining to produce the perfect storm: a budget deficit that has reached historic proportions, a legislature paralyzed by partisan politics, and a governor facing a fast-growing recall effort.

Further, while California has often missed its constitutional deadline for the budget, this year is different because of a state supreme court order last year that severely limited the type of funds that can be disbursed by the state controller. Seven other states also missed their June 30 deadlines.

Facing a $38 billion deficit out of an annual budget of about $80 billion, Republicans are resisting Gov. Gray Davis' call to raise taxes, including his proposed half- cent increase in the state sales tax. Meanwhile, Democrats say they won't approve any more cuts to programs, and say that, in particular, education spending must be protected.

Though Democrats rule both chambers of the legislature, recent budget plans have lacked the two-thirds majorities needed to pass.

As time ran out last week, there was little hope the two political parties could mend their differences and hammer out a compromise budget any time soon.

At the same time, a Republican-led effort to oust Mr. Davis, a Democrat, appears to be snowballing, and could result in a recall vote this fall. Some observers say that Republican legislators are resisting passage of a budget, in part, to cast further doubt on the governor's leadership skills and to garner support for that effort. ("California Recall," State Journal, this issue.)

Gov. Davis wants to keep education funding and teacher salaries stable, and preserve the state's class-size-reduction program while offering districts unprecedented flexibility in how they spend state money for other education programs.

"I aim to preserve the progress we've made," the governor said in a statement.

Vol. 22, Issue 42, Page 17

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