Published Online: June 29, 2010
Updated: March 23, 2012

Record Number of Calif. Districts Struggling to Pay Bills

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

A record 174 districts may not be able to meet their financial obligations over the next two years, a 38 percent 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 percent 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.

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 are also 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.

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