California Poised to Take Over Dozens of Insolvent School Districts

[Modern School]

110 California school districts are at risk of insolvency, compared with 37 five years ago, according to the Bay Citizen. Ironically, the distressed districts, which face expensive state takeovers, are distressed precisely because the state has slashed $21 billion from public education funding over the last three years (combined with declining revenue from property taxes and increasing costs).

As federal stimulus funding dries up at the end of this school year, the number of districts going belly up is likely to grow. According to the Bay Citizen, many districts are draining their strategic reserve funds to survive another school year, which puts them at risk of going belly up the following year.

Almost 50% of California's most desperate school districts are in the San Francisco Bay Area, which has some of the highest property values in the state. The Bay Citizen looked at financial reports from the 2010-11 school year and found that 13 CA school districts received negative certifications from the state and were not expected to meet all of their financial obligations. Six of these districts were in the Bay Area. 97 other school districts were identified as at risk of failing to meet their financial obligations.

Under California law, school districts cannot file for bankruptcy. Rather, the state must take them over and appoint administrators to bolster their finances. Since the state has already made it clear that it has no desire to fund schools sufficiently, the only way to shore up struggling school districts is by cutting costs. This will likely cause massive layoffs, exacerbating the state’s already high unemployment rate of nearly 12%, or lead to furloughs and shortened school years, which will dramatically reduce teachers’ already low incomes. It could also lead to increased class sizes, reduced course offerings, school closures and other cuts that will negatively impact student safety and wellbeing.

Much of this nightmare scenario has been playing out for the last few years in school districts that were already on the state’s watch list prior to the financial meltdown. Hayward Unified School District, for example, slashed around $26 million from its operating costs by firing staff, increasing class sizes and cutting music programs for fifth graders. Teachers who weren’t fired will be forced to take three to seven furlough days this year. Despite these “sacrifices,” the district is still considered at-risk and is being watched by the state.

Modern School
http://modeducation.blogspot.com/2011/10/california-poised-to-take-over-dozens.html

[pnwmom]

1. I wonder why the districts with the highest property values

are among those most in trouble?

[ProgressiveProfessor]

2. Califiornia schools are state funded, not locally funded

It is not related to property values

[Modern School]

3. CA schools are primarily funded by property taxes

The state provides extra funding, but property taxes are the primary source of funding. The majority of schools get substantially more from the state in addition to revenues from local property taxes. However, the most affluent districts (e.g., Beverley Hills and some in Marin and San Mateo countries) get only "basic aid" from the state because their local property tax base is so much higher than the other districts.

[ProgressiveProfessor]

4. The formulas also do not allow substantive disparities between districts

Due mostly to court actions, there are no very rich districts in California. Some however are in deep straights financially.

[Modern School]

5. Basic Aid Districts Have A Lot More

The basic Aid districts actually have significantly more per pupil than the majority of districts, which are revenue limit. Consequently, they've had far fewer layoffs and furloughs, cut programs, and other problems shared by the majority of the districts. There has been a recent move to level the playing field. As a result the state has been cutting a higher percentage of its contributions to basic aid districts than to revenue limit districts. In terms of real dollars, though, the revenue limit districts are still getting screwed harder, since they rely more heavily on state revenue.