The failure of California lawmakers to enact a budget more than two months after it was due has schools operating in what one official called a 鈥渧ery bizarre, unknown place鈥� and contemplating drastic steps to cope with the fiscal crisis.
Without a state budget, districts will have to do without more than $3 billion for programs such as special education, remedial and gifted instructional programs, professional development, and school transportation.
In anticipation of a funding cutoff, some districts already are canceling bus routes, increasing class sizes, raising school lunch fees, and dipping into reserve accounts to operate schools.
Payments for certain targeted programs鈥攊ncluding child-care centers鈥攈ave been put on hold because of the stalemate between Democrats and Republicans in the legislature over how to make up a $15.2 billion deficit in the $101 billion state budget.
See other stories on education issues in California. See data on California鈥檚 public school system.
If a budget is not enacted soon, schools, hospitals, and other human-service agencies will have lost a total of more than $12 billion since the new fiscal year began on July 1, state Controller John Chiang has announced. Although the agencies may get some of that back once a new budget is passed, the amount would depend on what shape the final fiscal 2009 package takes.
The situation is likely to create cash-flow problems for some districts and force others to consider borrowing money to cover their expenses.
鈥淧eople are planning for the worst and hoping for the best,鈥� said Scott Plotkin, the executive director of the . 鈥淥n our advice and others鈥�, they are spending very conservatively because we don鈥檛 know what the final numbers will be.鈥�
The crisis has consumed the attention of state and local officials for months, and even generated a threat by the California Correctional Peace Officers Association last week to seek the recall of Gov. Arnold Schwarzenegger.
Education officials, including state Superintendent Jack O鈥� Connell, initially supported a conference committee bill in July that restored much of the $3.9 billion in cuts to education that the governor proposed in May for fiscal 2009. But that bill stalled in both houses of the legislature, failing to receive the two-thirds vote in each house required by law.
The Republican governor, in August, then recommended a compromise plan that includes a temporary 1-cent increase in the state sales tax, bringing it to 8.25 cents on the dollar. His compromise proposal included an additional $2 billion in statewide spending cuts on top of the $10 billion recommended by the conference committee.
Gov. Schwarzenegger鈥檚 August plan also called for a permanent quarter-of-a-cent reduction in the sales tax after three years.
Senate Democrats then tried, but failed, to pass their own version of a budget plan that included the tax increase, but did not include the later rollback. As a result, Republicans in the Senate rejected it.
The Senate plan also included a large 鈥渞ainy day鈥� fund that could grow to as much as 12.5 percent of the state鈥檚 general fund and give greater authority to the governor to make midyear spending cuts if revenue decreases in the future.
Meanwhile, the Senate last week defeated a Republican budget proposal鈥攐pposed by the Republican governor鈥攖hat relied more heavily on cuts and borrowing to close the deficit.
State affiliates of the American Federation of Teachers and the National Education Association also criticized the plan.
David A. Sanchez, the president of the , a National Education Association affiliate, said in an Aug. 30 statement that the plan was 鈥渇illed with smoke, mirrors, and risky borrowing schemes,鈥� and 鈥渨ould be a disaster for students, public schools, and colleges.鈥�
District-Level Impact
Gov. Schwarzenegger says he remains hopeful that his plan will get consideration.
鈥淲hat I have proposed is truly a compromise budget, because it includes elements that both parties want but also requires that everyone come out of their partisan corners and give something up鈥攎yself included,鈥� he said in a Sept. 8 statement.
Districts, meanwhile, have to pass their own budgets without knowing how much they will receive from the state for the fiscal year. The uncertainty has led to a number of pre-emptive budget decisions.
While most of the more than 14,000 California teachers who received pink slips in March were ultimately not laid off, Mr. Plotkin said it鈥檚 likely that many are working on 鈥渢emporary contracts.鈥�
While state law provides districts with another deadline by which they can cut positions before the beginning of the school year, that would have required the state budget to be adopted by Aug. 15.
In addition to public schools, state-financed preschool classrooms and other child-development programs operated by child-care centers are not receiving payments as long as the budget impasse continues.
鈥淭here are 792 child-care agencies across California, and these centers provide a range of services to about 500,000 children, but without a budget in place, we do not have the authority to pay these agencies for services rendered,鈥� Mr. O鈥機onnell said in a press conference in July.
He added that while such agencies are encourage to have reserves, 鈥渋t is difficult for agencies to manage the fiscal burden of operating a program over an extended period of time with no income to cover costs.鈥�
Credit Crunch
Many child-care and preschool providers are used to having to get short-term 鈥渂ridge鈥� loans when budgets are delayed, but restrictions from banks on borrowing have increased because of the recent credit crunch, said Sandra Giarde, the executive director of the .
Some agencies she knows of were able to secure funding for July and August but expected a state budget to be in place by September. The delay has her and other advocates worried.
鈥淢any of these centers who were already on the financial brink of disaster are going to go over the side,鈥� said Dennis Vicars, the president of the Sacramento-based , an advocacy organization. 鈥淲e鈥檙e not going to get a lot of those schools back. Those centers are going to be closed.鈥�
Mr. Plotkin, of the state school boards鈥� group, predicted that most districts won鈥檛 run out of money this school year, but that they will have 鈥渄epleted their reserves.鈥� If the economy doesn鈥檛 improve, 鈥渋t鈥檚 next year that people are worrying about,鈥� he said.
While the late budget has overshadowed most other policy matters this year, the state was able to take a step toward continuing to improve its student-data system, a move that researchers and other experts have repeatedly warned is necessary if the state is going to accurately target students鈥� instructional needs.
