State payment delays to schools seen as gimmick

Think of state payment delays as a paycheck that never arrives, a carrot hanging just out of reach.

But local educators are giving an effort to stop the practice a wary welcome, applauding the intent but afraid an honest budget could spell disaster.

California's payments to schools fell so far behind this year, Central Valley districts have been forced to cover about 40 percent of the state's tab by borrowing or diving into dwindling savings.

Assemblymembers Kristin Olsen and Brian Nestande propose to eliminate that cash crisis for schools. Passage, however, is anything but certain for Assembly Constitutional Amendment 29, co-authored by Republicans Olsen, of Modesto, and Nestande, of Palm Desert.

Olsen called the state's penchant for putting off payments a funding gimmick. "They're manipulating Prop. 98 by saying we'll pay this now, we'll pay this later. The problem is later never comes," she said.

Where property taxes make up the bulk of school revenue, late state payments cause few problems. Central Valley districts, however, rely mainly on state payments, pointed out Ceres Unified Superintendent Scott Siegel.

"Deferring 20 percent of your money is not as big a deal as deferring 80 percent of your funding," he said. Siegel called the pay-later practice "almost like a payday loan the state is doing." Construction funds allowed Ceres to borrow internally this year.

Modesto City Schools did the same. But for the first time in its history, the district may need a short-term loan to make payroll in October, Chief Business Official Julie Chapin told board members last week.

For many small districts, however, late payments beat low payments.

"You still have to have your lights on. You still have to provide heat and air and food," said Salida Union Elementary Superintendent Twila Tosh. "Stopping the deferrals would help, but that's not my immediate need as a small district with declining enrollment."

Stanislaus County Office of Education budget overseer Don Gatti said on-time dollars would be welcome. "In the grand scheme of things, if we could do away with deferrals it would help our districts with cash flow," he said.

But, he added, the bottom line is still the bottom line.

"In order to get rid of the deferrals, the state has to buy them off, and that means they would have to come up with money," Gatti said. "Part of the risk is, if they do away with the deferral they may have to cut us, and that's worse."

Olsen acknowledged further cuts could be a consequence of her bill. "It certainly would spur a funding debate over where the state should be spending. Right now these discussions are masked," Olsen said.

"There are no easy choices. For the fiscal health of our state, we've got to cut spending," she said.

Bee education reporter Nan Austin can be reached at naustin@modbee.com or (209) 578-2339.