The La Mesa-Spring Valley, Oceanside Unified, Ramona and San Ysidro school districts in San Diego have warned the state that they face insolvency and may be forced into bankruptcy without state funding increases.

This announcement came on June 29 from the California Department of Education, which collects financial stability reports of the district and provides analysis for counties and the state. The four districts are among 160 that have been put on the "fiscal early warning list." Fourteen districts turned in "negative budget certifications," which means they are unable to meet their existing financial obligations.

The four San Diego County districts have said they will not be able to pay their bills through the next two years. La Mesa-Spring Valley and San Ysidro were also on the "fiscal early warning list" in 2008.

"Schools on this list are now forced to make terrible decisions to cut programs and services that students need or face bankruptcy," state Superintendent of Instruction Jack O'Connell said in a statement.

The rate of insolvency among school districts and education agencies has shot up 38 percent since January. This represents an "alarming spike," O'Connell said.

Cuts in State Funding for Education, Not Mismanagement, to Blame

"This is not a problem of district mismanagement. This problem has been passed on to school districts by the state," said Lora Duzyk, assistant superintendent of business services at the San Diego Office of Education, in a recent San Diego Union-Tribune story.

Over the past two budget years, California has reduced funding for public education by $17 billion. Governor Schwarzenegger has already proposed an additional $2.5 billion cut in education funding for the next budget.

School districts have already made deep cuts to personnel and education programs, including several districts that have shortened their school years.

The La Mesa-Spring Valley, Oceanside Unified, Ramona and San Ysidro districts are working closely with the San Diego County Office of Education to identify additional steps they can take to balance their budgets.

Based on that work, assistant superintendent Duzyk does not expect any of the four districts to face the worst-case scenario. Nevertheless, the outlook for school districts struggling with insolvency looks somewhat bleak.

"Our districts are really struggling," said Duzyk. "Next year we will see larger class sizes, layoffs, a reduction of the school year, services being cut back and salaries rolled back."

"This trend will worsen if the governor's proposed cuts to public education are enacted in the 2010-11 budget. I have grave concerns that more and more school districts will face financial crisis unless state lawmakers find solutions to the state budget crisis and provide adequate funding for our schools," said state Superintendent O'Connell.

The school districts are required to submit updated forecasts by July 1.

Related Resource:

"4 school districts warn state of hardship" (San Diego Union-Tribune, June 29, 2010)