State Panel Again Raps Financing of Schools

The state’s Little Hoover Commission, in another report criticizing the lack of state control over spending on public schools, charged Tuesday that local school districts are plagued by mismanagement, deficit spending and excessive emergency borrowing.

Release of the study was accompanied by a fresh exchange between Nathan Shapell, chairman of the commission, and state Supt. of Public Instruction Bill Honig over management of the schools.

Shapell, who said accountability of school budget dollars is “desperately lacking at the state level,” charged at a Capitol news conference that Honig was “sidestepping” his responsibility to exert control over school spending.

Honig, who did not attend the news conference, said Shapell was out of line. “The idea that I am not willing to step in there when it is needed is just not true,” the schools chief said.

Honig said Shapell, a successful businessman, wants to make the state schools superintendent a “czar” over the schools so that a single person could be held accountable for the system. But Honig said that would remove control from local boards of education.

“I don’t want to be a czar. That is just not our system. You are talking about a wholesale revolution in the way we run our schools. The chairman of the commission is the only one in the state who seems to want that kind of a system,” Honig said.

Power to Intervene

The new report by the commission, known formally as the Commission on California State Government Organization and Economy, urged that Honig be given greater authority to intervene in financially troubled districts. It also called for the state Department of Education to conduct more financial reviews and recommended that penalties be increased for school districts and accounting firms that fail to meet state standards.

The conclusions seem to support arguments by Gov. George Deukmejian that the problem with public schools in California is not that they are being inadequately funded--the position taken by Honig and others--but that school districts are not managing their budget dollars as well as they could be.

Deukmejian has appointed his own commission to look into the management of the public schools, and it is expected to release its preliminary report Dec. 1.

The nine-month study, similar in tone to reports released periodically over the last five years, called the lack of control over the nearly $20-billion system of funding kindergarten through high school education in California “inexcusable.”

Basically, the report said that since the state provides two-thirds of the funding for the public school system, it should be more responsible for the management of schools.

The report said that state funding had increased more than 50% between the budget years of 1982-83 and 1986-87, from $12.8 billion to $19.5 billion. Despite that, it said a growing number of school districts are in “poor financial” health. It said that 24% of the state’s school districts engaged in deficit financing during the 1985-86 budget year.

“Poor financial management practices have resulted in some school districts seeking bail-out loans from the Legislature and may have contributed to the number of incidents of theft, fraud, and financial abuse in school districts,” the report said. It did not cite specific examples.

Shapell said the commission found that some school districts could not account for all their tax dollars. “If they don’t know, if Honig doesn’t know . . . you know what this is, that to me is absolute lawlessness. Nobody knows,” he said.

Honig said the problem of late audits has been virtually eliminated because of legislation that passed during the last session requiring districts to meet deadlines. He also said a bill enacted recently will allow him to move into financially troubled districts and appoint outside financial consultants.

Assemblywoman Teresa P. Hughes (D-Los Angeles), who chairs the Assembly Education Committee and appeared with Shapell at a Capitol news conference, said the system isn’t working.

“We distrust the schools and the schools distrust us and the superintendent distrusts the governor and the governor distrusts the superintendent and all the legislators distrust each other,” she said.

Hughes said she and Assemblyman Charles Bader (R-Pomona), vice chairman of the committee, will be introducing legislation in January to implement many of the commission’s recommendations.