Spring Makes for Greener City Schools Budget

A well-publicized winter warning three months ago that San Diego city schools might have to cut $16.2 million in programs because of state funding problems has largely evaporated with the coming of spring.

The latest estimates from the nation’s eighth-largest school district show only a $4-million budget deficit for 1989-90. That figure could drop even more, depending on how Gov. George Deukmejian and state legislators negotiate allocations of $1.1 billion in unanticipated revenues announced Wednesday.

San Diego city schools Supt. Tom Payzant, who issued the warning of severe shortfalls Feb. 15, said Wednesday that the financial picture has improved considerably and will allow the district to avoid major cuts in instructional programs.

Still Wary About the Future

But Payzant remained wary of predicting an even rosier scenario for next year, pointing out that there are both complex statutes regarding state spending limits and educational funding, and past difficulties between the governor and legislators in reaching agreements.

The district still forecasts a budget for next fiscal year of about $517 million, an increase of $28.4 million over this year’s $489.2 budget. Almost all the increase is targeted for contract salary increases, inflationary costs in existing programs and costs associated with projects to accommodate an increase in the number of district students, such as the opening of two new schools next year.

But the revenue picture has changed considerably, with estimates now totaling $513.3 million, contrasted with the $499.5 million forecast in February, an increase of $13.8 million. That leaves the district an estimated $4 million short at this still-early stage. The final budget is not adopted until September.

District budget chief Henry Hurley said Wednesday that the revenue increases come from several areas, including:

- Lottery money. The district now expects $170 per student from the California lottery, for a total of $19 million, the highest figures since the legalized gambling began four years ago.

- State payments on past programs. Because the state now has more revenue, the district expects it to pay longstanding claims for educational programs it required but did not fund in whole, totaling $5 million for San Diego.

- Interest rates. The district will receive an extra $2 million from higher interest on deposits.

Depends on Discussions

The district could receive even more money depending on the outcome of discussions in Sacramento, Payzant said. If, in the worst case, there is no more money, $4 million in cuts would then be required, perhaps coming from maintenance, equipment, teaching materials and other areas not directly related to instruction, he said.

Under Proposition 98, approved in November to guarantee steady support of public education, schools are guaranteed about 40% of state general revenues, plus a large percentage of money that cannot otherwise be spent by the Legislature because it puts the state over the Gann constitutional limit approved in 1979.

Payzant said that any more revenues under the Gann limit that the San Diego district receives will go to teachers. “That is the way we have structured our salary contracts,” Payzant said.

The district last year reached a precedent-setting three-year contract with its teachers. In return for the flexibility to carry out school reforms, district trustees promised that salaries will increase annually at least the minimum provided for in cost-of-living adjustments by the governor and Legislature--at present 3.2%--but can rise higher if more funds are available.

San Diego could plan new programs or expand existing curriculum offerings if it receives unrestricted Proposition 98 money in excess of the Gann limit, Payzant said. But, until now, Deukmejian has said that such funds should be used only for specific mandated programs such as drug education and class-size reduction.

Compromise Hoped For

Schools districts throughout California have argued that they should be under no restrictions on how to spend any Gann excess funds, because they might consider dropout prevention or counseling programs or new textbooks as more important priorities.

The passage of Proposition 98, by reserving money for schools, has also resulted in potentially severe funding shortfalls for health and social service programs. Deukmejian and key legislators said Wednesday that they hope negotiations will bring about a compromise on splitting extra revenues between education and other services, including transportation.

Payzant said Wednesday that a compromise is reasonable “but not a total rollback . . . not at the total expense of education after all the work we have done to make sure that education is adequately supported.”

In any compromise, Payzant said, he will argue for fewer restrictions on Proposition 98 money given to schools.