Davis Ignores Cuts Made in School Funds : Education: In a challenge to Deukmejian, he issues checks reflecting the full cost-of-living increase approved by the Legislature.

The battle over money for public schools escalated Tuesday when state Controller Gray Davis said he would ignore Gov. George Deukmejian’s proposed budget cuts and send checks to school districts based on the full cost-of-living increase voted by the Legislature.

Davis and state Supt. of Public Instruction Bill Honig, who asked Davis to take the action, are “thumbing their nose at the governor,” said one Republican consultant in the state Assembly who asked not to be identified.

But Jay Ziegler, communications director for Davis, replied: “The governor, in his budget cuts, has thumbed his nose at Proposition 98.”

Before signing the final budget on July 31, Deukmejian cut the 4.8% cost-of-living increase included in the Legislature’s version of the budget to 3%. He set aside the difference, which amounted to about $150 million.

This was part of a total of $462 million in sequestered funds to be used later to reduce class size and pay for other educational improvements.

But Davis, a Democrat, said in a telephone interview that this week he is sending about $1.7 billion in the latest periodic payments to the state’s 1,100 school districts and that the checks reflect the full 4.8% increase in basic operating support.

“I’m relying on a duly authorized certification I received from the state Department of Education,” Davis said. Unless such certification “is defective on its face, and this one was not” the controller added, “I am required to act on it.”

“I personally believe the governor violated the Constitution” by setting aside several hundred million dollars the schools were supposed to receive under Proposition 98, “but that is not the legal basis for my action,” Davis said.

Proposition 98, approved by voters two years ago, guarantees at least 40% of the state’s General Fund for public schools and community colleges.

Late Tuesday, a Deukmejian spokeswoman said that Davis “has taken ministerial actions, based on what (Honig) did,” referring to the certification. The spokeswoman also said, “We are reviewing other possible future actions.”

Many involved in the squabble in the Capitol expect the governor to sue the controller in an effort to trim the cost-of-living boost back to 3%, but Davis said, “I’m absolutely satisfied my action will withstand legal scrutiny.”

Davis said he acted because the school year is rapidly approaching and Deukmejian and the Legislature still are fighting over how much money the schools should receive.

“The whole world doesn’t wait for Sacramento,” Davis said. “School is about to start and they need the money.”

In Los Angeles, restoration of the full cost-of-living increase would produce about $40 million during the year and allow the school district to balance its $3-billion budget, budget director Henry Jones said.

“We applaud the controller for taking action to make a regular school program possible,” Jones said.

Maureen DiMarco, president of the California School Boards Assn., said school districts run some risk if they spend the extra money Davis will be sending them.

“This is sort of ‘iffy’ money for the districts,” DiMarco warned. “Can they count on it all to the end of the school year?”

Honig acknowledged that the schools could lose the difference between the 4.8% and the 3% boost if the governor should sue over the matter and prevail.

But the state superintendent said, “I think we have strong constitutional authority to do this” and predicted that a legal action by Deukmejian would fail.

Meanwhile, the governor still is trying to negotiate an agreement on the disputed money with key legislative leaders.

Last week Deukmejian proposed unfreezing $97 million of the Proposition 98 money he has set aside and allowing schools to use it for a few specific purposes.

However, that idea has gained little support in the Legislature and this week a new plan is being discussed. This one would send about $200 million in unrestricted money to school districts immediately and another $150 million next spring if economic conditions permit.

The proposal also includes $110 million to $120 million for class size reduction.

However, the stumbling block is that the governor wants the $200 million in immediate money to be on a one-time basis only, not built into the schools’ permanent funding base.

This is not acceptable to the coalition of education groups that has been negotiating with the governor’s representatives and with key legislators.

“It is imprudent to spend one-time money when your costs are ongoing,” DiMarco said. “Our coalition is very firm that the money has to go into the base.”

Whether this problem can be resolved before the Legislature adjourns at midnight Friday remains a mystery.