Governor Won’t Sue Over Schools : Education: He remains convinced, however, that Controller Davis lacks authority to issue larger payments to districts.

As many California children completed the first week of the new school year, Gov. George Deukmejian announced Friday that he will not sue Controller Gray Davis to stop him from giving the public schools a greater cost-of-living increase than Deukmejian approved when he signed the state budget in July.

Deukmejian said he remains convinced that Davis is on a course that would violate the California Constitution. But the governor said a lawsuit would be more timely in the spring when the monthly distributions Davis is making, if they continue at their current rate, would actually exceed the total Deukmejian approved.

Deukmejian’s decision to back away from an immediate court test with Davis makes it more likely that the schools will reach some sort of settlement with the next governor and that a legal confrontation over the money will be avoided.

The governor’s remarks came at a sidewalk press conference after a speech in which he blasted the state’s “education establishment” for continually complaining about school funding.

“It’s clear we’re not getting our money’s worth,” Deukmejian told a large gathering of California business leaders.

Deukmejian, who will leave office at the end of this year, apparently has no intention of letting up on the criticism he has directed at the schools in recent years. He told the business leaders that his Administration has provided a 65% increase in school funding, after inflation, while enrollments have climbed just 23%.

Yet, he said, test scores have declined in the last two years, an average of 300 students drop out every day, and drug use is rampant in many schools.

“The disturbing gap between the product we are paying for and the product we are actually receiving is costing us our competitive edge in the international economy,” he said.

When Deukmejian signed the current state budget in July, he cut the cost-of-living increase the Legislature had approved for the schools from 4.8% to 3%. He set aside the difference, he said, to pay for a reduction in class size.

But Davis, a Democrat, sent the first batch of checks to the school districts at a rate that would give them the full 4.8% increase. Davis said he based his action on paper work he received from state Supt. of Public Instruction Bill Honig.

Deukmejian said he still believes that Davis lacks the constitutional authority to give the schools more than the 3% increase contained in the budget. The total of the monthly payments, however, will not exceed that amount until sometime next year.

“He can send that out now, but for the whole year, he is going to have to adjust it downward,” Deukmejian said. “Otherwise he’ll be violating the law, violating his oath of office, and I doubt seriously he’ll want to risk that.”

Deukmejian said the next governor, a private organization or a taxpayer could sue Davis when the time comes. Asked if he would consider going to court himself after he leaves office, Deukmejian said: “I won’t rule it out at this point.”

In a separate interview, Honig said he was relieved that Deukmejian had decided not to try to block the payments.

“This will let us work it out with the next governor, reinstate this funding and get it out to the schools,” Honig said. “What’s ridiculous is that this money has been going out to the districts, but they’re not sure they can use it. It’s not doing anybody any good.”

Robert Booker, chief budget and financial officer for the Los Angeles Unified School District, said the governor’s decision seemed to make it more likely that the full cost-of-living increase would be provided. Booker said the district plans to spend all the money it receives despite a warning from the governor that future allocations might be reduced.

“This is indeed good news,” Booker said. “This means we don’t need to make additional budget cuts at this time.”