Schools Brace for Drastic Funding Cuts : Education: Wilson’s first budget slashes spending, sources say. L.A. system expected to be hit hard by declining revenues.

California educators are bracing for Gov.-elect Pete Wilson’s first state budget, which one school official called “the worst in recent memory.”

Locally, the Los Angeles Unified School District, the state’s largest with 610,000 students, would be hit hard by funding cutbacks. The district could lose an estimated $120 million next year under Wilson’s budget proposal, on top of an unexpected cut of at least $60 million in the current year.

Otto Bos, Wilson’s communications director, said the 1991-92 budget is “being finalized” and no details will be made public until the new governor delivers his budget message Thursday.

Several legislative and educational sources who have been involved in budget planning said the state’s fiscal problems will result in a budget that cuts $1 billion from public schools statewide, delays opening a 10th University of California campus in the San Joaquin Valley and will probably lead to large increases in student tuition and fees at UC and California State University schools.

“The budget will be rather Draconian,” one well-informed source said.

Those involved in the negotiations said the proposed budget will eliminate cost-of-living increases for public schools and community colleges, which will amount to budget cuts because of inflation. The budget proposal also is expected to eliminate operating budget increases for UC and Cal State systems, again resulting in actual cuts from 1990-91 spending levels.

Robert Booker, chief business and financial officer for the Los Angeles school district, said that he had not been briefed on Wilson’s budget proposal. If the cuts being discussed in Sacramento materialize, he said, “it would be devastating to us, not only to the L.A. Unified but to districts all over the state.”

The Los Angeles district recently finished a round of deep budget cuts, slashing spending by $220 million and ordering 269 layoffs and the elimination by attrition of another 731 positions in administrative, maintenance and non-teaching staff.

In passing its $3.9-billion budget in September, the school board completed its most difficult round of fiscal deliberations since Proposition 13 sharply reduced school revenues in 1978.

The district stands to lose an additional $60 million this year because of a drop in lottery revenues and because officials gambled on having a larger cost-of-living increase than state revenues will permit.

Booker said a backup plan for further cuts this school year is being developed but he declined to disclose details. “I just can’t say just who is going to be affected,” he said.

The state budget reductions are prompted by the faltering economy and plunging state revenues, which are expected to produce a state budget deficit of $7 billion to $8 billion over the next 18 months.

If approved by the Legislature, the cuts would take effect July 1, the start of the new budget year.

Underlying the financial problem is the likely suspension in Wilson’s first budget of funding guarantees approved by voters in 1988.

Proposition 98, the voter-approved initiative that guarantees public schools and community colleges at least 40% of state general fund revenues, would have to be suspended in 1991-92 if schools and community colleges are not to receive cost-of-living increases, state fiscal analysts said. Although approved by voters, the funding guarantee can be suspended by the Legislature.

State Superintendent of Public Instruction Bill Honig and the California Teachers Assn., the principal backers of Proposition 98, can be expected to oppose its suspension under any circumstances.

Honig said in an interview that he had not been briefed on the 1991-92 budget, but had heard rumors that there would be no cost-of-living adjustment.

“We have no problem with that if it’s fair and across the board for all agencies,” he said. “But if it’s just education, we do have a problem.”

Some sources said education was not being singled out and there would be no cost-of-living increases in any departments next year.

Budget planners in the Department of Education estimate that declining state revenues will translate into a $450-million shortfall for kindergarten through 12th grades in the current budget year and a $1.1-billion loss in 1991-92.

The legislative analyst’s office is somewhat more optimistic, predicting that the current-year shortfall will be $242 million, growing to $703 million next year.

Department of Education officials said they hope to keep per-pupil spending at the same level--about $4,800 per student--in 1991-92 as this year, but they acknowledged that this amounts to an actual decline because of the effects of inflation.

The state’s public higher education institutions also expect bad news Thursday.

Community college officials said they project the Proposition 98 shortfall to amount to about $45 million in the current budget year and about $100 million in 1991-92.

William B. Baker, UC vice president for budget and university relations, said: “Our expectation is the budget’s going to be pretty flat,” meaning no increase in the $2.1 billion in state support the university is receiving this year.

“There are three things we can do--raise tuition and fees, lay people off or cut students,” he said. These options will be discussed with the UC Board of Regents at meetings Jan. 17 and 18. A detailed plan is expected to be ready a month later.

UC President David P. Gardner has warned several times that UC cannot continue to accept all qualified freshmen (the top 12.5% of the state’s high school graduates) if state financial support does not increase.

“The time has arrived to make that decision,” one of Gardner’s top aides said last week.

A knowledgeable Cal State source said the operating budget for that 20-campus system also would be the same next year as this--$1.7 billion.

Staff writer Larry Gordon in Los Angeles contributed to this story.