Failed ‘System for Choice’ Serves as Lesson to Schools : Education: A highly touted reform program has put Bay Area’s Richmond district on brink of bankruptcy.

For three heady days in November, 1989, the struggling, working-class Richmond Unified School District basked in the unfamiliar glow of national recognition.

Its charismatic superintendent, Walter L. Marks, had seemingly hit pay dirt with his project converting the district’s 47 campuses into specialty schools and allowing parents to choose among them. The Bush Administration, touting parental choice as an efficient, supposedly low-cost way to reform failing schools, had picked the district for one of its four “strategy meetings” across the nation. About 1,000 educators, parents and policy-makers from throughout the West came to the 31,000-student, San Francisco Bay Area district for what the glossy white conference brochure trumpeted as a “Spotlight on Richmond.”

Today, the spotlight casts a harsher glare. Richmond is in the news again, broke and struggling to meet its payroll and keep its doors open through the end of the school year.

Much of the “System for Choice” program--which promised fuller, more exciting educational opportunities--seems doomed to fall under the budget ax. The Contra Costa County Grand Jury is investigating district finances. The $29-million state loan the district is seeking--its best shot to avoid becoming the first school system in California to go bankrupt--has been held up in a bitter, potentially far-reaching row between the California Teachers Assn. and Gov. Pete Wilson.

Most say Richmond trod alone on an aberrant path, in just three years outspending its income by about $60 million, largely by adding staff and expensive equipment for the choice program. Its annual budget of $144 million is currently in the red by close to $30 million, and a consulting firm hired to assess the damage found the deficit “so great that traditional methods of cutting expenses and finding ways to increase revenues are inadequate.”

Its predicament stands as a warning to other school systems in California, most of which are facing hard choices in trying to live within shrinking means. Faced with a deepening budget deficit, the governor has proposed sharp cuts in state funding to schools, which depend on Sacramento for roughly three-fourths of their money.

And the specter of Richmond may well haunt the dreams of penniless would-be school innovators for years to come. Except for $6.8 million the Legislature granted this year for pilot education reform projects, California has very little money to spend on costly reforms.

“We’re well aware that we messed up,” said Sylvester Greenwood, a Richmond High School graduate who was Marks’ right-hand man and was named acting superintendent after the school board bought out Marks’ $112,000-a-year contract just before Christmas. “Choice was a good program, but we couldn’t afford it.”

“People should realize from this that choice is not cheap, it is expensive,” said Maureen DiMarco, Wilson’s secretary for child development and education. “If schools go into something like this, they should go in with their eyes open and operate in a fiscally responsible manner. . . . I don’t know if (Richmond’s experience) will deter others from (trying a system of) choice, but it should certainly deter them from trying for a quick fix,” DiMarco added.

Almost from the start there were some who said “quick fix” was an apt description for Richmond’s efforts, hurriedly implemented without consulting teachers or parents. The $10 million spent on computers alone and such costly extras as musical instruments, a seldom-used photography darkroom and microwave ovens for cooking classes ate into the budget for textbooks and other classroom supplies.

Academically, the district has little to show for its money: Scores on the California Assessment Program tests shot up initially but soon began plunging again, leaving the district well below statewide averages in most grades and subject areas.

“This district has badly overextended itself. . . . I have never seen a case of fiscal mismanagement as bad as this,” said Fred Stewart, a retired superintendent brought in by the state Department of Education last summer, when the Legislature gave Richmond a $9-million loan.

“But every district in California is starting out in the hole this year; everybody faces this,” Stewart added, citing inadequate funding over the last few years, rising costs and the education spending cutbacks proposed for the coming fiscal year.

Just last week, state education officials issued a list of California districts that are on shaky financial ground. Besides Richmond, Woodland Joint Unified School District in Northern California has a deficit. Twenty more districts have said they may have trouble paying their bills by the time the current fiscal year ends June 30.

Others, including the mammoth Los Angeles Unified School District, have been making drastic midyear budget trims to stay in the black, while virtually every district in the state anticipates making sharp cuts in the coming year.

Currently, Stewart has veto power over the Richmond school board’s spending decisions. If the district gets a new loan, he will get full decision-making authority, marking the first state takeover of a district in California history. The district’s elected officials will become mere advisers until it is back on its feet, which will probably be at least two years.

“My advice to any superintendent and school board in this state is to do anything in the world to stay solvent,” Stewart said.

Bill Honig, state superintendent of public instruction, said the price of solvency will be high.

“We’ll get this district reconstituted and back on sound footing, but the question is at what cost to the quality of education,” Honig said. “There will be some very wrenching changes in a very short time, and it is unfortunate that the kids, their families and the teachers will pay the price.”

For many in the district--which is ethnically and economically diverse, and covers six incorporated cities besides Richmond in Contra Costa County--the payments have begun.

“This is very traumatic . . . it’s a nightmare for everyone,” parent Nadine Doyle-Mason said one day shortly before district officials announced that a property tax advance from the county would enable them to meet the payroll.

A Hercules resident, Doyle-Mason was at district headquarters in downtown Richmond trying to get some answers. She said her son’s first-grade class at Ohlone Elementary School has had 10 substitutes so far this year after the regular teacher got sick. And, she added, supplies were so short that parents and teachers were donating paper, pencils and other necessities.

“This district has failed us,” added Doyle-Mason, who grew up in the Richmond schools and had hoped her children would fare as well as she.

Janice Mettler, whose son is a seventh-grader at Adams Middle School, expressed a concern echoed by many other parents: “Will my kid get a good enough education to allow him to compete for admission to a good college?”

Students are asking similar questions.

“It’s good I’m getting out,” said Damon Phillips, a Kennedy High School senior who has a scholarship to Stanford next year, “but I have a brother in the sixth grade. He’ll be at a real disadvantage.”

The recovery proposal described by Stewart, the district’s state-appointed overseer, is drastic and straightforward: Get the state loan to ensure the district can get through the school year; make a series of sharp cutbacks in educational programs, employees and benefits to get the district living within its means again; and find a way to pay back the 10-year state loans and other debts, probably by asking voters to pony up the funds once the district has rebuilt its credibility.

The proposed spending cuts would erase much of what remains of the costly “System for Choice” and would increase class sizes, wipe out the elementary school music program, shorten the school day for junior and senior high schools, reduce counseling and psychological services and eliminate nurses and librarians.

Between 300 and 500 of the district’s 1,750 teaching jobs would be lost, most through layoffs, and 30 of the remaining 55 administrative jobs would be eliminated. The recovery plan also calls for reductions in employee health benefits as well as possible cuts in salaries.

Much of what is proposed requires the consent of teachers and other employee groups, while the governor’s insistence that the unions agree to set aside their old contracts and negotiate new, three-year pacts as a condition of the loan has added another dimension to the already complicated and emotional scene in Richmond.

The powerful statewide teachers association, convinced that Wilson is trying to set a union-busting precedent by destroying its position in the collective bargaining process, has stepped into the fray on the side of its beleaguered local affiliate, United Teachers of Richmond. However, Wilson education adviser DiMarco said that being “hard-nosed” about the contracts, which represent about 87% of the district’s fixed costs, is the state’s only way to “have some sort of reasonable assurance that this district is going to shape up.”

DiMarco said the loan to keep Richmond afloat will take away education dollars that could have gone to programs or other financially strapped districts that have made painful cuts to stay within their budgets.

“It’s the Richmonds that make every school district in the state look bad, and that is not fair,” DiMarco said.

Gabrielle Moore, president of the Richmond teachers union, said, “It was not the teachers who got this district into this mess.”

She noted that many of the teachers’ early complaints about the choice program--including its high cost, confusing and too-rapid implementation and the lack of transportation out of neighborhood schools--went unheeded.

Parent Cindy Lovesy, who volunteers regularly in her youngsters’ classrooms at Mira Vista Elementary School and saw firsthand many of the problems the teachers were talking about, said much of the program was “just for show” and robbed from the basics.

“What is so hard for parents to understand is why the school board just rubber-stamped everything (that Marks proposed). Could they really have been that stupid?” Lovesy wondered.

When Marks was hired in 1987, the district already was on unsound financial footing; it began outspending its general fund revenues in 1984 and the fund was more than $2 million in the hole by the time he arrived.

Furthermore, its test scores were low and its dropout rate was high. The school board was anxious to turn things around. Along came Marks with a promise to set things right.

“He’s a very charismatic guy, a good, quick thinker, a good speaker, a visionary. Only trouble is, he can’t count,” said Board of Education member Woody Snodgrass, a former district superintendent elected on an anti-”System for Choice” platform in 1989.

Marks ordered expensive equipment and added about 300 teachers and administrators (including his wife) to implement the choice plan. Additionally, he raised teachers’ salaries from near the bottom of those paid in the state to about the middle. He financed it with desegregation funds ($5 million of which were disallowed after an audit determined the money was not spent appropriately) and persuaded the school board to authorize bondlike “certificates of participation” to pay for ongoing operating expenses. He overestimated revenues and counted on a federal grant that never came through, according to several fiscal officials and reports.

Marks did not respond to repeated telephone requests for an interview from his new offices in Kansas City, where he recently started as the $140,000-a-year superintendent for that city’s financially troubled schools. But at the time the Richmond school board ousted him, he acknowledged to a local reporter that fiscal matters were not his strong suit and blamed California’s complicated and stingy system of financing schools.

He still has at least one defender on the school board, Betty Allums, who said Marks “brought new life to the district” and created better opportunities for minority students and administrators.

The principal of predominantly black Kennedy High, Lavonya DeJean, who came to Richmond after 18 years in the San Francisco schools, said the choice system and the top-flight equipment that accompanied it “generated a lot of excitement.”

“I saw education come alive for kids in ways that I’ve never seen happen before,” DeJean said.

SCHOOL DISTRICTS WITH FINANCIAL PROBLEMS

The state Department of Education has issued a list of school districts that are “experiencing financial difficulties” in keeping their budgets in the black through the 1990-91 fiscal year, which ends June 30.

* These school districts have advised their county offices of education or the state Department of Education that they are unlikely to be able to meet their financial obligations for this year.

DISTRICT COUNTY Richmond Unified Contra Costa Woodland Unified Yolo

* These school districts have said that they are uncertain whether they can meet their obligations.

DISTRICT COUNTY Southern California Central Union High Imperial Holtville Unified Imperial Beardsley School District Kern Southern Kern Unified Kern Bonita Unified Los Angeles El Monte City Elementary Los Angeles Inglewood Unified Los Angeles Coachella Valley Unified Riverside Hesperia Unified San Bernardino National School District San Diego Santa Paula Elementary Ventura Northern California San Ramon Valley Unif. Contra Costa Kentfield Elementary Marin Nevada City Nevada Tahoe-Truckee Unified Placer Plumas Unified Plumas San Francisco Unified San Francisco San Lorenzo Valley Unified Santa Cruz Bellevue Union Elementary Sonoma Healdsburg Union High Sonoma

Source: California State Dept. of Education