Plan Devised to Aid Richmond Schools : Education: But Gov. Wilson lays foundation for a court fight, saying California cannot bail out every district in trouble because of its own mismanagement.

Faced with a court order to keep the schools in Richmond open, State School Supt. Bill Honig and Controller Gray Davis agreed on a plan Tuesday to bail out the bankrupt district with a $19-million loan.

At the same time, Gov. Pete Wilson launched a legal challenge against the judicial order, contending that it sets a “dangerous precedent” by requiring that the state come to the rescue of school districts that are in fiscal trouble because of their own mismanagement.

The two actions are designed to allow the Richmond Unified School District to continue operating for the next six weeks while laying the foundation to overturn the court order, which Wilson fears could force the state to bail out dozens of school districts.

“We should give them a chance to get back on their feet,” Davis said after he and Honig met with the governor. “This is the most poorly managed school district in the state. . . . This is a disaster. Having said that, the children of Richmond are entitled to have a decent education.”

The Richmond district, which serves 31,300 students in the San Francisco Bay Area, ran out of money after squandering millions of dollars on a costly experimental education program. Last week, the beleaguered district announced that it would shut its doors today.

But after a group of parents filed suit, Contra Costa Superior Court Judge Ellen James ordered the state on Monday to provide enough money to keep the schools operating for the remainder of the term.

While state officials were unanimous in condemning the Richmond district for its mismanagement, they were divided in their response to the suit.

Honig and Davis agreed that the schools should remain open so that the students could complete the school year on June 14.

“This six weeks is important to those kids,” Honig said. “They should not have to pay the price for this.”

To make up for the district’s $29-million deficit, the two officials came up with a plan to divert $19 million to Richmond that had been set aside for other programs but had remained unspent. The district would also receive its $10-million state allotment for the remainder of the school year.

The district would pay back the $19-million loan over 10 years, starting in 1992. A state-appointed trustee who oversees the district would have the power to set the salaries of teachers and other school employees.

The plan is similar to legislation Wilson rejected earlier this year because it did not go far enough in allowing the trustee to suspend collective bargaining and reduce teacher salaries.

Davis and Honig said they will present their plan to James this week. Richmond school officials could not be reached for comment on the bailout.

If the judge agrees to the proposal, the school district will receive the loan before Wilson gets a court hearing on his appeal.

The governor chose not to seek an emergency stay of the order--which could have prevented the bailout from taking effect. Instead, the governor on Tuesday filed a notice of appeal. His office said he will also ask the California Supreme Court to take the matter on an emergency basis.

Wilson, who already is facing a $12.6-billion state budget shortfall, is concerned that the judge’s order would reward districts for mismanaging their funds and put the state in the position of doling out millions of more dollars to keep the state’s schools operating.

“The precedent is such a dangerous precedent, it is a precedent for irresponsibility that we have no choice but to appeal it,” Wilson told reporters. “I see no way that it can be complied with.”

Maureen DiMarco, Wilson’s secretary for child development and education, said the judge’s order would end local control of the schools and make the state responsible for running the education system.

“The fate of the children in Richmond has always been the first concern of all the parties in this issue,” DiMarco said after the top-level meeting. “However, that does not mean the governor will sit by and allow a judge to . . . establish a new level of duty at the state to actually provide the service. This essentially would create a state school system and eliminate any local determination.”

By taking such a strong stance against the Richmond bailout, Wilson runs the risk of appearing to be a hardhearted chief executive who does not care whether the children in the district can go to school.

For the governor, however, there is far more at stake than the fate of the Richmond schools.

Underlying the crisis is a battle between Wilson and the California Teachers Association over how the state should cope with its soaring budget deficit.

At least 21 other school districts, including 11 in Southern California, have reported that they are having serious difficulty this year in meeting their financial obligations. Davis said 492 school districts around the state have had to seek loans or are engaged in some form of deficit financing.

If the state is going to provide emergency aid to school districts, Wilson wants to ensure that they can cut costs, including suspending collective bargaining and revising contracts with teachers.

Salaries are by far the largest single cost of operating school districts and cutting teachers’ pay could save hundreds of millions of dollars.

The powerful CTA is adamantly opposed to rolling back salaries and has resisted the governor’s efforts to find a budget solution at the expense of teachers.

DiMarco, however, said the judge’s decision would magnify the state’s budget crisis and plunge the education system into an even deeper fiscal crisis.

“I now believe if this order is allowed to hold, we will have a bankrupt Richmond and a bankrupt state,” DiMarco said.