32 More School Districts in Danger of Default, Davis Says : Education: Montebello, Delano are among the most precarious. But the controller expects no more threatened closures like Richmond's.


State Controller Gray Davis, already working to save the bankrupt Richmond schools, announced on Wednesday that 32 additional school districts across the state--three times the usual number--may be unable to pay their bills through the end of the school year.

Describing the Richmond schools as "the tip of the iceberg," Davis said the Montebello Unified School District in Los Angeles County and the Delano Joint Union High School District in Kern County are particularly troubled.

Both Davis and an official with the state Department of Public Instruction noted that most of the 32 will probably be able to pull out of their financial nose-dives, mainly through borrowing.

"If I had to bet," Davis cautioned, "I would bet that there would be no more threatened school closures for the balance of the school year."

But at a news conference in San Francisco, Davis added that the Montebello and Delano districts are in precarious positions and said he has offered to send financial managers to help out.

Davis announced his list of troubled schools hours before state Supt. of Public Instruction Bill Honig met with parents from the beleaguered Richmond Unified School District. More than 100 parents showed up for the afternoon session. There were a few outbursts, but mostly the crowd listened quietly as Honig addressed questions on what to expect next year.

Patrick Keegan, state assistant superintendent of public instruction for school business services, confirmed in an interview that "more than the normal" number of school districts are having serious financial trouble this year.

In most years, nine or 10 districts face problems at this point in the school year, not the 32 that are on this year's list, he said.

"If I were a parent in one of those districts, I would be concerned," Keegan said.

Keegan also singled out the Coachella Valley Unified School District in Riverside County as having significant financial problems.

Davis explained the increasing financial pressures on the schools by noting that revenue to government in general, including state lottery revenue, is down. He also blamed bad management practices.

"Part of it is hard financial times," Davis said. "Part of it is mismanagement and part of it is ignorance of rudimentary financial controls. In good times, nobody cares. There's plenty of money and nobody worries about it."

Davis based his comments about the financial health of the school districts on reports issued by the districts themselves.

Davis pointed to projections showing that Delano, with a budget of roughly $11 million, will have a deficit of almost $1 million this year. He said there is a "strong possibility" that Delano, which has 2,770 students, may be unable to meet its June payroll of $560,000 until July.

The 32,000-student Montebello district hopes to raise money by selling more than $7 million in bonds. If it fails to sell the bonds, the district may be unable to meet its June payroll, Davis said. Montebello, with a $145-million budget, expects a deficit of almost $13 million.

Montebello school officials blamed their crisis on reduced state funding and their own reluctance to part with special services and programs. Montebello's teachers are the highest paid in the county, according to the Los Angeles County Office of Education.

Richard Marr, assistant superintendent in Montebello, said many services will be hard hit next year. The school board has approved $19 million in cuts, eliminating the district's elementary school librarians. The district plans to lay off 200 employees, and is seeking to cut teachers' pay by 10%.

San Francisco, with 63,000 students and a potential $1.9-million deficit, is the biggest district on Davis' list of 32 troubled systems. Thomas Sammon, a top San Francisco school official, said the district remains confident that it will "pull out of it without a deficit."

"We're not worried about this year. It's next year that we're worried about," Sammon said, noting that San Francisco schools expect a $20-million reduction in state aid.

Davis' list of 32 also includes four Los Angeles County districts in addition to Montebello: Bonita Unified, El Monte City Elementary, Inglewood Unified and Hughes-Elizabeth Lakes Elementary.

Other Southern California districts on the list are Hesperia Unified and Oro Grande in San Bernardino County, Santa Paula Elementary in Ventura County and National Elementary in San Diego County.

Beverly Hills and Downey Unified were two of 20 districts across the state that have run deficits for four consecutive years, although neither district has indicated that it is in danger of defaulting on payments this year.

None of the districts are in the same boat as Richmond. Davis has had a team of auditors looking over Richmond's books since the end of April when the state issued an emergency $19-million loan--secured with help from Davis--to keep the schools open.

"In a word, Richmond is a financial nightmare," Davis said.

He described a badly mismanaged system in which people who wrote checks for services and goods never saw bills. He told of an instance in which an employee was paid twice for a single day's work, and an occasion in which the district sold a parcel of land to raise money and mistakenly gave the buyer two parcels. The buyer returned the extra parcel.

Fred Stewart, the trustee appointed by the state to oversee operations at Richmond, said the accounting failures mentioned in the audit would be "taken care of immediately."

Richmond officials have blamed the financial crisis on several factors, including an expensive program that allowed students to attend any school in the district, and some costly outlays, including $250,000 for computer equipment bought last year but still boxed and stored in a district warehouse.

So far, Davis said, auditors have not found fraud. But he called former Supt. Walter Marks a "financial charlatan" and lashed out at the Richmond school board for running the district into bankruptcy.

"I hope all of these people are recalled because they have no right to serve," Davis said.

Marks, whose contract was bought out last year, has consistently declined comment.

Honig assured parents who had gathered at a San Pablo middle school Wednesday that schools in the district will be operating next year, but he said there would be substantial cutbacks.

Some parents said they had anticipated the results of the controller's report.

"I'm not surprised at all," said Ann Marie Marinakis, whose son attends kindergarten in nearby El Sobrante. "I've been asking questions about the school budget, and haven't been able to get any straight answers. Now the truth is out."

Others, like Dwight Merrill, the parent of three El Cerrito students, defended the administration.

"I don't think the school district has done that badly, overall," he said. "But I guess there's always room for improvement."

Times staff writer Howard Blume contributed to this story.

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