School Funding Bill Restores $500 Million : Education: Lawmakers return for a one-day session to pass legislation to replace funds vetoed by Wilson. The governor is expected to sign it.

Just one week after the current Legislature was supposed to go home for good, lawmakers came back for a few hours Wednesday to restore more than $500 million vetoed by Gov. Pete Wilson from the state’s education budget.

Legislative leaders engaged in finger-pointing for the need to return to fix a technicality in the education funding language.

The Republican governor blamed the Legislature for the faulty wording in the legislation, part of an agreement that ended a 63-day budget impasse. The wording gave him no choice but to veto the funding, he said.

But Assembly Speaker Willie Brown (D-San Francisco), Senate President Pro Tem David A. Roberti (D-Van Nuys) and State Supt. of Public Instruction Bill Honig all contended that there was no need for the vetoes at all.

“He should have signed it,” said Brown, blaming the vetoes on “Wilson’s staff screw-up on education.”

Roberti agreed that “there was no problem. (The legislation passed last week used) the exact same language that we used last year.”

The governor has said that the cuts he made were not vetoes at all but “set-asides,” intended to remedy what he called “an inadvertent omission on the part of the Legislature.”

All along Wilson has said that the unusual one-day session was not really necessary, that the problem could be remedied and the budget restored in January, after a new Legislature was in place.

The governor tried to assure school districts that the $4,185 per student they had been promised in ending the budget impasse was secure.

But Honig would not take the governor at his word. Honig said that he feared the $500 million might be lost to the schools if tax revenues were down later this year.

Whoever was at fault, the confusion over Wilson’s action had school districts throughout the state worried that they might have to cut as much as $100 per student from their local budgets--about 2% of the total state money for education.

That will no longer be a problem under a measure, authored by Roberti, which was unanimously approved in both houses to restore $488 million to the public schools. The governor is expected to sign that measure. But Wilson might cut the total amount by about $35 million to cover the cost of past-year desegregation efforts, said Maureen DiMarco, the governor’s secretary of child development and education.

The lawmakers also approved a separate bill to restore $24.5 million in funding for a statewide experiment in school restructuring. The program would give grants to about 150 public schools to develop innovative approaches to educating youngsters and involving parents, teachers and businesses in school operations. DiMarco said she would urge Wilson to sign this bill as well.

Honig, who was at the center of the school funding controversy, urged lawmakers to restore the $24.5 million--distributing lists of 240 schools that were finalists for grants worth up to $200 per student. The schools represent almost every legislative district in the state.

Although legislative leaders wanted to confine the session to the education vetoes, several members tried to take up other issues as well.

The Assembly, on a 54-6 vote, approved a measure to end the state’s underfinanced earthquake insurance program immediately, rather than wait until January.

But the Senate would not go along. Senators rejected the measure on an 18-15 vote--far short of the two-thirds margin required.

The Legislature had already voted to eliminate the program, which adds a surtax to homeowners’ insurance policies throughout California to provide up to $15,000 in coverage in the event of an earthquake.

But Assemblyman Phillip Isenberg (D-Sacramento) and Sen. Art Torres (D-Los Angeles) argued that it was important to pass a bill to repeal the earthquake insurance at once rather than wait until 1993. Critics of the quake insurance, including state Insurance Commissioner John Garamendi, argued that the policies could not possibly cover the costs of a major quake and that the state’s taxpayers would wind up liable for the rest--potentially billions of dollars. They also said that there was no reason for policyholders to continue paying the surtax.

Torres blamed the defeat of the bill in the Senate on an aggressive lobbying effort by Frank Murphy Jr., a former legislator who lobbies for Computer Sciences Corp. The company holds a contract to help establish the program.

The El Segundo firm argued that ending the program--and stopping the homeowners’ tax now--could leave the state short of the $16 million or more it owes the company.

While the Legislature was in session, Wilson traveled to Speaker Brown’s home turf of San Francisco to attack the Democratic leadership, telling business leaders that special interests hold veto power over reforms needed to reinvigorate California’s economy.

“We need a Legislature that will stand up to the special interests,” Wilson said in a luncheon speech to the Commonwealth Club. “If they can’t change the law, then, my friends, it is time to change the lawmakers.”

Wilson declared that “California’s job climate is not competitive” and blamed “wounds inflicted by the legislative majorities in Sacramento,” while public policy created in the Capitol “is responsible for destroying the jobs of hundreds of thousands of Californians.”

In his first major speech since the end of the budget battle, the governor outlined his prescription for jump-starting the state’s economy: reforming the “fraud-ridden” workers’ compensation system, curbing “skyrocketing” costs of litigation and reducing the burdensome system of regulation and permits for new business.

Times staff writer Dan Morain contributed to this story from San Francisco.