Lapse Could Cost District $5.8 Million : Government: Funds for new Santa Ana school weren’t spent by state’s deadline. But district hopes to win an extension.

The Santa Ana Unified School District stands to lose $5.8 million of state funding for a desperately needed elementary school after missing a state deadline to spend the money, state officials said Tuesday.

The State Allocation Board set aside the money last year to renovate the district’s headquarters at 1405 French St. into an elementary school.

However, the district failed to spend the money within 180 days as required by a state policy intended to ensure that scarce funds are used expeditiously, a state spokeswoman said.

The loss of funding, however, is not automatic.

“Districts do get a chance to make their case to the State Allocation Board,” said Jeanine Holmes, supervisor for the Office of Local Assistance, which works with the district on the board’s behalf.

The project is now in jeopardy, but district officials are expected to defend their handling of it during next Wednesday’s meeting of the Allocation Board, she said.

District officials downplayed the risk of losing the funds, saying that once they explained the reasons for the delay, the board would probably grant an extension.

“We don’t believe there will be any problem,” said Mike Vail, senior director of facilities.

The main reason for the delay stemmed from an April meeting at which the Board of Education was forced to reject construction bids for the project. The two lowest bidders failed to submit a legally required affidavit stating they did not collude to fix prices. A third bid came in at $254,000 more than was budgeted for the renovation. The board rejected all three.

The school board will review new bids on Tuesday, and is expected to approve one at that time. Vail said that action should show that the district is making a good-faith effort to push the project forward.

“By the time they (Allocation Board members) hold their meeting, we may have awarded the contract. They’ll see we’re fulfilling the spirit of the policy,” he said.

District enrollment estimates show an overwhelming need for the new school. The number of elementary students is expected to jump by 4,000 by 1999.

Even with the completion of Martin Luther King Jr. and Pio Pico Elementary schools, which are now under construction, as well as the proposed French Street campus, the district will need three additional schools to accommodate the influx, Vail said.