400,000 Students Deserve an Answer : Save schools from Orange County’s fiscal chaos

In the last dozen years the state Legislature has bailed out a number of school districts with loans ranging from $10 million for Oakland to $600,000 for the San Francisco Bay Area community of Emeryville. It proved to be money well spent; all the loans have either been or are being repaid, even though state officials said it was the school districts’ fiscal mismanagement that caused the initial problems.

Now the governor’s office and the Legislature should be ready to help Orange County’s public schools, which face massive financial problems that are not entirely of their making. The schools have more than fairness on their side; they also have a state Supreme Court ruling.

There is understandable uncertainty over what Orange County’s bankruptcy filing last week will mean for the county’s 31 school districts and 400,000 students. The districts invested $1 billion in the county fund that lost billions of dollars. But they did not invest completely by choice; under state law, they were forced to entrust their money to the fund run by county Treasurer-Tax Collector Robert L. Citron, who has since resigned. Sacramento must be ready to help should the county’s and schools’ situation worsen.

The Legislature can act without forcing a takeover of local school systems; that must be only a worst-case scenario. Loans would be one source of help. Orange County’s superintendent of schools, John F. Dean, reminds Sacramento, correctly, that by law the state must keep the schools open, which means paying the bills if necessary.

The state Supreme Court ruled unanimously two years ago that state officials have a broad constitutional duty to step in when a local school district faces insolvency and provide students with the same basic education as other pupils in the state. Gov. Pete Wilson argued unsuccessfully that state intervention in the Richmond Unified School District case in 1991 would abrogate local autonomy and local accountability for fiscal mismanagement. However, the justices did say that the state Education Department could not hand over unappropriated money; it said the Legislature would have to specifically appropriate money for a school district in the event of a bailout.

It is too early to know exactly how much money might be needed in Orange County. The state took over the Richmond schools when they were close to insolvent. There may be a bit more time in the Orange County situation, but the state is better off helping out now with loans and avoiding even the possibility of a takeover.