$41 Million Averts Courts’ Fiscal Crisis

The Los Angeles County court system narrowly escaped financial disaster last week when it obtained $41 million from the state, officials said Thursday.

County officials said the courts had faced such a severe budget shortfall that the Superior Court would not be able to pay its 2,400 employees this coming Monday.

The state government, which in January took over funding of all county courts, was not scheduled to write its next quarterly check until July 15, state officials said.

Court administrators in numerous counties scrambled to inform the state of their dire financial situations May 28, and a $110-million loan was approved by the governor, treasurer and controller the next day, said Byron Tucker, spokesman for the controller.

Los Angeles County’s Municipal and Superior courts, the largest local system in the nation with 300 courtrooms, received a $33-million advance on its next payment and an additional $8 million that the state owed, a court spokesman said. The courts will pay back the $33 million in July, when they receive the next check from the state, officials said.

Most attribute the crisis to a change in the payment schedule. When the state took control of funding the courts under the Trial Court Funding Act, it chose to pay the counties every three months.

“It’s just like if your paycheck was switched, you’d have to get used to the new schedule,” said Katharine Holland, spokeswoman for the state’s administrative office of the courts. “The courts were used to having their paychecks come right from the county.”

The shift to state funding was intended to provide stability to the courts, which since the early 1990s have faced annual budget crises as they appealed for funds from cash-depleted county governments.

The new system requires the county courts to contribute money, based on 1994-95 revenues, to the state, which reallocates it to the courts on a quarterly basis.

A county could get more or less money than it gave, depending on where the state decides to channel the resources.

Because the courts were used to receiving their payments from the county more frequently and because the law was initially supposed to take effect July 1, a funding gap developed.

State officials say that it will be temporary as the courts adjust to the schedule, but county officials predict a recurring crisis.

Sandra Davis, chief deputy of the county administrative office, said the system needs to be more flexible because court expenses “ebb and flow” throughout the year.

She added that the state Legislature needs to resolve the problem by the next quarter, or another advanced payment will be needed.

County Auditor-Controller Al Sasaki said the problem arose because the state this year has paid the county $34 million less than it expected.

This contributed to the shortfall, he said.

“The state has not paid back its quarterly obligations to the courts,” said John Naimo, an auditor with the office.

Officials at the state Department of Finance said the county has received more than it paid into the system.

L.A. County court officials said other factors contributed to the financial crunch, including pay raises for clerks.