The state Department of Education must improve the way it distributes about $17 billion each year that is earmarked for specific purposes such as special education, a state audit found.
The report, released Thursday by the Bureau of State Audits, raises questions about whether the department correctly calculates the amounts that go to local schools for some of the 113 separate programs financed by these earmarked funds.
The services covered by this so-called categorical money include bilingual teacher training, Native American centers, Advanced Placement programs and class-size reduction efforts. For three of the 12 programs reviewed, the audit said, the department "may not have accurately calculated allocation amounts in accordance with state law."
The report was requested in March by state Sen. Chuck Poochigian (R-Fresno), a member of the Joint Legislative Audit Committee. It was based on a review of spending in the fiscal year ending in June 2002. Poochigian could not be reached for comment Thursday.
The report found that the state education office had yet to implement auditors' last series of recommendations, released in 2000 and aimed at strengthening departmental oversight.
Critics contend that categorical programs create unnecessary layers of administration within the state education system. They say government regulation of the programs has stunted local creativity and flexibility.
Earlier this year, Gov. Gray Davis proposed combining the funds into a single block grant that school districts could spend on categorical programs as they saw fit.
But that proposal triggered protests from interest groups that feared they would lose their financing.
The auditor charged that a pilot program to streamline the funding process was prematurely abandoned by the Education Department.
Rick Miller, a spokesman for state Supt. of Public Instruction Jack O'Connell, said his office agreed with most of the state auditor's conclusions.
"We think it's helpful information that we appreciate that will help us do a better job," he said.
A letter attached to the final report, from Gavin Payne, California's chief deputy superintendent of public instruction, promised that the department would make some changes soon.
The department did, however, take issue with the audit's charge that it fails to properly oversee use of money from the state lottery that goes to local districts.
The department does not think it has an obligation to audit the districts to which it distributes lottery money, Miller said.