Abusing the Credit Card

Tuesday, June 22, 2004

Page 7

IN MY OPINION (Column)

Abusing the Credit Card

RAY HAYNES

(The writer represents the 66th Assembly District which includes portions of western Riverside County and northern San Diego County.)

This month the state bailed out Vallejo Unified School district by giving them $60 million. Last year the state bailed out Oakland Unified by giving that district $100 million. Over the last three years, more school districts have come to the state asking for money, and threatening to go bankrupt, than ever before.

From 1850 to 1990, not one single school district in the state went bankrupt. Since 1990, eight districts have gotten themselves into such financial trouble that the state had to lend them money to keep them from going bankrupt. For some reason, over the last 15 years, school districts have become less and less responsible with the money entrusted to them by the state. What is happening? Why is the system out of control?

In 1990, Richmond Unified was the first district to run out of money, and come to the state for enough money to cover its incompetence. Republicans refused to vote for the bill that would give Richmond the money unless the district reformed its ways. Their argument was simple. If the Legislature gave an incompetently run district money without requiring some real spending reform in the district, it would literally be throwing the taxpayers’ money down that same rat hole. Richmond didn’t get its money, so it sued.

For some reason, the California Supreme Court ordered the state to give Richmond the money without strings, claiming that the state could not allow a district to go bankrupt. The court’s reasoning was extremely flawed, but worse, the court literally ignored some real political facts when it issued its order. For instance, in many districts, the school board has been elected by money from the union for the teachers or the janitors. That board then votes for a sweetheart contract with that union. If the board does that too often, the district can go bankrupt.

The Republicans knew this, and believed that the only way to hold the district responsible for this kind of irresponsible behavior was to allow for the contract to be voided. By ordering the payment of the money, the court essentially interfered with the legislative process, and prevented Republicans from holding the unions responsible. The money had to be paid.

So the Democrats in the Legislature passed AB 1200, which required the district to file a lot of reports, and allowed the state to appoint a receiver to run the district, but the receiver could not set aside either union or administrator contracts. The school board of the bankrupt district didn’t get to vote on district issues, but none of the board members lost their jobs, or the perks of the jobs.

The result? None of the adults who caused the bankruptcy, and destroyed the education of the children, paid a price for their incompetence. Lately, districts have figured out that they can use the state’s general fund as its personal credit card for a period, and if they get out of control, the board loses its power for a period, but the union, the administrators, and the others who make money off of the system don’t really get hurt. That is why, lately, more and more school districts are going bankrupt.

Vallejo, Oakland, Fresno, Compton, Coachella and other districts have found that, if they scream loud enough, they don’t have to do anything to get the money. The Legislature has essentially written checks without any controls on the money. The receiver goes into the district without the power to hold any of the adults who caused the problems accountable. How can you bring accountability to a system when bad laws and bad court decisions prevent reasonable reforms? Until unions or administrators lose their jobs or their contracts, they will continue to abuse the state’s credit card.