Dan Walters: Craziness governs school aid in California

The state budget's 800-pound gorilla is the task of educating 6 million elementary and high school students.

It consumes between 35 and 40 percent of the general fund. The money is allocated by a bizarre combination of power politics and a constitutional provision so complex that only a few in and around the Capitol even profess to understand it – and rarely agree.

Since the budget usually can't meet its full constitutional obligation each year, even when the economy is healthy, politicians and education lobbyists hammer out some number. They include a proviso that any unpaid amount will go on what they call "the credit card" to be repaid at some point in the future.

To complicate matters even more, one of the factors determining the obligation is how much money hundreds of districts are receiving in local property taxes, which are also affected by the economy. A huge chunk of the money is allocated for specific purposes called "categorical aids."

Finally, the school aid numbers budget are subject to change at any moment if the state's revenue estimates are off the mark – which they usually are.

It's completely irrational, and effectively forces local school officials to operate on a month-to-month basis – even though they are also tied into labor contracts, especially with teachers, that assume longer-term financial stability.

The current situation is a classic example, and even more convoluted than usual. The 2011-12 state budget adopted in June assumed that the state would receive an extra $4 billion in revenues. But it also provided that should those dollars not appear, there would be up to $2.5 billion in automatic spending cuts, three-quarters of it school aid.

However, to gain acquiescence from the California Teachers Association, et al., Gov. Jerry Brown and legislators also passed a law barring school districts from laying off teachers to cope with any cuts.

That really put districts on the spot. Should they assume that the spending cut triggers would be pulled and budget conservatively? Or should they assume that the money would be there?

Those that opted for the former will survive more easily if, as now appears highly likely, school aid will be cut. Those that took a chance will suffer.

San Diego Unified, the state's second-largest district, took a chance. It not only negotiated a "back-loaded" contract with its teachers union that kicks in a 10 percent raise next year but gambled that the extra money would be there and rescinded layoff plans.

District officials now project a huge deficit if triggers are pulled and say that seeking a state bailout – which may also mean a form of receivership – may be their only option if the teachers union refuses to reopen the contract.

It proves that when it comes to school finance, irrationality is not confined to Sacramento.