Walter Freeman, assistant superintendent of business services for Carlsbad schools, mentioned another painful quirk of the state’s budget calculations for schools during our conversation about the cost of layoffs: A proposed delay in payments to public schools that would force districts to borrow money to cover costs.

Glancing through the news coverage and analysis of Gov. Arnold Schwarzenegger’s revised budget, I can’t find this specific provision, but I’ve also heard it dubbed a “potential summer cash flow crisis” during budget workshops at San Diego Unified. I’ll follow up more when I ferret out the exact proposal; I’m guessing that Freeman knows what he’s talking about, since he gets paid to keep Carlsbad schools in the black.

Freeman said that if state payments in school categorical funds, which are earmarked for specific purposes, were delayed from July 2008 to April 2009, Carlsbad schools would need to borrow about $6 million in funding.

“That in and of itself is a major impact on our budget,” Freeman said. “Because Carlsbad doesn’t have $6 million sitting in the bank. We’re going to have to borrow money to pay staff members funded out of those categorical funds. The state would shift its short-term borrowing problem to school districts to the tune of billions of dollars in 2008-2009.

“Eventually we get the money, but we have to go borrow it and there’s a cost of borrowing,” Freeman said.

Personally, I don’t trust any budget predictions from Sacramento legislators anymore, but this is one I’ll be keeping an eye on.


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