The San Diego Unified school board is likely to dip deeper into its reserves if Gov. Arnold Schwarzenegger doesn’t sign a bill to restore state funding for students with disabilities. Doing so would leave it with a thin financial cushion as the school system faces more budget cuts.

The board met tonight to go over their options after the County Office of Education put conditions on approving the San Diego Unified budget, partly because it didn’t include the last minute cut to special education funds.

While state lawmakers have given the thumbs up to a bill that would reverse that cut, Gov. Schwarzenegger has yet to sign it. Phil Stover, the deputy superintendent who oversees business operations, said the bill could be signed as early as tomorrow.

If that bill passes, the school district doesn’t have to dip into its reserves or find any other cuts for this coming school year. If it doesn’t, the school board would have to decide between slashing its reserves down to 0.67 percent, instead of the 2 percent cushion that is usually recommended, or trimming its spending by $12.5 million.

While the school board did not actually vote, it was clear that the board was loath to make another $12.5 million in cuts after the school year had already begun, preferring to use reserves instead.

“This is exactly what reserves should be used for — to get through a short-term, difficult situation,” said school board member John Lee Evans.

But board members were also unhappy about the idea of spending down their reserves. Katherine Nakamura questioned whether doing so would hurt the school district credit rating, forcing it to pay more to borrow money in the future.

San Diego Unified must make any needed changes to its budget, including cutting into its reserves, by next Tuesday to satisfy deadlines set by the County Office of Education. The board will meet again next week.


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