Summer school. Art and music. Classes for gifted children.

Buying textbooks. Training math and English teachers. Tutoring students for the high school exit exam.

For decades, a large portion of California's school funding has been strictly designated for such categories.

Not any more.

In the budget deal crafted last week, the Legislature and Gov. Arnold Schwarzenegger combined many of the pots of money known as "categoricals." The result is that for the next five years, principals and district administrators will have more spending flexibility than they've had in recent history.

It's a move education reformers have been pushing for years, saying a bit more freedom with the checkbook would help schools meet their students' needs.

The new state budget cuts about $2.4 billion from schools this year and changes the payment terms of another $5 billion. The reductions get even deeper next year, when schools will face an additional cut of $400 million.

About $1 billion of the cuts will be taken out of categorical funding – which makes up one-third of the money California spends on education and funds more than 60 individual education programs.

Categorical funding became popular in the 1960s as politicians tried to help disadvantaged children by spending money specifically on them and ensuring the additional cash didn't wind up in teachers' paychecks, according to a new report by UC Berkeley's law school.

As categoricals proliferated over time, however, they created a bureaucratic web of obligations for educators, who couldn't target funds where they were needed most. Money for buying new technology couldn't be used to buy books for a library. Money for checking kids' teeth couldn't be spent on counseling. Money for training principals couldn't be used to train a teacher.

"Principals said they spent a God-awful amount of their time filling out compliance forms," said Bruce Fuller, a UC Berkeley education professor who surveyed principals for a recent study.

"They've got to keep receipts, keep billing information. … Principals become mini-bureaucrats rather than working with teachers and being in classrooms."

The findings led him to recommend – in the massive "Getting Down to Facts" report Schwarzenegger released with fanfare in March 2007 – that the state consolidate categorical funding.

And that is just what the new plan does. It collapses 42 categorical programs into one block of money, and trims it by about 15 percent, or $1 billion. Schools can now use that money for any purpose.

"They could do less on school safety and more on career tech," said Jennifer Kuhn, director of K-12 education with the Legislative Analyst's Office. "They can do less counseling and have smaller class sizes. They can do less adult ed and more K-12 ed."

Or, she said, they can skip spending on those programs and give teachers a raise.

The plan has the potential to revolutionize school funding in California, said Michael Kirst, a Stanford education professor and former state Board of Education president.

But it doesn't do away with categorical funding altogether. About 20 categorical programs remain intact, including some of the biggest – special education and K-3 class-size reduction.

Because the restrictions on many of the biggest categorical programs have not been eased, the new flexibility won't help cash-strapped districts very much, said David Gordon, Sacramento County's superintendent of schools.

The changes might have been more useful during a time of surplus, he said. But without money, flexibility is of little use.

"To me it's more like, 'Do you cut your arm off or your hand off?' " Gordon said. "We have a bare-bones program already going in. That basic core – the reading, the math and so on – is something you can't trade off."

Other educators said the eased restrictions will give them some welcome wiggle room.

Patrick Godwin, superintendent of Folsom Cordova Unified, expects the relaxed rules will allow his district to avoid painful staff cuts.

"The district here already had a strong music and arts program," Godwin said. "So we'll be able to use those monies to keep more counselors or keep more electives in the high schools."

Call The Bee's Laurel Rosenhall, (916) 321-1083.