Few Californians have ever heard of the Fiscal Crisis and Management Assistance Team, also called FCMAT, much less know what it does.
Based in Bakersfield, FCMAT monitors the financial health of California's roughly 1,000 school districts and intervenes when one of them gets into trouble. It's seeing more trouble these days, with about 10 percent of districts facing serious difficulty.
Declining enrollment, erratic and/or declining state aid, a deep economic recession and cash flow crunches are plaguing school systems. Joel Montero, who runs FCMAT, says he's seeing more districts flirting with fiscal failure, especially smaller ones.
"If you're tiny, you have no margin of error," Montero told a legislative committee last week during his annual briefing on school district finances.
King City Joint Union High School District, in a rural portion of Monterey County, is the latest district to seek state loans and probably face some sort of state intervention. Montero told the committee of several others on the brink.
There would be even more on the watch list, he said, had the governor and the Legislature not agreed in February to loosen strings on categorical aid – funds designated for specific purposes or groups. That gave districts more flexibility to move around cash and keep themselves afloat.
Montero expects the list of troubled districts to expand later this year as the Capitol copes with another budget deficit. Although the 2009-10 budget passed in February was supposedly balanced, it's beginning to bleed red ink even though it won't go into effect until July 1.
Legislative Analyst Mac Taylor says the deepening recession has put it $8 billion out of balance, below-forecast revenues for the current year will add a couple billion dollars more to the deficit, and if Propositions 1C, 1D and 1E are rejected by voters on May 19 – all are trailing in the polls – it would punch another $6 billion hole in the 2009-10 budget.
Recent economic forecasts have been gloomy, which will make the state's fiscal crunch even worse, and the state's prospects of borrowing as much as $23 billion or more in July to keep its check-writing machines going are not bright. A major problem for local districts, especially the smaller ones, has been the state's practice of deferring its aid payments, which create cash crunches at the local level.
As gloomy as it may be, the schools' financial plight is also an opportunity for structural reform. It already has pushed the Legislature into doing what would have been unthinkable a few years ago – loosening the strings on categoricals.
It should push lawmakers into re-energizing a program that was launched in the 1960s only to falter later – encouraging the unification of small elementary and high school districts into larger, but not too large, K-12 districts that would have more economy of scale.
Oddly, the state's school aid system discourages such unification. Changing this should be on the table.
Call The Bee's Dan Walters, (916) 321-1195. Back columns, www.sacbee.com/walters.
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