Hoover Panel Accuses State of Bad School Money Supervision

SACRAMENTO — The state’s Little Hoover Commission on Friday castigated state government for failing to keep a watchful eye over more than $15 billion allocated each year to operate California’s public school systems.

In a report to Gov. George Deukmejian and the Legislature, the commission also warned that the quality of public education may suffer as state government butts up against a constitutional spending limit sometime within the next year and is forced to halt the growth in many public services.

Commission Chairman Nathan Shapell warned that the governor and lawmakers face “some serious decisions” on school programs, adding, “It is imperative that the state get a better grasp on how the schools use their money, so that taxpayers can be assured that school funds are well spent.”

Problems Ahead

State Supt. of Public Instruction Bill Honig said he agrees that the schools face some thorny financial problems. However, he contends that accountability over school tax money is at the highest level ever as the result of legislation passed in recent years that empowers his office and the state controller to delve into the financial condition of local school districts.

“I think we have enough power now to keep the system honest . . . and we’re starting to exercise that now,” Honig said. “Whether it is enough, we won’t know until we see the results of our new accounting.”

Honig added that he believes the public may now be ready to modify the constitutional spending limit approved by voters in 1979 and allow school expenditures to grow in proportion to increased enrollment.

The commission, which was established to curb waste and inefficiency in government agencies, has been highly critical of the state’s role in watching the money that flows to schools, particularly since the state virtually took over school financing after the 1978 passage of tax-slashing Proposition 13.

Presently, more than 70% of the $15 billion spent to run public schools comes from the state. Since 1983 when Deukmejian took office, funding for public elementary and high schools has increased by 32%.

Lack of Control Charged

The commission contends, however, that “this dramatic increase in educational funding has not been accompanied by a concomitant increase in the state’s efforts to improve its enforcement and control over educational spending.”

Although conceding that recent legislation has expanded the state’s role in overseeing how school money is spent, the report charged that there still are too many agencies involved. That, the report said, leads to “confusion, wasted resources and promotes a breakdown in accountability.”

The commission cited the results of hearings and studies over the last decade as evidence that “millions of dollars of unnecessary expenditures” are being made by schools.

However, the only specific example cited was the lack of control over how schools account for money they receive from the California Lottery. Schools are allowed to commingle lottery funds with their general tax money. “This makes it very difficult, if not impossible, to determine how lottery funds are spent,” the report said.

The commission urged the Legislature to give more power to Honig, particularly to withhold money from school districts where accounting practices are questioned.

But Honig said his office already has the power to inspect school district financial reports and to question the figures if “they are not in balance.”