Page One

A $1.4 million budget scare for the Berkeley Unified School District has vanished, district officials said. 

Last week district officials thought that a state money transfer was going to deny them access to $1.4 million this year and compound the district’s roughly $4 million deficit.  

But county officials now say districts are allowed to “spend” deferred money – if the state reimburses the district next year, according to Berkeley’s Associate Superintendent of Business and Operations Jerry Kurr. 

Because the dollars in question will not actually come from the state this year, Kurr said the district can float bonds to raise some of the $1.4 million. The district would repay those bonds once the deferred state money flows to the district during the 2003-2004 fiscal year, likely in July or August 2003, Kurr said. 

The $1.4 million budget scare arose after a district official came away from a state budget workshop last Thursday with the impression that the district would not be allowed to spend deferred dollars. 

But Kurr said that during a follow-up workshop on Friday, county officials, who have jurisdiction over Berkeley Unified, told him they would allow the practice given the state’s gloomy fiscal picture. 

“It was a one-day panic,” Kurr said. 

The state will defer about one-quarter of the district’s funding in three areas. Roughly $1 million of the $4 million Berkeley Unified receives to support its desegregation plan, $195,000 of the $725,000 the district gets in transportation dollars and $125,000 of the $500,000 it gets in “school improvement program” funds, which go to professional development and other services, will be held.  

State legislators deferred spending in these and other education programs in an effort to plug a nearly $24 billion shortfall and balance the 2002-2003 budget. Critics called the move an accounting trick. 

Some observers have raised doubts about whether the troubled state government will be in a position to repay the deferred dollars next year. 

But Bill Fong, fiscal consultant for the California Department of Education, said there is almost no chance that the state will fail to pay back the money.