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The county has rejected Berkeley Unified School District’s budget for the second straight year, citing a $3.9 million deficit and a vague financial recovery plan, county officials said Tuesday. 

The Alameda County Office of Education is requiring the district to develop a new fiscal recovery plan and revise its budget by Dec. 15. The county will then decide whether to approve the new budget or send the district back to the drawing board. 

The Tuesday ruling was no surprise but still a blow to Superintendent Michele Lawrence and members of the Board of Education, who made fiscal recovery the top priority this year. 

“I think this is evidence of past mismanagement,” said Sean Dugar, one of seven school board candidates vying for three slots on the panel in November. 

Board President Shirley Issel, who faces re-election in November, said the public has a right to question board oversight of the budget. But Issel distanced herself from the board majority, arguing that she was one of the few to acknowledge the district’s financial problems when they surfaced two years ago. 

Board member Ted Schultz said the district has done as much as possible in recent months to address the deficit and to fix years of sloppy accounting practices. 

“I think we’re making progress,” said Schultz, who will retire at the end of his term. “I’m sure everyone’s a bit frustrated in that we’d like to move more quickly, but these things take time.”  

The school board has approved millions in cuts since January, when the extent of the 2002-2003 deficit became clear – laying off teachers, cutting administrative staff and increasing class sizes, among other measures. 

But by June, it was obvious that the board would not meet its goal of balancing the 2002-2003 budget before the close of the 2001-2002 school year. 

In the end, the board passed a budget June 26 that included a $2.8 million shortfall. After further study, district officials revised the deficit estimate to $3.9 million. 

Faced with a lingering shortfall, the board also approved a fiscal recovery plan June 26. The 2 1/2 page document was short on specifics, but suggested that further layoffs, solvency for the district’s cafeteria fund and the sale of district property, as a last resort, are all possible remedies. 

County Superintendent Sheila Jordan said Tuesday that the recovery plan is “inadequate” and in a letter to the district called for a new plan by Dec. 15.  

Crafting a new, workable recovery plan could prove difficult. By law the district cannot lay off any more certified teachers and administrators this year. Because employee salaries and benefits make up about 85 percent of the district’s budget, the rule is a significant stumbling block. 

“It’s going to be a challenge,” said Issel, acknowledging that the district may not be able to make all the cuts this year. 

School board candidate Nancy Riddle said she hopes that the district will listen closely to community concerns. 

“Last year, it was pretty top-down,” Riddle said. 

District officials have long contended that because they did not learn the magnitude of the budget problems until January, they were rushed to make cuts and did not include the community as much as they would have liked. 

Issel said the public process will improve this year. 

The county rejected last year’s budget after discovering that the district had not properly accounted for millions in revenue. 

This year the numbers were in proper order, Jordan said, even if they revealed a $3.9 million deficit. 

“That’s a very significant statement of progress – everyone knows what we’re dealing with now,” she said. 

But, even if the district has made progress it still faces a series of long-term financial concerns. In a letter to Berkeley Unified Tuesday Jordan pointed to, among other things, a decline in student enrollment, which will lead to a dip in state funding next year. 

Issel said she was not surprised by Jordan’s ruling or the points in her letter but is troubled by the persistence of budget issues, which dominated last year’s debate and now seem poised to again. 

“It’s going to take over the agenda once again, which is the thing that is to me the most disappointing,” Issel said. 

Berkeley’s Superintendent Lawrence and Associate Superintendent of Business and Operations Jerry Kurr were unavailable for comment Tuesday.