Despite having to suffer the worst economical crisis in almost a century, just a small number of school districts in California are officially designated as financially troubled.

In a study issued past the California Department of Education, seven districts — including Inglewood Unified near Los Angeles, Paso Robles Articulation Unified in San Luis Obispo County, and Vallejo City Unified due north of San Francisco — take received a "negative certfication," meaning that "based on electric current projections" a school district won't exist able to meet its financial obligations this year or next.

That is the nearly serious rating a district tin receive. Another 120 districts received a "qualified" certification, which ways they may not be able to meet their fiscal obligations at some point over the adjacent 3 years.

These districts, which includes Los Angeles Unified, the state'southward largest, together serve virtually one-third of California's 6.2 meg public schoolhouse students.

Yet the "negative" and "qualified" designations obscure the fact that a far larger number of districts in the state — possibly the majority — are struggling financially.

"The financial emergency facing our schools remains both wide and deep," Tom Torlakson, California's superintendent of public instruction, said in a statement. "The deep cuts made to school funding — and looming uncertainties well-nigh the futurity — are driving school districts to the brink of insolvency."

Land laws and procedures — most notably Assembly Nib 1200, passed in 1991 — have succeeded in preventing almost all school districts from actually going insolvent. But 8 districts have get insolvent since the law passed.

"That'southward 8 out of 1,000 local education agencies in 20 years," said Joel Montero, CEO of the Fiscal Crunch & Direction Team (FCMAT), which helps districts regain their fiscal stability. "Past anyone's measure out, that's a pretty skilful record, peculiarly when you consider the fiscal ups and downs of the state during that time."

In 1991, after two school districts — Richmond Unified and Compton Unified — faced insolvency and needed a land bond-out loan, lawmakers passed AB 1200. The country wanted to institute an early warning system signaling a district's financial distress by requiring county offices to review district budgets, said Jeannie Oropeza, state deputy superintendent of public pedagogy who has also worked for the Department of Finance.

The law encouraged a back-and-forth system of accountability between districts and their county offices of education and so districts — and the country — would not exist surprised by sudden insolvencies. Districts must prove they can balance their current-year budget and those for the next two years. Twice a year, county offices must certify this is true and file reports with the California Department of Education.

Districts, different private enterprises, cannot declare bankruptcy and go out of business. However, districts can get insolvent, which means they can't see their financial obligations and the land so must step in, provide them with loans, and appoint a state administrator to run the district.

The number of districts with "negative" or "qualified" certifications in the report published today — vii "negative" and 120 "qualified" — is lower than in the final acting report, when 13 districts had "negative" certifications and 130 had "qualified" ones.

But the number is significantly college than before the recession, when but 29 districts received "qualified" certifications. That year, seven districts also received "negative" classifications.

Districts with "negative "or "qualified" certifications must work with their canton offices to get back on track.

"Once you're 'qualified,' you've got the canton office'south watchful eye on you," said Lora Duzyk, past president of the California Association of School Business concern Officials and assistant superintendent for the San Diego Canton Office of Education. "The interventions get more than intense as you progress to 'negative' [certifications]. Past the fourth dimension you are 'negative,' the canton office pulls out all the stops to keep you lot from going insolvent."

But almost all districts receive a "positive certification," which means the district has enough resources to meet both current needs and fiscal obligations for at least the next two years.

Notwithstanding, getting a "positive" rating doesn't necessarily mean the district is in practiced shape financially.

Ken Shelton, master business officer for the Santa Clara Canton Office of Education, says many districts are like boats trying to stay afloat every bit the water rushes in. "You jettison things to go rid of weight," he said. "At some point, y'all can't jettison things anymore, and we're at that point."

Tom Armelino, superintendent of the Shasta Canton Office of Instruction in Northern California, recently testified at a state Senate Budget and Fiscal Review Commission hearing that five of the 25 school districts that he oversees accept "qualified" certifications. If statewide tax initiatives that would provide funding for schools don't pass, 16 of the districts would receive "qualified" or "negative" certifications, he said. At that signal, he added, he would not have enough resources to help them all.

At the same hearing, Kent Bechler, superintendent of Corona-Norco Unified in Riverside County, said even if the tax initiative proposed by Gov. Jerry Brown were to pass in November, most districts would nonetheless have to make painful reductions.

"Nosotros're in survival mode," he said.

For more information well-nigh state reporting and fiscal oversight requirements, see fiscal oversight on our website and an EdSource publication, Agreement School District Budgets: A Guide for Local Leaders.

For a discussion of the bear on of the state'due south budget crisis on Chiliad–12 education, come across EdSource's brief, California'southward Fiscal Crunch, What does information technology mean for schools?

To get more reports like this 1, click hither to sign up for EdSource's no-price daily e-mail on latest developments in educational activity.