Using "magic dollars" tucked away in leftover or overbudgeted state education accounts could avoid the need to suspend the Proposition 98 funding guarantees, Sen. Joe Simitian (D-Palo Alto) told a packed audience of primarily school officials in Palo Alto Saturday.
"Everybody here should be fighting like the devil to tell people, 'Don't Suspend Prop. 98,'" he said.
Suspending the proposition would set a dangerous precedent of continual school funding cuts, he said.
Earlier this month Gov. Arnold Schwarzenegger proposed cutting school funding by 10 percent as part of an emergency plan to wrangle California out of a $14.5 billion budget deficit.
The plan could cost school districts $400 million this fiscal year and $4 billion in the next fiscal year beginning in July.
Palo Alto's schools could lose $921,000, district Chief Business Officials Bob Golton and Cathy Mak said at the Jan. 15 school board meeting.
Schwarzenegger's proposal requires suspending Prop. 98, the 1988 initiative that guarantees minimum annual funding to schools.
But legislators could be convinced not to suspend Prop. 98 if funds from overbudgeted accounts could be used to offset educational expenditures from the state General Fund this year, Simitian said.
There could be as much as $1.5 billion in such accounts this year, he said.
The meeting was one of the semi-annual Education Updates hosted by Simitian, a former member of the Palo Alto school board, Palo Alto City Council and Santa Clara County Board of Supervisors.
Nearly 150 people -- overwhelmingly school board members or school staff, some from as far as San Diego -- crammed into a conference room at the school district office and fell absolutely silent as Simitian spoke.
Many were worried about the impact massive state cuts could have on their districts.
"We're talking about librarians and custodians again," Rose Filicetti, executive director of the Santa Clara County School Boards Association, said.
California is "already the last in the nation in the ratio of counselors to students and nurses to students, so this can't bode well," Claudia Hevel, a volunteer with Los Altos-based MVLA Community Scholars, said.
Yet some damage could be avoided if Prop. 98 is not suspended, Simitian said.
Under the complex measure, the state must spend at least as much on education each year as it did the previous year, he said. Funds to match this year would be scarce next year under the current budget crisis, a major reason Schwarzenegger has proposed suspending the proposition, he said.
But suspending Prop. 98 would start a slide down a slippery slope to more frequent and casual school-funding cuts, he warned, noting Schwarzenegger's initial suspension of the measure in 2004-05 paved the way for the current proposal.
Instead, the state should reduce the current year's education budget to make next year's financial obligation smaller, he said.
He outlined a plan to use overbudgeted or saved money to meet the current education budget without spending less on students this year.
About $1.5 billion could come from three sources outside the General Fund, he said.
Some special programs are over-budgeted this year, and funds can also be taken from an account of extra funds unspent in previous years, called the Reversion Account, and the Settle-Up Account of money set aside from years when spending didn't end up meeting Prop. 98.
The total $1.5 billion in budget re-distribution would in turn lessen by $1.5 billion next year's Proposition 98 minimum-guarantee responsibility to spend from the General Fund, he said.
That reduces Proposition 98 money the state must provide for both years from $4.4 billion to $1.4 billion, he said.
Legislators might be able to stomach that size and vote "no" on suspending the proposition, he said.
Because his re-distribution plan wouldn't cause schools to spend less on students this year, he dubbed the non-General Fund sources "the magic dollars."
The state legislature has 45 days or until Feb. 24 to respond to Schwarzenegger's emergency proposal for this fiscal year.
After getting input from legislature, the governor will present his revision of next year's plan in May and the legislature will vote on it by the end of June.
Another Education Update meeting will be held in Santa Cruz at the Santa Cruz County Government Center on Feb. 7 from 6 to 7:30 p.m. (701 Ocean St.).