Governor Jerry Brown signed $55-million emergency bailout legislation for the Inglewood Unified School District, approved on the last day of the legislative session, that effectively transfers control of the schools to the state. Inglewood Unified was expected to run out of cash three months into 2013.

It is not the only school district teetering on the brink. As of last March, the California Department of Education listed 12 school districts that it projected won’t be financially viable in 2011-12 or the year after. Inglewood was one of the 12. Three months earlier there were only seven districts on the list.

If you add another year to the projection, the department says, 176 school districts might not meet their financial obligations. Six years ago, there were just 37 districts on the watch lists.  

School districts can’t declare bankruptcy. By law, they turn to the state—with its theoretically deeper pockets—for help, which may be one of the reasons schools are currently doing better in the bond market than municipalities.

The bailout loan authorized by Senate Bill 533 comes at a high price. The locally-elected school board and the appointed superintendent are stripped of their authority and a state overseer, who reports directly to the state superintendent of instruction, will make decisions about the district.

Only eight other school districts have suffered Inglewood’s fate since the state authorized takeovers in 1992.

The 15,000-student Inglewood Unified is a poor school district that has lost 35% of its attendees in recent years. It borrowed $17 million from the Los Angeles County Office of Education in February to make payroll through the end of the school year, promising an immediate $7 million in budget cuts. The board voted in July to ask for a bailout, and approved 15% employee pay cuts last week.

State Senator Roderick Wright, the author of SB 533, set the table for future discussions with troubled school districts. “Our other option is to shut down the school district and have the schoolchildren cast to the wind,” Wright told fellow lawmakers the day before the Legislature voted, according to the Los Angeles Times.

–Ken Broder

To Learn More:

Brown Signs Bailout for Inglewood Schools (by Patrick McGreevy, Los Angeles Times)

Record Number of School Districts in State Face Bankruptcy (by Teresa Watanabe, Los Angeles Times)

Investors Head Back to Classroom (by Mike Cherney, Wall Street Journal)

California Lawmakers Consider Bailout for Inglewood Schools (by Patrick McGreevy, Los Angeles Times)

Inglewood Unified Sets Wheels in Motion to Give State Control of District (by Rob Kuznia, Daily Breeze)

Dramatic Jump in Number of School Districts on Financial Brink (by Jennifer Gollan, The Bay Citizen)