Sometime this year, the California School Boards Association will sue the governor and the state over  the level of state funding for K-12 schools.

During the organization’s Forecast Webcast on the state of the economy and its impact on education Thursday, CSBA Executive Director Scott Plotkin reaffirmed what he told me last fall.  His message fit the mood of the annual event: one of gloom and frustration.

Jannelle Kubinec, associate vice president of School Services of California, Inc., said that the coming school year could be the most difficult yet for school districts. Besides facing a $200 per student cut in funding under the governor’s proposed budget (maybe more after the Legislature is through with it), districts could face cash flow problems and the daunting legal burden of projecting balanced budgets over three years. Complicating that will be a revenue cliff starting next year, with the end of federal stimulus money and of temporary sales and income taxes that the Legislature passed last year.

California economist Christopher Thornberg of Beacon Economics predicted that some districts will be unable to market construction bonds that voters have approved.  Sharply eroding property values will scare away buyers of the bonds, he said. Declines in commercial real estate  will start to be felt, and the impact of residential property declines will be seen as county assessors finally enter them in the books.

This will be the backdrop for the school lawsuit, which CSBA has been contemplating for months. Plotkin said the association will challenge the constitutionality of an overregulated and underfinanced education system. The state has adopted among the nation’s most rigorous academic standards, and the governor and Legislature are  continuing to raise expectations. But  school districts are hamstrung in meeting them by inadequate funding.

School adequacy lawsuits are dicey. They’re expensive, and, they have stretched out for decades in some states. But Plotkin said that school boards see Sacramento as incapable of resolving fundamenbal problems. So school boards want to regain local control over money and decisions.

Thornberg didn’t dismiss the gravity of the state’s problems. California will be slow to recover from a deep recession. And the governor’s projection of a $20 billion state deficit over the next 18 months is about on target; the administration’s revenue projections are a little optimistic for this year, but may be conservative for next, he said.

But it’s important to put the problem in perspective. The federal trillion-dollar deficit is serious, he said; it equals 12 percent of the economy.

California’s tax burden is far from the highest among states. And the $20 billion deficit represents only 1 percent of the state’s economic activity. “California faces a political crisis, not an economic crisis,” he said. The issue is not high taxes, but “dumb taxes” that the Legislature has the power to fix.

By John Fensterwald on January 14th, 2010