COLLEGE DISTRICTS GET HARSH LESSON IN FISCAL REALITY.

Byline: Lisa M. Sodders Staff Writer

The Los Angeles, Santa Monica, Glendale and Ventura community college districts have been warned they could be in financial trouble and must outline a strategy for improvement, officials said Wednesday.

A total of 13 of California's 72 districts are on the ``watch'' list this year, compared with only Santa Monica and Compton last year, reflecting the ``fiscal shock of state budget cuts,'' said Robert Turner, vice chancellor for fiscal policy for the California Community College System.

``I don't think it reflects a sudden deterioration of management,'' he said.

Despite the gloomy financial conditions, none of the districts is so bad it will be taken over by the state, Turner said.

Peter Landsberger, acting chancellor for the nine-college Los Angeles Community College District, said recent state budget cuts have been so severe that many districts anticipated being put on the list.

``It's not something any of us like to see, but it doesn't come as a fundamental shock,'' Landsberger said.

In addition to the statewide budget cuts, community colleges, like other businesses, have seen huge increases in health care, workers' compensation and employee pension costs, Landsberger said.

The 13 districts were placed on the list because their unrestricted reserves - money that can be spent for a wide range of expenses - fell below 5 percent of their general fund expenditures, Turner said.

He said many districts had no choice but to draw down their reserves. In 2002-03, $161 million was cut from the statewide community college budget midyear followed by an $86 million cut for the 2003-04 year. The cuts came out of a $6 billion operating budget statewide.

The state classified the 13 districts by Priority 1, 2 and 3. Priority 1 and 2 districts will have to file detailed financial plans with the state and find ways to cut costs or increase revenue, Turner said. Santa Monica is Priority 1 and Ventura is Priority 2.

For districts on the Priority 3 list, including the LACCD and Glendale, the process will be more informal.

``Priority 3 means, in part, that in the view of the chancellor, this district faces possible fiscal difficulties in the next 18 to 36 months, and that is a true statement,'' Landsberger said.

Ann Ransford, director of communications and marketing for the Glendale district, said the state's formula doesn't adequately reflect the college's situation, because it only looks at unrestricted reserves. Glendale's unrestricted reserves are at 3.8 percent, but its combined unrestricted and restricted reserves total 7 percent.

``We feel that we've done a very responsible job fiscally,'' she said, adding that faculty and staff members took a 1 percent pay cut and about 20 people were laid off.

Lisa M. Sodders, [phone]

lisa.sodders(at)dailynews.com