CONNELL TO PROBE PROP. BB SPENDING.

Byline: Dana Bartholomew and Sonia Giordani Staff Writers

State Controller Kathleen Connell said Monday that she plans to launch a probe of the Los Angeles Unified School District's mismanagement of the $2.4 billion Proposition BB bond issue.

As soon as she gets the green light from her legal team, Connell said, she plans to determine how the LAUSD spent the money earmarked for refurbishing and remodeling dilapidated schools.

School officials admitted last week that they face a $600 million shortfall because of poor fiscal management and miscalculated costs.

``We are going to recommend an analysis of that whole process,'' Connell said during a meeting with Daily News editors and reporters. ``As a parent, I am very concerned about the condition of these schools. We believed as taxpayers, when we passed that bond measure, that that money was going to go to schools.

``I'm outraged. I'm looking into an audit - we need a legal opinion. If we can (audit the district), we will.''

LAUSD board member David Tokofsky endorsed a state investigation.

``I absolutely support her spending taxpayer money to find out where the taxpayer money went,'' he said.

Tokofsky noted that LAUSD Inspector General Don Mullinax's audit in March 2000 warned of a $316.4 million deficit and found that $51 million had been wasted on management fees.

Last week, Mullinax said he was starting another audit. That same day, Superintendent Roy Romer and facilities staff members announced the shortfall.

Romer said Connell should ``do whatever she feels she needs to do.'' But he said his staff is already ``vigorously pursuing'' answers. He blamed the deficit on erroneous estimates and promised a full report next month.

Connell, whose children attend public schools in the Valley, also outlined her analysis of the state's economy:

--The California economy fell into recession early this year with the downfall of dot-com businesses but will start rebounding by spring, led by technology, defense and biotechnology. ``We are bullish ... We believe California will lead the nation out of recession,'' she said.

--A multibillion-dollar budget deficit, spurred by state energy purchases last summer, would best be solved by a 10 percent cut in government spending rather than the issue of more state bonds. ``We don't have the revenue flow to pay the money back.''

--A retail sales tax holiday promoted by Gov. Gray Davis to add fire to the economy would instead harm revenues to local cities. ``I don't think that reducing sales taxes will stimulate the economy - we've got to reduce the cost of state government.''

Connell also said she expected her office to end up being the legal arbiter of a San Fernando Valley secession dispute between the city and breakaway proponents over who would own current L.A. assets after the creation of a new Valley city.

California taxpayers groups responded positively to her opposition to increased borrowing for energy purchases and educational needs.

``She's (right) on the money as far as bonds go,'' said Jon Coupal, president of the Howard Jarvis Taxpayers Association. ``We are shocked a public official could make such an intelligent statement. We believe now is not the time to take on between $22 billion and $32 billion in additional debt.''