LAUSD PLACED ON FINANCIAL WATCH LIST EIGHT OTHER COUNTY DISTRICTS ALSO CITED.

Byline: Naush Boghossian Staff Writer

Los Angeles Unified and eight other Los Angeles County school districts were placed Thursday on the state's financial watch list after overspending their budgets in 2003-04.

LAUSD - the nation's second-largest district - made its first appearance on the list predicting ``impending financial problems'' after it overspent its $5 billion budget by $253 million.

The Annual Financial Report of California K-12 Schools, released by State Controller Steve Westly, points to a dire future for public school finances and warns that nearly 80 districts may not be able to pay their bills in two years.

The Los Angeles School District said tighter state budgets make it difficult to retain the quality of education for the district's 740,000 students.

``We still have financial issues that face the district in 2006-07 and 2007-08, and we're hard-pressed to provide the quality of education we like with the revenue we're getting,'' said Roger Rasmussen, the district's budget director.

For the first time in 12 years, school districts overall spent more money than they received in fiscal 2003-04, with 552 districts overspending a total of $682 million.

``With declining enrollment ... coming together with a tough budget year, you have a recipe for a problem,'' Westly said. ``We're putting the spotlight on this to make sure we start making corrections now.''

The LAUSD has been accused by the teachers union and others of maintaining a top-heavy bureaucracy, but Westly and state Superintendent Jack O'Connell said most districts have been forced into a situation where they have to overspend in order to compete with districts in other states.

California currently ranks eighth from the bottom nationally in per-pupil spending.

``California will not continue to have a world-class economy if we continue to rank at the bottom of per-pupil spending,'' Westly said.

Other districts in Los Angeles County making the state's list of financially troubled schools were: Bellflower Unified; Centinela Valley Union High; El Rancho Unified, Lowell Joint School District; Palmdale Unified; Pasadena Unified; Pomona Unified, Torrance Unified and Westside Union Elementary.

The audit came less than four months after the Los Angeles Unified board unanimously voted to submit a ``qualified'' financial rating to the Los Angeles County Office of Education - one of 47 school districts statewide to do so - indicating that the district is uncertain whether it can meet its financial obligations over the next three years.

A positive certification indicates that a district will meet its financial obligations for three years, usually by making steep cuts.

The number of districts and county offices of education filing negative or qualified interim certifications - relating to their ability to meet their financial obligations for the current and subsequent two fiscal years - increased, from 65 in 2003-04 to 79 in 2003-05.

Naush Boghossian, [phone]

naush.boghossian(at)dailynews.com