New gov. infuriates educators.

Education lobbyists in California say they may take Gov. Arnold Schwarzenegger to court over his proposal to withhold $2.3 billion in guaranteed school funds to help plug the state's $8.5 billion budget gap and over his effort to weaken a voter-sanctioned formula guaranteeing public schools funding each year.

That's not all. They are also spewing steam about Schwarzenegger's support of merit pay for teachers.

Schwarzenegger is proposing $2.9 billion, or a 7 percent increase over last year, in school spending. But that's about $2 billion less than what schools are owed under Proposition 98, which voters approved in 1988; it requires that the state direct 40 percent of new tax income to K-12 schools.

Educators say Schwarzenegger is reneging on a deal he made with them last year to forgo $2.3 billion owed to them under the formula with the promise that it would be repaid when the economy picked up. The governor also wants local districts to pick up the nearly $500 million that the state contributes to teacher retirement funds.

"Shocking is not a strong enough word," says Brett McFadden, legislative advocate for the Association of California School Administrators, which joined eight other education groups to right the proposals. "This is probably the most serious threat to California public education in the past 50 years."

But the governor claims children have "first call on the treasury." Thirty percent of ninth-graders do not graduate and barely 40 percent are proficient in math. His plan to reward good teachers, expand vocational education and expand charter schools are ground-breaking. "Special interests will push back on his proposals," his office states. "They want to preserve the status quo, when creativity, innovation and progress are what will benefit our children most."

While state revenues are expected to increase by 6.8 percent, Schwarzenegger maintains he can't justify giving education any more funding when he has to slash other state services to make up for the budget gap.

Part of the coalition against the proposals says Schwarzenegger is using merit pay as a smoke screen, according to Dean Vogel, secretary treasurer of the California Teachers Association.

"What the governor's administration would love would be for the education coalition to focus on merit pay and forget about the budget. It's just a tremendous tactic." he says.

It would cost the state $25 million to fund merit pay, which "pulls at the heartstrings of teachers." Vogel says. "It says to them, you aren't working hard enough."

The governor says the system which gives raises to low-performing teachers robs generations of students of learning opportunities.

State educators say California schools have faced more than $9.8 billion in cuts in the last four years. Coalition members say that along with possible court action, they may take the issue to voters with a ballot initiative. Already the California Teachers Association has been running radio ads criticizing the governor's education budget plan. "It's going to be an all-year fight," McFadden says. --Fran Silverman