The state is investigating whether Orange County political leaders will be breaking the law if they go forward with their plan to take $73.5 million in tax dollars that are supposed to go to local schools.

County officials said they have no choice but to redirect the money in January and again in May to balance the county’s budget and pay its bills.

Without the tax dollars, the county might be forced to lay off hundreds of workers, close jails and cut care for indigent patients, said Bill Campbell, chairman of the Board of Supervisors.

Orange County’s schools chief, however, said the loss of the money would be even more devastating to regional education.


“As county superintendent, I am not going to stand around and be a nice guy and watch people balance their budget on the backs of the children,” said Bill Habermehl.

Education officials said the move by the county auditor to redirect the tax funds not only would affect schools in Orange County, but also state-funded community colleges throughout California.

Campbell said the money would plug a $49.5-million budget hole and provide another $24 million for essential day-to-day costs. He said the state was mandated to backfill the money that would be taken from K-12 education.

But there is no mandate that the state make up the money that would be stripped from community colleges. Most community college districts operate on a blend of general fund dollars, local property taxes and student fees.


If the Orange County districts are short property tax dollars, the state would have to divert funds from other community college districts to make up the difference, estimated to be $10 million to $15 million.

California’s community colleges already have been hit with about $400 million in cuts this year, and further reductions, as well as higher student fees, are expected.

“This would just be one more cut stacked on top of this,” said Scott Lay, president of the Community College League of California. “At some point, you’re just pushed over the edge.”

Campbell acknowledged that community colleges could suffer under the move, but said he was working with education officials to address their concerns.


“It’s a statewide total impact, and overall, it’s relatively small,” he said. “But I can’t say it won’t affect them.”

The county’s tactic is being watched in Sacramento. If Orange County follows through on its vow to redirect the funds, the state might take legal action against the county, said H.D. Palmer, a spokesman for the state finance department.

“We think it runs afoul of state law,” he said.

Habermehl said he has little confidence that the state will backfill any of the education dollars in a timely manner, if it does so at all.


“I don’t expect the governor’s budget in January to be anything less than very, very drastic,” he said.

Habermehl said local schools already have sustained deep cuts, trimmed salaries and renegotiated for reduced medical benefits.

“I just don’t even see how they could operate at this point,” he said. “The only thing that would be left to do would be reduce the school year. There’s nothing left to cut.”

County Auditor David Sundstrom said he was working with local education leaders to address their issues, and said he would not redirect the funds if he thought it was illegal.


“I believe if I don’t do this, the county would have sued me to compel me to do this,” he said.

Habermehl said he also was upset about the short notice his office received. Supervisors voted to request the auditor to take the action in closed session Nov. 8. Habermehl said he was notified only after the vote.

Campbell said Orange County was feeling the strain of the economy and needs the money. Without it, 250 people might lose their jobs, the district attorney’s office would have to reduce the cases it files, jails could be closed, and medical costs for indigent care cut.

The extra money would be used for such expenses as deferred maintenance in jails or juvenile facilities, software upgrades or to pay down the county’s 1994 bankruptcy debt.


“We would spend it on one-time projects, not adding back people,” Campbell said.

nicole.santacruz@latimes.com