BOARD CONSIDERS COFFERS; WHAT HAPPENS WHEN SCHOOLS GO BROKE?

It is, officials concede, a dismal possibility. But the Missouri's State Board of Education this fall will consider what to do if a school di~strict goes bankrupt.

A recent escalation of the number of districts operating in the red has prompted to state board to create a response plan, said member Bekki Cook of Cape Girardeau.

"We have in the last 18 months seen a skyrocketing number of school districts who are technically bankrupt," Cook said. "We have no statute to cover this situation."

For school districts to spend beyond balances is illegal in Missouri.

Even so, last year 16 of the states 543 districts were in that position and 46 more would be in the red this year if changes were not made.

"Since we started discussing the problem, it's only getting worse," Cook said.

This summer, two districts closed their doors. The Knob Lick district became part of the Farmington district and the Benton County R-10 district became part of the Warsaw district in west central Missouri.

Under the current system, the local district has the responsibility to come up with a plan when it can no longer operate. That system had been satisfactory because so few school districts were in dire financial straits, Cook said.

But, she said, with the growing number of districts facing budget crises, it's time to set down some guidelines. The board has been discussing possible solutions for several months.

"Some educators are concerned that the state board wants to take over these schools," Cook said. That's not the case, she said, but something must be done.

"We've asked the Department of Education to work up some sort of a plan that could be written in the form of a bill," Cook said. "Part of our mission is to be watching out for problem areas and suggesting legislation to address those problems."

The board hopes to have legislation introduced after the first of the year.

Vic Slaughter, director of finance for the Department of Elementary and Secondary Education, said school districts are now filing financial reports from the previous school year. An analysis of that data won't be ready until late September or October.

But Slaughter recently surveyed 250 school districts about their financial health. Of those 250 districts, 159 said that balances for 1991-92 are projected to be lower than in 1990-91 and 50 of those districts say it's the first time their balances will dwindle.

"It's our suspicion that the situation is getting worse," he said.

"Yesterday I had a telephone call from a legislator worried about a district he thinks may go belly up within a couple weeks," Slaughter said. "We do not have a good me~~~~th~od of handling a district that can't make it."

Under the current situation, it's possible that a district could close and students would be out of class for as long as three months before action was taken.

"That's not right," Slaughter said. "When we let a school's financial structure determine children's education, that a pretty sorry way of doing business. I think we need a little more consideration of what is good for the kids."

Cook said the difficulty in formulating a plan is that the state has so many different types of school districts.

"And there are so many reasons a district could go bankrupt from funding to pure mismanagement. It makes it really hard to come up with one concept."

Slaughter said a large suburban district was $3 million in the red last year. "Was it bankrupt? You and I would probably say so." Slaughter said. "But they have borrowed some money and made some changes and this year they have turned it around.

"A small school district with less than 100 students might not be as drastically bankrupt, but they don't have any flexibility. They really might be bankrupt," he said.

"I think a lot of times it will have to be a judgment call taking into consideration both the program and the financial condition. It takes a gutsy call on someone's part."

Slaughter suggests the appropriate group to make that call is the state board of education.

Cook said the state board has voted to endorse Proposition B, but said that measure will not solve the entire problem.

"Certainly we are all agreed that the combination of reforms and additional money mean a lot to schools," she said. "But Proposition B would not provide money until the 1993-94 fiscal year. It will not be an immediate salvation. The dollars will be way late."

Cook said if Proposition B is defeated, "I don't think the legislature, having had word that the people of Missouri don't want to pay for education, are going to push for anything else."