I’m still in the hole to my teenage son for a little over $100. I promised him $25 for every A on his report card, with a $50 bonus for straight As.  Oh sure, I gave him some of it; I‘m not a complete deadbeat. But I deferred the rest.

Let’s set aside for now the wisdom of paying for good grades, especially since it’s been two years since our agreement, and he’s still waiting for the full amount. “Go get that video game you were counting on buying,” I told him. “Use some of your own money and I’ll repay you. I’m good for it, eventually.” Then a few days later I’d borrow a bit back, replacing it with an IOU and forcing him to ask his sister for a loan, which she happily gave him — with interest. But that’s his problem; I never agreed to cover interest.

Multiply this situation manyfold — let’s say enough to reach more than $9 billion — and you get a glimpse into one of the complicated budget challenges facing California schools today. It started in the 2001-02 fiscal year with the dot-com bust. Relatively speaking, it was a small delay; the state pushed a $1.1 billion payment to schools from June to July, the start of the next fiscal year. It worked so well, apparently, that lawmakers made it de rigueur in the budget process, approving $7.4 billion in deferrals through the current fiscal year, according to a policy brief by the state Legislative Analyst’s Office. Gov. Brown has proposed another $2.1 billion in deferrals for 2011-12.

On the upside, deferrals are a way to save district programs in tough economic times. “The state says, ‘You run the program, we’ll pay you later,’” explains Jennifer Kuhn of the LAO’s office. The problem, says Kuhn (and just about everyone else I spoke with), is that the state hasn’t been paying back the money on time in recent years. Deferrals are fine “if year-to-year growth in funding is sufficient to pay for the deferred payments as well as support all existing programmatic costs,” explains the LAO’s policy brief. However, if there’s not enough money to payback the deferred costs, then the state imposes another deferral to cover the first.  “This is essentially the situation that has occurred over the past few years,” writes the LAO.

The state is now deferring about a third of the Proposition 98 money owed to districts.  When those expected funds don’t come in, districts are forced to borrow money, and that costs even more. “We pay interest,” said Michael Hulsizer, head of legislative affairs for the Kern County Superintendent of Schools Office, who sent out a chart using bags of money to illustrate the give and take that makes it look like a bank heist gone bad. “The state has basically put the cost of borrowing on the districts,” said Hulsizer, who estimates the combined cost to districts at somewhere between $200 and $500 million in interest. (Click here to see chart on deferrals.) Yet taking out a loan is preferential to the other option available to districts that can’t afford to borrow; 20 percent of them have had to cut programs.

At the moment, however, Hulsizer is optimistic that the state has enough cash to pay districts the $7.4 billion in outstanding deferrals.  If that happens, it will be at the same time that another $2.1 billion deferral is scheduled to take effect. I don’t know about my son, but I feel a lot better about those IOUs.