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New details emerge in Lyon probe

Michael Lyon committed no crimes and local investigations are the product of divorce proceedings as a 24-year marriage breaks up, his attorney says.

For nearly 18 months, Sacramento businessman Michael Lyon has faced the twin crises of a bitter divorce and a criminal probe.

The fallout escalates as the 54-year-old executive, who has stepped aside as CEO of Lyon Real Estate, resigned this week as a Boy Scout leader and remains out of town.

Lyon learned two weeks ago that a federal probe would be closed without charges being filed. But the Sacramento County sheriff and district attorney since have launched their own investigation into whether he secretly videotaped guests and family members in bedrooms and bathrooms in his Sacramento and Lake Tahoe homes.

That probe continues this week, as local investigators pore over the federal evidence to determine whether state charges are warranted against one of Sacramento's best known real estate executives, whose name appears on red-and-white yard signs throughout the region.

Lyon's attorney, William Portanova, maintains his client has committed no crimes and said the entire episode is the product of divorce proceedings between Lyon and his wife of 24 years, Kimarie "Kim" Lyon.

Kim Lyon did go to the FBI with her allegations as their marriage was crumbling, according to confidential law enforcement documents reviewed by The Bee, as well as interviews with sources.

But those documents also indicate the FBI's evidence reaches well beyond Kim Lyon's assertions, detailing a series of interviews with close family friends and at least one former employee who confirmed they had been taped without their knowledge in episodes that span two decades.

Lyon temporarily stepped down last week as CEO of Lyon Real Estate, and has stayed out of view since word of the investigations became public.

Kim Lyon also has refrained from discussing the matter.

"It is a very sensitive and emotional situation, and I have children, so I think I have to stick to a 'no comment' for now," she said, reached by The Bee this week at her Arden Oaks home. "I'm especially trying to protect my younger son from all this."

The Lyons have two sons, ages 15 and 22.

Michael Lyon has been a fixture in Sacramento's philanthropic circles and a leader in a Carmichael Boy Scout troop for years. He voluntarily stepped down from his Boy Scout position after word of the probes became public. There was no evidence of any video activity involving Scouts, sources said.

An interview with the FBI

The documents reviewed by The Bee indicate the FBI first came knocking at Lyon's real estate office on American River Drive in June 2009, two months after he had filed for divorce.

When agents arrived, the documents state, Lyon initially indicated that he would answer their questions.

Kim Lyon had told agents her husband had surveillance cameras hidden inside bathrooms and bedrooms of their 4,000-square-foot Arden Oaks home – tucked into clock radios and vents – and that the cameras had recorded images of house guests, family friends and others.

The documents indicate that at some point, Kim Lyon turned those tapes and electronic recordings over to investigators.

When Michael Lyon was asked about the recordings, his answers remained vague, one document states. He told agents he didn't remember employing a 15-year-old girl recorded years ago taking a shower in the Lyon family vacation home at Lake Tahoe, the document states. He denied making that tape.

He was not sure what had happened to the surveillance equipment, he told agents, and did not know what recordings were made using it.

"Lyon was unresponsive to the question as to whether he installed hidden surveillance equipment devices in his children's bathroom and the guest bathroom and bedroom of his Fox Hollow Lane residence," federal agents reported. "Lyon's response was, 'I do not want to impugn my wife.' "

Problems involving Lyon and hidden cameras surfaced early in his marriage to Kim Lyon, according to interviews she had with the FBI in April 2009 and again in April of this year.

"The first problems with the marriage started 'when the camera thing came out of the blue,' " law enforcement documents quote Kim Lyon as telling agents.

The "camera thing" referred to an incident near the July Fourth holiday in 1992, when a newly married couple visited the Lyon family in their Sacramento home, the law enforcement documents state. As the husband and wife were showering in the guest bathroom, the man "noticed a hole in the ceiling of the shower behind the vent," he told agents last May.

The man told them he "looked up and saw a lens in the hole" and that "the lens was for a small portable camera."

"The fan had been removed from the vent, so when (he) looked at the hole he was able to see the attic," the documents state.

The couple confronted Michael and Kim Lyon in the den, and Michael Lyon "expressed that he was sorry" and agreed to give the couple the tape, according to the documents reviewed by The Bee.

"During the confrontation with Michael, (the man) observed Kim becoming very upset," the documents state. "Kim was saying that Michael would have to go into therapy."

The couple left with the tape, pulling their car over after leaving the home, smashing it and pulling the magnetic tape out of the cassette. "I just wanted to get out of there," the man told agents last May.

He recently declined to speak with The Bee. "I feel funny about saying anything …" said the man, who does not live in Sacramento and is not being named by The Bee because he is an alleged victim. "I don't know what he's gotten himself into."

A discovery in the attic

In her interview with investigators last April, Kim Lyon said it was another event, just after Christmas in 2005, that deepened the rift in their marriage.

A family friend and the friend's son had come to the Fox Hollow Lane home to spend New Year's there, law enforcement documents state. After they left, Kim Lyon began taking down the Christmas decorations and went to the attic to store ornaments, she told investigators.

"Kim located a monitor, and recognized the guest bathroom and guest bedroom as being displayed on the monitor," law enforcement documents state. "Kim confirmed the location of the cameras by repositioning the clock radios and confirming the change on the monitor. The monitor displayed both live and recorded feeds."

Kim Lyon confronted her husband, then summoned a housekeeper to help her collect "the computers, clock radios, and wires to remove them from the house," the law enforcement documents state. "Michael stood in front of the car and said, 'You don't want to take that,' repeatedly."

The documents state that Kim Lyon drove the materials to a storage locker off Highway 50 in Rancho Cordova, where she stored the materials for three years, returning annually and paying the rent in cash.

The couple continued to have problems and, on April 4, 2009, Kim Lyon told her attorney there was "a lot of crazy stuff at my house" and walked her through the home, documents state. The attorney called in an electronics expert, who said the house "contained between $500,000 and $800,000 worth of production quality monitoring equipment."

Either that night or the next, Michael Lyon came to the house and removed computer equipment from the home, "making multiple trips, filling up his Suburban several times," the documents state.

Why federal probe ended

The federal investigation ended because of what officials say is a lack of evidence. However, numerous law enforcement sources told The Bee that the federal case hit other walls: The statute of limitations had expired in some instances involving possible federal crimes, the sources said, and some witnesses were deemed to lack credibility.

The Sacramento County district attorney's and sheriff's offices will not discuss their investigation or any possible charges. However, California's wiretapping law makes it a crime to record or eavesdrop on any confidential communication without the consent of all parties. A California appellate court ruled that the statute applies to the use of hidden video cameras.

The crime can be charged as a misdemeanor or felony, and can be pursued by prosecutors up to three years after the alleged act.

Lyon's attorney says he is confident that no charges will be filed.

"The bottom line is that Michael Lyon has done nothing illegal," Portanova said. "In 30 years of practicing law, I have never seen a systematic public campaign like this.

"In two years, we've been through family court, Child Protective Services, the U.S. attorney's office and the FBI. And now, somehow, every uncorroborated and false statement is finding its way into print, and here I am shadow boxing."

Portonova also said the estimated value of the equipment in Lyon's home was "ludicrous." He said the cameras in the homes were for standard home security systems and were clearly visible.

Lyon is well-known as a video buff and aficionado of the latest electronic gadgets, ranging from iPhones to portable generators powered by hydrogen. Basic Internet searches turn up video he has taken climbing an area peak or bicycle routes the veteran cyclist suggests others follow.

He runs a separate company that produces educational and training films for professional offices throughout the country. Portanova said none of that equipment was used in Lyon's home.

Marriage breaks up

On April 5, 2009, Michael Lyon moved out of the home, law enforcement documents state, and Kim Lyon went to see Matt Jacobs, a former federal prosecutor and now a Sacramento attorney. Jacobs later told her there was material on the recordings from the equipment in the storage unit – a digital video recorder and an 8 mm movie camera – that had to be reported to the FBI and that "the matter was no longer about divorce," the documents state.

Two weeks after Kim Lyon met with Jacobs, she was served with divorce papers filed by her husband, the documents state.

On April 22, 2009, Kim Lyon and Jacobs went to the offices of the Sacramento Valley Hi-Tech Crimes Task Force, a cyber crime agency located in a secure compound at McClellan Air Park that includes FBI and sheriff's investigators. She told investigators about the recording equipment.

The FBI began talking to people who may have been recorded without their knowledge, interviewing the couple from the 1992 shower incident, as well as the young woman they believed had been recorded in the shower at the Lake Tahoe home.

They brought her to the McClellan compound where they showed her a video of a girl blow-drying her hair in the bathroom of the Lyons' Lake Tahoe home. She said it was her, possibly from a 1992 visit when she was at most 16, law enforcement documents state.

Agents went to the home of another family friend and showed him a video image from a Lyon home bathroom. He confirmed the picture was of him and said he "had never considered the possibility that he would be filmed and was unaware of the cameras hidden in the bathroom or elsewhere in the house," law enforcement documents state.

By then, agents also were working with information that came from another source: a 40-year-old woman Michael Lyon had been dating after his separation.

According to the documents, she called the FBI, sheriff's officials and the Hi-Tech Crimes Task Force in September 2009 and told them she had seen sexually explicit material on Lyon's computer while she was a part-time occupant of a Carmichael home he moved into after separating from his wife.

The woman took the hard drive from the computer and later turned it over to authorities, according to the documents.

Portonova has said none of the materials the woman turned over constitute criminal behavior.

San Bruno fire crews try to reach smoldering homes after blast

Firefighters sift through rubble at a burned home that was destroyed by a massive explosion and fire September 10, 2010 in San Bruno, California. Thirty eight homes were destroyed and four people were killed when a Pacific Gas and Electric gas main blew up in a San Bruno, California neighborhood near San Francisco International Airport on Thursday evening.

SAN BRUNO, Calif. -- Fire crews tried to douse the remnants of an enormous blaze and account for the residents of dozens of homes Friday after a gas line ruptured and an explosion ripped through in a neighborhood near San Francisco, killing at least four people and likely more.

Television footage showed crews with dogs going house to house in the neighborhood Friday morning, and officials said there could be more casualties. Earlier Friday, officials said at least six people were killed before revising the official number to four.

At least 50 people were hurt, with three suffering critical burns in the explosion Thursday evening that left a giant crater and sent flames tearing through the middle-class neighborhood of 1960s-era homes in hills overlooking San Francisco, the bay and the airport.

Christina Veraflor, 41, of Napa, grew up in the neighborhood and said Friday morning that her 67-year-old mother's house was destroyed. Her mother, who had lived in the home for 40 years, was at the movies when the neighborhood erupted in flames.

"I woke up this morning and said, 'I'll go to my mom's and get this and get that.' But there is no mom's anymore," Veraflor said.

Pacific Gas and Electric Co. President Chris Johns said Friday morning a steel gas pipe ruptured about three feet underground just before 6:30 p.m Thursday, but crews still haven't been able to determine the cause of the rupture or the ensuing blast because they can't get close enough. The damaged section was isolated and gas flow to the area has been stopped. The blaze was 75 percent contained by midmorning, fire officials said.

Veraflor said she smelled gas at the house during a visit six weeks ago but did not report the smell to the utility.

"You'd get a whiff of it, and it would dissipate," she said.

Johns said the company has heard the reports that some residents smelled gas in the area before the blast.

"Right now, we haven't got confirmation about that, but we have records that we are going back right this minute to try to confirm what exactly those phone calls look like and when they occurred, and we will report back as soon as we know something."

After the initial blast, flames reached as high as 100 feet as the fire fueled itself on burning homes, leaving some in total ruins and reducing parked automobiles to burned out hulks.

"It was a continuous whooshing sound as if it was a fed fire," resident Michael Yost said. "It sounded like, you know, you would if you had a blow torch. It's that sound but, you know, a hundred times louder."

It's not the first time a deadly explosion on a PG&E gas line has devastated a Northern California neighborhood.

On Christmas Eve 2008 an explosion killed a 72-year-old man in the Sacramento suburb of Rancho Cordova, destroyed one home and seriously damaged others.

The National Transportation Safety Board's final report said PG&E used a wrong pipe to repair the gas line two years before the explosion. Rancho Cordova residents had reported of a gas smell in the area before the blast.

In response to the NTSB's findings, the company said it had taken "extraordinary measures" to ensure a blast like that would never happen again.

The NTSB has sent a four-member team to San Bruno to investigate Thursday's blast.

Four firefighters suffered minor smoke inhalation injuries and were treated and quickly released, said Fire Chief Dennis Haag.

Haag said crews walked through the neighborhood Friday morning and revised the damage estimate to 38 structures destroyed and seven significantly damaged. Dozens of other homes suffered less severe damage in the fire, which burned 15 acres.

Lt. Gov. Abel Maldonado, acting governor while Gov. Arnold Schwarzenegger was in Asia on a trade mission, declared a state of emergency in San Mateo County.

Rep. Jackie Speier, a Democrat who represents San Mateo County, said she was working to secure federal disaster assistance for residents and businesses affected by the fire.

"This is an extraordinary community, it's extremely tight-knit. Generations of families have lived here forever. And we will all come together. We will restore the homes and lives of all these people."

Stephanie Mullen, Associated Press news editor for photos based in San Francisco, was attending children's soccer practice with her two children and husband at Crestmoor High School when she saw the blast.

"First, it was a low deep roar and everybody looked up, and we all knew something big was happening," she said. "Then there was a huge explosion with a ball of fire that went up behind the high school several thousand feet into the sky.

"Everybody grabbed their children and ran and put their children in their cars," Mullen said. "It was very clear something awful had happened."

Several minutes later, Mullen was near the fire scene, about a half-mile away. She said she could feel the heat of the fire on her face although she was three or four blocks away from the blaze. It appeared the fireball was big enough to have engulfed at least several homes.

"I could see families in the backyards of the homes next to where the fire was, bundling their children and trying to get them out of the backyards," she said.

She said people in the neighborhood were yelling, "This is awful" and "My family is down there."

Chimneys, burnt-out cars and a real estate for sale sign remain after a massive fire in a residential neighborhood September 9, 2010 in a San Bruno, California. A massive explosion rocked a neighborhood near San Francisco International Airport.

A home destroyed after a massive fire that roared through a mostly residential neighborhood in San Bruno, Calif., Thursday, Sept. 9, 2010. Firefighters from San Bruno and surrounding cities are battling the blaze that started on a hillside and is now consuming homes in a residential neighborhood.

Fires burn where remains of homes and automobiles consumed by a massive fire in a residential neighborhood are scattered on September 9, 2010 in San Bruno, California. A huge explosion rocked a neighborhood near San Francisco International Airport.

A massive fire roars through a mostly residential neighborhood in San Bruno, Calif., Thursday, Sept. 9, 2010.

A Daly City firefighter stands near a hose Thursday as it feeds water to crews battling the huge blaze in San Bruno.

A massive fire roars through a mostly residential neighborhood in San Bruno, Calif., Thursday. Firefighters from San Bruno and surrounding cities are battling the blaze that started on a hillside and is now consuming homes in the neighborhood south of San Francisco.

Firefighters douse a massive fire that roars through a mostly residential neighborhood in San Bruno, Calif., Thursday, Sept. 9, 2010. A massive fire burned homes as it roared through a mostly residential neighborhood in the hills south of San Francisco following a loud explosion Thursday evening that shot a fireball more than 1,000 feet into the air and sent frightened residents fleeing for safety, witnesses said.

A massive fire is roars through a mostly residential neighborhood in San Bruno, Calif., Thursday, Sept. 9, 2010. Firefighters from San Bruno and surrounding cities are battling the blaze that started on a hillside and is now consuming homes in a residential neighborhood.

A massive fire is roars through a mostly residential neighborhood in San Bruno, Calif., Thursday, Sept. 9, 2010. Homes are being destroyed as the massive fire roars through the south San Francisco suburb.

A massive fire is roars through a mostly residential neighborhood in San Bruno, Calif., Thursday, Sept. 9, 2010. Firefighters from San Bruno and surrounding cities are battling the blaze that started on a hillside and is consuming homes in a residential neighborhood.

A massive fire is roars through a mostly residential neighborhood in San Bruno, Calif., Thursday, Sept. 9, 2010. Firefighters from San Bruno and surrounding cities are battling the blaze that started on a hillside and is now consuming homes in a residential neighborhood.

A cameraman takes footage as a ball of flames and smoke are seen in San Bruno, Calif., Thursday, Sept. 9, 2010. Several homes were destroyed as a massive fire roared through the mostly residential neighborhood south of San Francisco.

A screenshot of video from KGO-TV.

A ball of flames and smoke are seen in San Bruno, Calif., Thursday, Sept. 9, 2010. Several homes were destroyed as a massive fire roared through a mostly residential neighborhood in the south San Francisco suburb.

Sacramento specialty store William Glen announces closure

William Glen employee Mary Worthing fights tears Thursday after it was announced the store will close at the end of the year.

William Glen, the landmark specialty store that became a holiday destination for generations of Sacramentans, is closing its doors at the end of the year.

The store's owners broke the news to gathered staff Thursday afternoon at the store in Sacramento's Town & Country Village shopping center.

"There were tears," said Trevor Sanders, adviser to the William Glen Trust. "It's an icon – an iconic brand."

William Glen will stay open through the winter holidays, always a special time for the store and customers, said Dave Smith, brother-in-law of late co-founder William "Bill" Snyder, who died in December at age 67.

"Bill was 'Mr. Christmas.' It was a special time of year for him," Smith said. "Everybody's trying to make it as positive as they can. The employees are trying to make it that one last celebration."

Thursday's announcement marks the end of a 47-year run that began in 1963 when two Sacramento State students, Snyder and Glen Forbes, joined forces, joined names and sank their cash into a new venture.

Their initial investment was just $500 and a borrowed $2,000 backed by their two Chevrolets, but it was enough to open a 1,000-square-foot storefront at Fulton and Edison avenues. William Glen moved the next year to Town & Country Village at Fulton and Marconi avenues.

Over time, the small candle shop grew into a 20,000- square-foot showcase for high-end housewares, signature holiday gifts, specialty items and even gourmet dining, cementing its reputation as one of Sacramento's premier retail outlets.

Forbes retired from the business in 1998, and Snyder and his wife, Terry, became co-owners.

But the venerable store finally fell victim to several blows it sustained in recent years: lingering recession, changing consumer tastes, competition from the Internet and, most painful of all, Snyder's death in December.

William Glen's closing comes less than two years after another Sacramento institution announced it was closing its doors at Town & Country. Bonney & Gordon, longtime clothier to the city's elite, shuttered in early 2009 after 61 years in business.

"This is a tough time for everyone. The economy is a factor, but it's not the only factor," Sanders said. "Bill was the spark for this business. It's the passing of a legacy."

And a presence that is still deeply felt by employees at William Glen, many of whom have worked at the store for 20 years or more.

"The dedication the employees showed to Bill and his memory, it's a testament to them and to Bill," Smith said.

In the months after Snyder's death, "we really tried everything we could to make a go of it," Sanders said. "In the last couple of months, we were looking at different options – selling, continuing to run – all were viable options."

Only in the last week was the decision made to close for good, Sanders said.

Reaction was swift online at sacbee.com as readers lamented the store's passing, offered best wishes and recalled holiday shopping trips, calling the store "one-of-a-kind," and mourning its closing as "a loss to the community."

The store will continue to honor its gift certificates and return policy and is "working every angle" to fulfill its gift registry, Sanders said.

William Glen leased space for its main store and the nearby Christmas and More store. What will happen to the space is unclear, said William Glen spokesman John Segale.

"The decision was made to close the store at the end of the year, but there's been no thought as to what happens next," Segale said.

Merchandise will be marked down beginning Saturday.

"As sad as it is, we hope people will come and remember the joy and life that William Glen brought them," Sanders said. "This store was open 47 years – that's a pretty special thing."

Thursday afternoon, after hearing news of the imminent closure, Mary Worthing made her way through the dimly lit store.

A William Glen employee for 26 years, Worthing declined to talk with a reporter, but her face said everything.

She choked back a tear and turned out the lights.

Trevor Sanders, adviser to the William Glen Trust, said the death of co-founder William Snyder in December contributed to the decision to close the store. "It's the passing of a legacy," Sanders said.

No California IOUs until October, at the earliest

State Controller John Chiang speaks to the rare joint session of the Assembly and Senate to hear from experts about the states financial crisis, Monday Dec. 8, 2008.

California will avoid issuing formal IOUs until at least October, sparing the state from another embarrassment for now and relieving some pressure from budget negotiations.

Controller John Chiang announced Thursday he does not yet have to issue IOUs – otherwise known as registered warrants – because the state took in more revenues and spent less money in August than anticipated.

He originally believed the state would have to start issuing IOUs on Sept. 23, his office said. The controller now says the state can survive without IOUs until at least early October.

California is in its 11th week without a budget, the second longest delay in at least 45 years. Without a balanced spending plan, the state cannot obtain short-term loans and risks running out of cash. That has forced Chiang to consider emergency steps to conserve cash.

California last year issued IOUs for only the second time since the Great Depression as a way to ensure the state could make its highest priority payments to schools and bondholders.

Since July 1, the state has issued an informal version of IOUs by withholding more than $3 billion in payments to state vendors, health clinics, community colleges, Cal Grant recipients and legislative and gubernatorial employees. The state will pay those recipients, some with interest, once a budget is enacted.

Some workers and vendors have been able to survive on short-term loans from banks, but a handful of clinics may be forced to shut their doors.

The controller's office has not decided whom it would pay with IOUs if necessary, although spokesman Jacob Roper said those already going without pay would not be eligible.

Because the state pays interest on IOUs and formally promises repayment, IOU recipients were able to cash them in last year. Sacramento County announced Wednesday that it would purchase up to $10 million in IOUs if the state issues them.

Still, budget experts have suggested that the stigma of IOUs could be just the motivation that state leaders need to break the budget stalemate. Leaders last year allowed 23 days' worth of IOUs before approving a budget.

"They may be breathing sigh of relief that IOUs aren't here right now since it takes away some of the heat," said Jaime Regalado, director of the Pat Brown Institute for Public Affairs at California State University, Los Angeles. "The relaxing of IOUs or anything else similarly draconian seems to ease up the pedal."

Chiang, a Democrat, warned leaders Thursday not to get comfortable.

"The governor and Legislature should not view this short reprieve as an invitation to break the budget deadlock record," he said in a statement.

Democrats and Republicans disagree over how to resolve the $19 billion deficit and whether to include permanent changes that reduce future pension benefits and curtail spending in good years. Democrats want about $4.5 billion more in taxes from oil production, corporations and a complicated tax swap. Republicans refuse to approve any higher taxes.

"I think there is a sense of urgency among Republicans and has been for some time," said Seth Unger, spokesman for Assembly Republican leader Martin Garrick, R-Solana Beach. "We are very anxious to resolve the $19 billion deficit and do so without raising taxes."

Democrats, however, face pressure from labor unions and education groups not to cut state spending as deeply as Republicans demand.

The American Federation of State, County and Municipal Employees sent mailers this week in Senate President Pro Tem Darrell Steinberg's district criticizing him for agreeing last year to cut various state services. The mailer did not mention that Steinberg also forced Republicans to accept more than $12 billion in temporary tax hikes.

AFSCME lobbyist Willie Pelote did not return calls Thursday. His office said he was busy meeting with aides to the Democratic leaders.

"It's just not effective to form circular firing squads," said Steinberg spokesman Nathan Barankin. "In terms of items on the mailer, those were conditions that Democrats were forced to agree to in order to get a two-thirds vote for the budget last year."

The state received $264.6 million, or 3.9 percent, more in revenues than Schwarzenegger's Department of Finance projected for the month of August, Chiang reported. At the same time, expenditures for July and August were $1.2 billion below estimates.

The controller's office attributed half of the reduced expenditures to timing; some agencies will spend money in September that budget analysts expected them to use in August. At the same time, agencies have either reduced their expenditures or avoided filing claims due to uncertainty.

In the last 45 years, the latest the Legislature approved a budget was on Sept. 16, 2008, according to the Department of Finance.

Lawmakers are almost certain to miss Sept. 16 this year. Gov. Arnold Schwarzenegger left Thursday for a trade mission in Asia, and he will not return until Wednesday. Legislative leaders do not expect to close a budget deal in his absence. Once a compromise is reached, it would take a few days to draft final budget bills for lawmakers to vote on.

Sacramento-area schools await U.S. aid

Millions of federal dollars meant to add education jobs are expected to reach beleaguered California school districts in the next few weeks.

But this isn't likely to add many more teacher jobs in the Sacramento area this year.

Instead, local education leaders, wary of years of budget cuts, seem more inclined to sit on the money until they get a look at the state budget.

"We still don't know what the state will do with our revenue," said Deborah Bettencourt, superintendent of Folsom Cordova Unified, which will get $3.5 million. "In the past they have cut us by a similar amount."

Some officials are considering temporarily putting the money in district reserve accounts to help with cash flow disrupted by state budget cuts and deferrals of payments to districts.

Sacramento-area schools are expected to get more than $75 million of the $1.2 billion that recently flowed to the state from the federal government. They have until September 2012 to spend it.

Local schools laid off hundreds of teachers and staff this year, increasing class sizes, closing libraries and eliminating programs to balance budgets strained by state budget cuts.

While most districts are short on specifics about plans to spend the federal dollars, most say they will fill immediate needs and save the rest. Officials from both Natomas Unified and Folsom Cordova say counselors are likely to be hired this year.

"Our counselors were reduced by 50 percent," Bettencourt said. "We've been struggling without them."

Natomas Unified's school board has decided to give priority to health and safety positions, said Superintendent Bobbie Plough. The board is considering bringing back health assistants, campus supervisors, library assistants and custodians with some of the $2.4 million it expects to get from the jobs bill.

The board also is considering adding some instruction hours to increase shop periods. "Next year we will hire more teachers," said Plough, who previously has expressed concern about disrupting classes by adding teachers once school has began.

Some districts, like Elk Grove Unified, San Juan and Sacramento City Unified, haven't decided how to spend the money.

Twin Rivers is the only large local district that has committed to hiring teachers this year.

The district will rehire 20 teachers and four custodians, said Trinette Marquis, district spokeswoman.

She said about half of the $5.5 million the district will receive will be used next year to help reduce the number of future layoffs.

Local school boards are expected to make final decisions on how to spend the money over the next two weeks.

The money comes from a $10 billion federal Education Jobs Fund, passed by Congress and signed Aug. 10 by President Barack Obama. Lt. Gov. Abel Maldonado will sign state legislation releasing the federal funds in a ceremony in Los Angeles this morning, according to a news release from Maldonado's office.

The money should take about two weeks to wend its way from the controller to the state's county offices of education to local school districts, said state schools chief Jack O'Connell.

"We need to get these funds to the classrooms as soon as possible," he said.

Despite federal legislation prohibiting states from using the money to supplant state funds, not all local educators are convinced state officials will hand over the funds without finding a way to take money away somewhere else.

"Even though the say they can't, there are funny ways to do that," Plough said. "We've seen that in the past."

TOP AREA RECIPIENTS OF EDUCATIONAL JOBS FUND

Elk Grove Unified $11.9 million

San Juan Unified $8.4 million

Sacramento Unified $8.4 million

Twin Rivers $5.5 million

Folsom Cordova Unified $3.5 million

Natomas Unified $2.4 million

Roseville Joint Union High School $2.1 million

Rocklin Unified $2 million

Woodland Joint Unified $1.9 million

Roseville City Elementary $1.7 million

El Dorado Union High School $1.5 million

Davis Joint Unified $1.5 million

Dry Creek Joint Unified $1.3 million

Washington Unified $1.3 million

Western Placer Unified $1.1 million

To see how much money a school should expect, go to: www.cde.ca.gov/fg/aa/ca/edjobsfund.asp.