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There were 127 districts on a state financial warning list indicating they had a negative or qualified financial status as of the budget reporting period that ended Oct. 31, 2011 — 17 more than last year at this point.

Seven school districts in San Diego County gave themselves a qualified financial status for the reporting period, a signal they may not be able to pay their bills for the current or two subsequent fiscal years. A negative certification — the most serious of the classification — is assigned when a district will be unable to meet its financial obligations for the remainder of the year or for the subsequent fiscal year.

The local districts that signaled potential budget problems included Borrego Unified, Carlsbad Unified, Fallbrook Union, Grossmont Union, Ramona Unified and San Marcos Unified and the National School District. School districts and other local educational agencies submit interim status reports semiannually to the state Department of Education which are classified as positive, qualified or negative. The latest reports, which were due Dec. 15, show seven districts in the state with a negative certification and 120 as qualified.

The number of districts on the watch list declined slightly from last June when the second interim status report for fiscal year 2010-11 was issued, officials said.

"The deep cuts made to school funding — and looming uncertainties about the future — are driving school districts to the brink of insolvency," state Superintendent of Public Instruction Tom Torlakson said in a statement.

For other stories from our news partner, go to utsandiego.com.