After Heated Debate, Capo OKs Loan

Trustees give staff permission to seek out a short-term loan as high as $30 million.

Trustees of the lobbed criticism and questioned each others’ motives Monday night as part of a fiery discussion on whether the district should borrow millions to make it through the end of the year.

School district staff had asked the trustees for permission to take out a short-term loan up to $30 million –  but that number was adjusted higher by tonight’s meeting – so the district could make payroll and meet other financial obligations in June, when funds are expected to run dry.

Trustees Ellen Addonizio and Sue Palazzo urged the board to hold off on the decision until it could take a more in-depth look at district finances. But the majority said a rejection or even a delay was basically a vote to, as Trustee John Alpay put it, “shut down the school district.”

The loan did pass, 4-2, with Trustee Jack Brick absent.

The loan would be the first of its kind to cross fiscal years, but is necessary because , said Ron Lebs, in his last board meeting.

The district now expects that $26 million due for the 2011-12 school year won’t be showing up in district bank accounts until August or September, well into the next school year, Lebs said.

In addition, the Orange County Board of Supervisors has with the expectation that the state will eventually make the schools whole.

Since 2006, Superintendent Joseph Farley said, the school district has relied on a financial vehicle called Tax and Revenue Anticipation Notes (or TRANs), which pools together many school districts to seek out more favorable terms.

The district already took out a $75-million TRAN loan this year, which will be paid back in full by May, Lebs said, leaving the district in a financial lurch by June.

Palazzo said her “conscience, as well as my common sense,” prevented her from voting in favor of the loan.

“Continuing to borrow is not the answer to our financial crisis. Keeping in mind that we already have borrowed $75 million, I think it's time we come up with a plan for operating within our means,” Palazzo said.

Palazzo said it was time to go back to the negotiating table with the various unions and talk about salaries, class size and furlough days.

But Farley said it would be “virtually impossible” for the district to find $26 million to cut by the year’s end.

The district is already tasked with the state made last month.

The conversation Monday became more heated when Addonizio suggested that the board got itself into more financial hot water when .

“Immediately upon election without analysis or an understanding of the district or its finances, the board reinstated approximately $10 million in ongoing annual salary compensation,” Addonizio said. “The decisions you have made in the past year have, in part, led us to the crisis we are facing today.”

Fellow trustees took great umbrage with those comments.

“I’m offended that it continually brought up as if there’s something nefarious going on,” said Trustee Anna Bryson. The contract’s own language dictated those restorations be made, and the trustees were obligated to follow it to the letter.

“I too find it very tiresome and offensive,” said Trustee Lynn Hatton.

“It certainly sounds like an election is coming soon,” Alpay added. “People are getting on their soapbox.”

Getting back to the topic of the loan, Farley said he had full confidence the state would come through with the deferred money.

“It’s virtually impossible for the money not to be received form the state. The state can’t say, ‘We can’t give you the money.’ They must,” he said.

RSM Dad January 12, 2012 at 04:29 PM
Any government agency that would budget based on an assumption that a tax increase in this economy is going to pass is smoking the funny stuff coming out of the medical marijuana collectives. CUSD is headed down a road of self destruction that will be confirmed in November when the tax hike fails. And then it will be too late. The teachers and children will suffer from all of this because the unions fail to recognize they are the problem and not the solution. The district will have to lay off teachers and raise class sizes. Do the math. There is nothing else in the General Fund to cut.
Pam Sunderman January 12, 2012 at 05:28 PM
RSM Dad...class sizes can only be raised so far. They are near capacity now. We are at the point where the school year will be shortened and this will be statewide. This is a catastrophic event which has nothing to do with petty politics in CUSD. And it saddens me that paying a half percent more at the cash register or asking wealthy people to pony up a pittance more is something that some folks are unwilling to do to avoid it. Prop 13 did a lot more than lower property taxes...it gave credence to the current philosophy of how we govern...give me mine and if you don't I will use any tactic to get my way. I will scare you, threaten you, lie about you, and make you play the game my way. Ethics, honesty and doing the right thing are for suckers. The end justifies the means. It's all in the perception and I have a sound byte to prove it. If I make you look bad enough my own transgressions will be forgotten. And when all else fails...remember that God is on my side.
Capo mom January 12, 2012 at 10:50 PM
The problem with school financing isn't Prop 13. It is the Rodda Act. The Rodda Act is the basis of "give me mine and if you don't, I will use any tactic to get my way". Ethics, honesty and doing the right thing are for suckers. The end justifies the means. It's all in the perception and I have a sound byte to prove it. If I make you look bad enough my own transgressions will be forgotten. And when all else fails...remember as we stick it to you, we are the 99%.
shelly January 13, 2012 at 01:42 AM
We are all in this together. We are all responsible for the cause and we are all responsible for the solution. The union or the government did not bring down the economy or cause the lack money to cover the budget. We, the public, did this collectively along with banks and corporation. What do you value? The education budget has been continually cut. Teachers pay cut, teachers jobs axed, program cut, class size increased. And yes there has been waste but there is not much more to cut so what do you suggest? Before someone starts blaming the union and teachers. Please tell me how much a teacher should make? What kind of benefits? A number please since many imply teachers make too much. And no I am not saying they make too little. And if you do not trust Sacramento and the money is not here or there to cover the budget how about a local tax? No? Why? Because you already pay enough? Or you don't believe public education for all? You hate unions and blame them for everything? What? Schools have been continually cut. CUSD does have good schools. We do. No, they are not perfect but no school is and everything can be improved. Some of the monikers imply that you are parents who have children in CUSD schools yet you rant against the schools and the teachers. Your children are precious. Why would you put them in a place and with people you blame and find not very good.
shelly January 13, 2012 at 02:04 AM
I have been called a union hack and troll but really I am just a parent. I have no association with the union other than I respect and value my children's teachers. I have 4 children. I live in a modest neighborhood that is not gated. We have lived here for almost 17 years. I have a car that is 10 years old with 150,000 miles on it. We do not live extravagantly. I graduated from UCSD back when I could afford to pay my modest tution by working as a waitress, an ice cream truck driver and a phlebotomist at the VA. I was the first from my family to go to and graduate from college. I value education and understand that you can come from nothing and make something of yourself. I go back and forth with other parents here about who should be responsible for our lack of money. Conspiracy theories are bantered back and forth on both sides. Our taxes are not covering what we the public have had. More cuts? yes or no?


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