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.