Capo Schools Go on Borrowing Binge

To fix cash-flow problems, the school board eyes another short-term loan, bringing Capo Unified's total borrowing this year to $100 million.

The is about to borrow more money than ever to make ends meet through the end of the school year.

On Monday, the Board of Trustees will consider taking out a short-term loan of $25 million. That's on top of a $75-million loan taken in July, after the board authorized .

Half of the first bridge loan is due to be repaid this month, and half in April. Property-tax revenues will cover those payments. But by June,  will leave the district short another $21.3 million, creating the need for a second loan, according to a staff report.

The combined $100 million in loans represents 27 percent of the district’s $372-million budget.

“The district has never borrowed that much,” said CUSD spokesman Marcus Walton.

The short-term bridge loans are offered through a financial vehicle available to school districts called Tax and Revenue Anticipation Notes (or TRANs). It pools together other cash-strapped school districts, community college districts and county offices of education to get better terms for the loans.

Capistrano Unified has used TRANs regularly because it relies on property taxes as its primary source of income, and the payouts mostly arrive twice a year, in December and April, according to a staff report.

In addition to cash-flow issues created by the normal ebb and flow of property taxes, the state in recent years has routinely delayed payment to local school districts, the staff report says. For example, in the 2011-12 state budget, $2.1 billion owed to school districts this year won't be paid until the next fiscal year.

“This latest deferral brings the total amount of deferred payments the state owes to all school districts from February through June to over $8.3 billion,” the staff report states.

“This means approximately 40 percent of the total state-apportionment payments the district should have received before June 30 will now not be paid by the state until after the start of the next fiscal year,” the report says.

Staff cannot yet estimate the cost of borrowing the funds, paying interest and the cost of issuing the TRANs, the report states. 

The trustees meet at 7 p.m. Monday at the district headquarters, 33122 Valle Road in San Juan Capistrano.

Pam Sunderman January 08, 2012 at 11:49 PM
Shelly...this is a great link. It is interesting that Finnish doesn't have a word for accountability and consider it what is left without taking responsibility. Here is another link with a well respected methodology among early childhood educators. It could also be posted on the Transitional Kindergarten thread...which I will do. But it also belongs here as an example of how teachers, parents, and communities worked together to come up with some amazing innovations which have lived on successfully since WW2. http://en.wikipedia.org/wiki/Reggio_Emilia_approach This is not an expensive school to run since everyone does their part.
RSM Dad January 09, 2012 at 04:38 AM
For Shelly and Jolly Girl- All rhetoric aside just answer this simple question- Assuming the tax increase fails in November, what is YOUR solution to balancing the budget? Salary cuts or shortening the school year? And remember if this is all about "the children" and you tell me that shortening the school year is better, then I would like you to justify it. Do you think either of you can handle my simple request?
shelly January 09, 2012 at 05:16 AM
RSM Dad, The solution will be to both shorten the school year and cut salaries and cut programs and increase classroom size. That is the reality. Correct. There will not be enough money to cover the costs of education. My children are students in CUSD schools so they will be affected along with all the children of CUSD. As a parent I dont expect only others to sacrifice for my children. Do you? So what is your solution? There is not enough money to cover the budget due to the poor economy. Do you object to paying a little more in taxes to cover education until the economy recovers? And remember this is all about the children. I won't put the children in quote marks because it really is about the kids and their educaiton.
Pam Sunderman January 09, 2012 at 05:17 AM
So you think that if the tax measure fails the teachers (and other district employees) should make up the difference? I disagree. That would be like asking them to work for 3 weeks for nothing. You have quite a sense of entitlement there Dad. That is not to say that no further cuts in salary are possible. Teachers are steeling themselves for that possibility. However if state ADA ends 3 weeks early the schools should close.
shelly January 09, 2012 at 05:31 AM
RSM Dad, How will you vote on raising taxes for education? yes or no? and if programs are cut and class sizes increased and the school year shortened are you willing to own your vote and the consequences without putting all the blame on the teachers, administrators and union when schools are drastically cut?. I believe that it is not only the responsibility of the teachers, administrators and staff to fix the financial crisis in our state. I believe that we also have responsibility? Do you believe that we have no responsibility? I plan on voting yes. I teach my kids that we are all in this together. And you should never ask others to do something that you are not willing to do yourself.
RSM Dad January 09, 2012 at 05:34 AM
Shelly, I think JG pretty much layed out the union party line you seem to support. Screw the children on education but don't cut salaries. Just about every other public employee in the state is taking cuts, but not teachers. Screw the children. They don't need the classroom time. Your solution is balanced but you will never convince the union hacks like JG to compromise. As far as the tax increase, never will vote for one until the state gets its head out of the sand and makes an honest effort to reform te system as a whole. Why don't we start with abolishing categorials?
Pam Sunderman January 09, 2012 at 06:11 AM
RSM Dad, you asked what I think and I gave you my opinion. I don't speak for the union and I don't speak for every teacher. And did you read my reply? I said that more salary cuts would probably come. But if you are asking teachers alone to make up the difference if state funding is cut for 3 weeks then my vote would be for a 1/2 percent increase in sales tax for everyone. Why would you expect teachers to do your fair share and theirs as well? And that is exactly what Shelly said. Why am I am a "union hack" and she is offering a balanced solution when we said the same thing?
shelly January 09, 2012 at 02:17 PM
RSM Dad, How about my opinion be a parent party line because that is what I am. I support what is best for the children of CUSD. Teachers all over California did take a paycut. CUSD teachers took a paycut. So essentially you are saying that teachers should always take a paycut no matter how drastic, and parents and taxpayers (who are also teachers ) have no responsibility. So for you it seems it really is not what is best for the children but it is political and what is best for you and your agenda.
shelly January 09, 2012 at 02:30 PM
RSM Dad, As I said before I am not going to ask others to do something I am not willing to do myself. My state and my district are in a financial crisis. And I don't plan on folding my hands and blaming others because I don't like it. We are all responsible for this crisis. Do I think some money has been misspent. yes. But I will try to help during this crisis because it is a crisis and will affect the children if I don't. I will vote yes. My agenda is for the children. I do not want more programs cut, bigger class sizes and shorter year.
James Schumaker January 09, 2012 at 04:36 PM
Reviewing all these comments, it seems to me that there has to be a better and more dependable way to do up a budget in order to eliminate funding uncertainties. The TRAN loan process seems to create a natural budget trap for schools, and they have to walk right into it -- they have no choice. Taking out loans against state government funding promises is a pretty tricky business, and the way things are now, school districts are going to be caught short time after time. Maybe while he's at it, Governor Brown should take a crack at revising the way schools are funded that will give us all a little more certainty. Not being a budget maven, I don't know exactly how that could be done, but there must be a better way. It may be that other states have a better system and can show us the best way to get out of this mess.
Capo Parent January 09, 2012 at 09:17 PM
Moonbeam is promising to make deep cuts to education, public safety and parks to scare the public into voting for his tax increases. Nothing like playing on the fears of others. Moonbeam wants roughly $6 to $7 billion in new taxes, yet his proposed budget has an increase in spending of roughly $6 to $7 billion. Given the size of the state budget deficit, why didn't he freeze expenditures to the level in last year's budget? When dealing with Moonbeam, the devil is in the details. As for CUSD, it is clear a solid majority of the board is in the union camp. How else can one rationally explain the board voting to open an existing contract and increase the amount of medical benefits teachers get at the same time it is looking at millions of dollars in cuts under the best of circumstances? Don't forget, teachers are also still getting step and column increases, i.e. higher wages. As an unnamed pundit once said, "We be s*rewed!"
shelly January 10, 2012 at 12:05 AM
Capo Parent, When someone wrote a comment on the Governor Brown's proposal of raising taxes on people who make $250,000 or more you wrote, "So, if citizens have had drastic cuts in pay, benefits and retirement, but are still working, they should gladly give up more of their hard earn money to support others, nothwithstanding the cuts they have alread suffered. You're kidding, right?" So do you believe that teachers should be asked to "pay more" by having their pay and benefits cut more even after taking pay cuts? They took an over 6% pay cut. They only make on average $75,000. No teachers makes anything close to $250,000. Currently there are 4 reform trustees who were also on the former board and 3 non reform trustees. The reform trustees have a majority. Who is the solid majority in the union camp? The 4 reform trustees all ran against union endorsed candidates. There is currently not enough money in the state to cover education, public safety, parks, etc. so in order to make things work the state must cut programs or raise taxes. The Governor is giving the public a choice since the legislator is not choosing. It is the public's decision. Yes or no. Cuts or not cuts?
shelly January 10, 2012 at 12:08 AM
Capo Parent, Step and column increases I believe only occur after 5 year increments so teachers only get raises after working for the district for 5 years or if the teacher gets a higher degree on their own dime. They invest years of studying and thousands of dollars and bring the knowledge back to our district. And by staying in our district for five years and longer they keep their knowledge, training, experience, talent in our district.
OC Mom January 10, 2012 at 12:39 AM
Shelly, Thanks for your latest comment reminding me that the average teacher in CUSD makes $75K a year. Not too shabby. Especially when you consider that the majority of teachers are women who are usually married and may actually be in an over $250K a year household. How many teachers are married to other teachers, principals, water district employees, firefighters or other government employees. Most teachers are not the put upon individuals that the teacher's union would have us think they are. The one's I feel sorry for are the new teachers who have student loan debt and no income either because they can't find a job or they were laid off in order to keep a higher paid "tenured" teacher. There are many people in the private sector who have taken paycuts in order to stay employed in this economy. There are others who I speak with who have twentysomething kids with college degrees who can't find work or are working for very little money. Why should "tenured" teachers immune to paycuts? I agree with previous posters that raising taxes isn't going to fix this problem. The money is never spent the way it should be and the taxes are rarely decreased once the crisis passes.
Pam Sunderman January 10, 2012 at 01:12 AM
OC Mom, Surely you aren't suggesting that a teacher's salary should be based on what his/her spouse makes? Would that hold true for everyone? Should there be a law that you can't make over a certain amount if you are married? Is this just for women or should men also make less if they are married? What if that new teacher who got laid off is married to a professional who makes over a certain amount (say $150,000)? What if they finished school without incurring student loans? Should that be taken into consideration in your scenarios. And should teachers who make more be laid off so that those who make less can be kept? Do you acknowledge that teachers also have taken pay cuts?
concerned parent January 10, 2012 at 01:23 AM
Actually, what SHOULD happen is that teachers be hired/promoted/paid/fired based on merit in addition to length of tenure, just like is done in every other profession. Those who are the most effective in their jobs should be rewarded. But union rules prevent that, don't they? BTW, how many teachers are there left in CUSD who HAVEN'T taught for at least five years, if that indeed is the basis for step increases? All of those teachers have been pink slipped, have they not? Also, I don't know many other jobs, professional or otherwise, where you can make an average of $75,000 a year, with first-class benefits, and not work an entire year.
Pam Sunderman January 10, 2012 at 01:42 AM
concerned parent, teachers are hired on merit (everyone concerned wants the best new teachers) unless they have too much experience. They can be placed on the salary scale for up to 10 years experience. After that they receive no credit. So if a teacher has been teaching 15 years in another city or state, no matter how good they are, they will be placed on the salary scale at the 10 year level. This prevents many teachers from leaving their district and is a hardship for an experienced teacher with a spouse who is transferred, requiring the family to move. Actually teachers can get step increases every year until the 12th year. At that point they receive a step increase only every 5 years. All step increases cease at 24 years with no further step salary advancement possible after that, no matter how long the teacher remains in the job. Column increases are possible for every 15 units of post graduate work up to a maximum of 75 units (which must also include a master's degree. And there are few teachers left who have taught for fewer than 10 years. Tenure has not saved those teachers who were laid off. A few have specialized credentials and less than 5 years experience...but not many. As for merit pay...most teachers (and unions) have advocated for various forms of merit pay. The problem comes in determining how to define merit. Merit in most professions is determine by expertise and experience. Expertise is a very subjective term and very difficult to measure.
shelly January 10, 2012 at 01:46 AM
OC Mom, Teachers deserve a living wage. Are you saying they are paid too much? What does being a woman have to do with anything? This is not the 1950's and being a teacher is not a hobby so that a housewife can bring in a little something extra for the cookie jar. Teaching is a career, a profession. Men and women both teach and support and raise families earning a living. And if the combined income of a teacher and his or her spouse (man or woman) is $250,000 or more than they will be subject to the higher tax proposal. So what is your point? I asked Capo Parent to clarify his statement. Read it. Are you saying that teachers with mortgages, bills, families, college loans of their own and for their own kids should make way for kids right out of college? Are you stating simply because new teachers have loans that they should have a job over a teacher who has experience even though this teacher has no experience and may in fact not be a very good teacher because he or she has not been tested in the classroom. College professors have tenure. Public school teachers do not. If the money is not there to hire the new teachers and you want them to be hired then vote yes.
Pam Sunderman January 10, 2012 at 01:46 AM
Expertise can be measured by extra training, leadership capabilities, and in some cases, productivity. Training and leadership are easy to measure for teachers and the current methods of determining salary work to do so. Productivity is not easily measured for teachers. No widgets or financial profits to count. Test scores don't work...too many outside factors affect them.
shelly January 10, 2012 at 01:52 AM
Concerned parent, $75,000 is an average. A first year teacher does not receive $75,000 or first class benefits. If administrators do their jobs then teachers are hired, promoted and fired based on merit. I agree those who are the most effective in their jobs should be rewarded. How do you measure this?
Greg January 10, 2012 at 10:31 PM
So you're saying that borrowing nearly 30% of your budget is not binge borrowing? Sounds like union math to me.
Greg January 10, 2012 at 10:34 PM
Did you consider the actions of the new board in the pay kick backs they gave to the teachers virtually the minute they came into office? If they had followed the terms of the contract, they could have saved millions for the district. Instead, they rewarded the unions that got them elected. That has negative connotations for the fiscal stability of the district.
Greg January 10, 2012 at 10:38 PM
"Still even if the Governor's proposal wins out budgets will still need to be cut, salaries and benefits cut and programs cut." That is simply not true. Putting aside the Governor's gimmicky budget, cuts do not have to be made to education. That is simply Brown's attempt to scare people into voting for the increased taxes he wants. If you bothered to read the stories about the budget, you would know that Brown is proposing increasing the budget by 6 or 7%. If he simply maintained the same budget as last year, or heaven forbid REALLY cut the budget, there would be no need for further cuts if the tax increases are rejected because the $6 billion he is proposing increasing the budget would cover the lost "revenue" from the rejection of tax increases.
Greg January 10, 2012 at 10:42 PM
Shelly, you are correct that "Because the former board imposed a contract and did not negotiate they then had to go back and negotiate trigger language into the final contract." However, you ignore the fact that the trigger language had not yet occurred when the new board gave the union members' money back. Had they waited until the proper time, the district would have saved considerable resources.
shelly January 10, 2012 at 11:36 PM
Greg, What exactly is union math? I am a parent and not a union member. Why do so many assume that people I am union just because I do not agree with the agenda of cutting teachers pay, pensions and benefits. I know who has my kids back and it is not the conservative people on this blog who keep saying that teachers are in it for the money. Volunteer in your kids class and see how hard teachers work and how much they care about your child and the children they teach. Almost every school district is borrowing money because of how the state is funding districts. Union math or any math. Do you want the schools to stay open or not? So what do you suggest? Shorten the school year? Increase class sizes? Cut salaries and benefits more? That is what happened with the former board and that is what will happen again if we, the public do not help. Simple vote yes or no but then don't complain about what happens.
shelly January 10, 2012 at 11:44 PM
Greg, Did you consider the fact that the former board signed the trigger language into the contract and the state increased the ADA money coming to our district so the trigger was pulled? If the former board would have just negotiated cuts in the first place instead of imposing there would have been no trigger language. The cuts would have been for the length of the contract and there would have been no trigger to pull. So if you have a problem with the trigger language you should take it up with the former board. There are still 4 of them on the board. Trustees Addonizio, Palazzo, Brick and Bryson were on the previous board and all ran as reform trustees against union endorsed candidates. The current board is 4 reform trustees and 3 non reform trustees. The former board still has majority vote.
Shripathi Kamath January 11, 2012 at 12:06 AM
"Capo Borrows Record Sums as State Defers Payments"
shelly January 11, 2012 at 03:05 AM
Greg, I don't know if what I say is "simply not true" given that in the last couple of years since the economy tanked education has been a target. Gimmicky? K-12 and higher education funding has been cut every year since the economy tanked. Governor Brown actually didn't cut education this year as much as he could have because education had already been cut.. And Brown may be increasing the budget 6 to 7% but it is a budge that has already been slashed. Our class sizes are bigger and programs have been cut. Are you satisfied with the status quo and the same funding for education? I'm not. As a country we should actually value educaton. And value the people who work in education. Now since we are in a financial crisis some call teachers hacks, only in it for the money, and not as intelligent as other professions. These are people who previously had nothing but praise for teachers. So to me it seems like it is all about the money for the critics not the teachers. Finland has teachers union and almost all schools are public and their students are highly educated. They value education. We, the public, had better stop nickle and diming education and start viewing our taxes that go into education as investments into our countries future.
Capo Parent January 11, 2012 at 06:14 AM
Given your comments, then I assume you agree tenure for teachers should be abolished, and teaching jobs should be based on merit, not time on the job. I understand that defining merit is not easy, but it can be done in a reasonable, appropriate manner to address legitimate concerns regarding how merit is to be measured.
shelly January 11, 2012 at 03:37 PM
Capo parent, Public school teachers do not have tenure.


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