Despite unprecedented borrowing, the would not have been able to pay its bills this month if not for a cash advance from the state.
At Monday’s Board of Trustees meeting, Clark Hampton, deputy superintendent of business services and support services, announced the district had received what he called a deferral waiver, an advance payment of money owed to CUSD by the state.
“It’s a small amount of $5.6 million that was due to be paid in July, but the district received a waiver and received it early,” Hampton said.
A CUSD spokesperson did not return Patch's request for further comment.
According to the state Department of Education, 19 school districts in California successfully applied for the advance.
Districts can qualify for the early payment if they can show “that the deferral of payments during February through June 2012 will result in the school district being unable to meet its expenditure obligations for June,” according to the state.
In its application to the state via the Orange County Department of Education, Clark wrote:
It is imperative that this deferral exemption waiver so that the Capistrano Unified School District can maintain a positive cash balance during June 2012.
Cash flow has become a significant problem for a number of school districts, Hampton said Monday night, because .
Arlene Matsuura, an administrator with the School Fiscal Services Division of the state Department of Education, said the state delayed $2.5 billion of June payments to July.
“In the old days before these cuts came, an ending fund balance was mostly cash. And now it’s mostly IOUs,” Hampton said.
He added that “any amount we can get reduces our borrowing costs.”
In recent months, the district has . CUSD took out a $75-million short-term loan last July, a practice it is has done for several years to help handle cash-flow needs.
But in January, the trustees . It was the district’s first-ever loan to cross fiscal years. Ultimately, however, the district borrowed just $12.5 million because .
Still, it wasn't enough to get Capo through the end of the school year, according to the district's application for relief.
"The district has exhausted all external and internal borrowing options and without the deferral exemption, may not be able to meet its operating obligations through June 2012," Hampton wrote in his letter of application.
Matsuura said the $5.635 million would cover the first payroll in July, as the normal July payment won't arrive until the end of month. This was the first time the school district has requested such an advance.
"These are payments they would've gotten in a normal year," Matsuura said.
Hampton said Monday that the district was already in the process of applying for more cash advances for next year.
Also at Monday's meeting, trustees voted on two other items that indicated financial duress. They approved:
- Borrowing money from several district funds, such as the cafeteria fund and adult education, which typically are not used to pay for regular school expenses
- Giving themselves the ability to take money pegged for specific programs and "sweep" them to the general fund
Of the 19 school districts that successfully applied for cash advances, 11 – including CUSD – are in what the . Capo is by far the largest school district of the bunch. The only other Orange County school district to apply for and receive an advance payment was Anaheim City School District, which received $4.465 million.