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To Make Payroll, Schools to Get Their December Tax Money Early

A delay in getting out this year's property tax bills means much fewer funds to disburse to schools in November, which in turn makes finances tight.

The county will release December’s property tax revenue to Orange County school districts one week early so that they can meet November payrolls despite a snafu that delayed property tax collections.

The county parcels out the funds as they come, and this year, the influx of funds has been slowed because property tax bills were mailed later, said Frank Davies, administrative manager with the county Auditor-Controller’s office.

“We can only distribute the collections that are received,” he said.

See the chart below for how much less local school districts received early this month compared to last year’s November allotment.

Davies said his office was contacted by officials from the Orange County Department of Education, who were concerned that school districts may not be able to meet November’s payroll.

So the schools will get their next share of the property taxes the week of Nov. 26, he said. Normally, the schools would receive the funds Dec. 4 ― the same day city governments get their allotment of tax revenue.

“Getting the money on Dec. 4 would not have helped them,” Davies said of schools.

Darren Dang, director of business services for the Orange County Department of Education, said school districts already face severe cash-flow issues for several reasons, chief among them is that the state often defers its own payments to schools many months, sometimes pushing them into the next fiscal year.

School districts also have very small rainy-day reserves. A small school district is required to maintain 3 percent of its budget in savings, and larger districts serving more than 30,000 students are required to keep 2 percent on hand for emergencies, Dang said.

“Two percent probably only covers less than two weeks of payroll,” Dang said.

School districts often take out short-term loans called Tax and Revenue Anticipation Notes at the beginning of the fiscal year to help them keep the lights on when cash flow is weak, Dang said. Although district finance gurus do their best to figure out what they’ll need, they probably didn’t anticipate such a precipitous decline in the November allotment.

“A TRAN wouldn’t cover this,” he said. They offer “a little bit of buffer room,” but not this much, he added.

School District

Last Year's Secured

Net Novemember Payout 

This Year's Secured

November Payout

Capistrano Unified  $13,541,323.67 $1,975,891.21 Saddleback Valley Unified $7,189,950.49 $1,050,441.42 Laguna Beach Unified $2,085,726.69 $307,949.32 Newport-Mesa Unified $9,984,664.29 $1,479,898.31 Los Alamitos Unified $1,699,623.53 $248,959.12
bbq November 16, 2012 at 04:56 PM
Why did they receive so much less this year?
Penny Arévalo (Editor) November 16, 2012 at 05:28 PM
The property tax bills went out later, and people are paying more slowly.
bbq November 16, 2012 at 05:39 PM
Is this the total amount expected for this tax period, or will more $$$ be coming in?
Penny Arévalo (Editor) November 16, 2012 at 05:44 PM
Goodness no! They'll get the total amount due from the property taxes. The county can't disburse them until they actually come in. But public agencies come to expect a certain amount (based on history) in November, and the numbers are WAY down this month. This creates CASH FLOW problems, but the cash will eventually flow. Make sense?
Ann Sue November 16, 2012 at 06:49 PM
Nothing makes sense anymore
bbq November 16, 2012 at 07:31 PM
Ok, Penny. No need to be snarky. Thanks.
Penny Arévalo (Editor) November 16, 2012 at 07:32 PM
Yikes! I didn't mean to be snarky. Apologies!
bbq November 16, 2012 at 07:35 PM
Ok, Peace :)
Homer November 16, 2012 at 08:11 PM
How does one pay "more slowly"; as opposed to "slow." That's like saying someone is "more wrong." It would be better to say; people are not paying their taxes as fast as last year. Or, is that too "snarky" ?
shelly November 16, 2012 at 09:48 PM
I suggest that you read John Crandall's patch article. It explains the tax bill "snafu" more in depth. "In an interview with Patch Wednesday evening, Davies said one of the reasons the tax bills were sent out “a little bit later” this year was because of the delays caused by installation of a new computer system in the County Tax Assessor’s Office took time." Tax Snafu Shortchanges OC Cities, Schools, John Crandall
Penny Arévalo (Editor) November 16, 2012 at 09:50 PM
Thanks for the pitch! Here's the link: http://sanjuancapistrano.patch.com/articles/assessor-delay-leads-to-late-revenue-for-oc-cities-school-districts

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