Budget Picture Brightened by W. Covina Pact to Sell School

Officials of the financially pinched West Covina Unified School District, who in January gave a dour prognosis for district finances, are now optimistic that they can balance next year’s budget and achieve a full recovery over the next five years.

Recent developments have brightened the outlook for district officials, who in February decided to close three schools in the 1988-89 school year to cut operating costs and repay a $3.3-million bailout loan from the state. Despite controversy over which schools have been picked for closure and a threatened recall effort against two trustees, the officials believe that the worst is behind them.

“We’re all optimistic that things are starting to jell,” said school board President Joe Mount, one of the recall targets. “At this point in time, we’re not going to see as severe a budget cut next year as everyone first thought.”

Stanley Oswalt, who was appointed by the state to oversee district finances as a condition of the bail-out loan, concurred.

“My estimate is that in three years this district can be in great shape,” Oswalt said.

School to Be Sold

Last week, the district accepted a developer’s offer of $8.5 million for Tonopah Elementary School, which was closed a decade ago. Administrators say proceeds from the sale, which will not be available to the district for at least a year, will not alleviate next year’s budget crunch but will give the district some long-term financial stability.

But state officials are considering two requests from the district that would help balance next year’s budget. The district has asked that the first-year loan repayment, pegged at $1.5 million, be reduced to $1 million. The district has also asked that proceeds from school sales, which under state law must be used to repay bond obligations, go toward paying off the loan and other expenses.

Price Doubled

Answers to both questions will come in May, when the school budget becomes firm. In March, the school board put off the recommended closure of another elementary school until the status of the budget becomes clear.

“This has the potential to go a long way to solve our problem,” said Supt. Jane D. Gawronski. “Overall, things are looking better.”

The district’s prognosis brightened significantly with the agreement to sell Tonopah School, Gawronski said. Competitive bidding more than doubled the final price from the $4-million minimum the school board set for the 13.5-acre property, said H. C. Tanner, assistant superintendent of business services.

Tonopah had been listed as a surplus school for three years.

Under the sale agreement, Pacific Ocean Realty of Torrance will pay the district $660,000 at the close of escrow, probably next May, Tanner said. Two more $660,000 payments--roughly the district’s yearly installment on the state loan--are due before the remaining $6.52 million is paid, he said.

Tanner said the high price was the result of a tentative agreement between the district and the City of West Covina that allowed housing on the site. The installment schedule, which allows Pacific to defer the main payment until the 1992-93 school year, also was a factor, he said.

‘More Immediate Help’

The district may get another financial boost when bids are opened on the closed El Dorado School site in May. Sale of the 10-acre site, which has also been tentatively approved for housing, will provide money that could be used as early as next year, said attorney Richard V. Godino, who represents the district in its real estate sales.

“The Tonopah sale will not entirely solve their problem, but it will help them out in the long run,” Godino said. “El Dorado will be of more immediate help.”

The minimum acceptable bid is $2.5 million, but Godino predicted that the district will reap more than that.

Tanner said the district’s request to use the proceeds from school sales will be decided by the state Allocations Board in May. If approved, that money could wipe out the debt to the state and provide needed capital improvements for the district, he said.

“It has a good chance of passing,” he said. “It has been done before for other districts in the same situation.”

But even without those funds, which have not been calculated into next year’s budget, the district has gained in making up the $2.7 million needed to balance the books.

In February, after a month of emotional debate, the school board decided to turn Edgewood High School into an intermediate school and close Hollencrest and Willowood intermediate schools and Cortez Elementary school in the 1988-89 school year.

Prompted Recall Try

It was that decision, which ran counter to the recommendations of an advisory committee, that prompted the recall efforts.

The schools had to be closed if the district was going to stay out of the red, Gawronski said. Officials have estimated next year’s budget at between $25 million and $26 million.

“Many of the painful decisions had to be made this year,” she said. “The state average per school (for operating) is $2 million a year, and with 14 schools, the district was headed for another deficit.”

Besides the school closures, which will save an estimated $1 million, several other factors appear to be working in the district’s favor, Gawronski said.

The budget submitted by Gov. George Deukmejian to the state Legislature includes a $900,000 windfall for the district, she said. In past years, the Legislature has often sought to augment the governor’s allocation for schools, and officials hope the figure will stand.

Moreover, a decision on the district’s request to renegotiate the first-year loan repayment is pending with state Supt. of Public Instruction Bill Honig. Oswalt, who was appointed by Honig’s office, submitted the request and is confident of approval.

$300,000 More in Cuts

If everything falls into place, the district would still need about $300,000 more in budget cuts, Gawronski said. “Reducing a budget by $300,000 is a lot easier than reducing it by $2.7 million,” she said.

Much of the balance could be made up in reductions in the music, nursing, counseling and psychology staffs, she said.

The district is negotiating with the West Covina Teachers Assn. to increase class sizes in grades four through 12 as part of a new contract. The teachers oppose any increase, arguing that the current 1-to-31 teacher-student ratio is too large for quality education.

A two-student increase could save $500,000, Gawronski said.