Fiasco Reaches Into Many Private Lives in County

The 2% interest on a certificate of deposit was too low, the judge told the mother, and the stock market too risky.

So Fran Findlater took the judge’s advice and put every penny of her son’s $60,000 from a car-accident settlement into the Orange County investment pool, which was paying 9% at the time.

That was two years ago. Now Findlater is wondering whether the money earmarked for college and her son’s continuing medical bills will be there.

James Findlater suffered a severe gash in his left leg, which was broken when he was hit by a car as he rode his bicycle. Since then, his mother said, he has had five operations and still needs to make regular doctor’s visits to have his bone development checked.

“I can’t believe the county would let the kids go down,” the Fullerton resident said. “I just can’t believe it. These are minors who had no say in what happened to that money. I think this county is liable. I think they have a moral obligation to these children.”

James, now 15, is one of an untold number of private individuals whose lives are now tied to the county’s public fiasco.

Orange County’s workers and children, its homeowners and shop owners, are beginning to realize the fearful possibilities of the county’s financial debacle. As the extent of the debacle unfolds, its tentacles seemingly reach into every corner of county life.

They might not be among the largest investors or companies with the power to make the county wince. But for many, their ability to go to college or stay in business now depends on whether they will continue to receive interest or monthly payments from the county. With the county’s investment fund frozen and its value down sharply, both investors and vendors are experiencing sleepless nights.

When Findlater learned in November, 1992, that James was going to be awarded the $60,000 settlement, she arranged with a major bank to put the money into a certificate of deposit earning 2% interest until her son turned 18.

But the day that she went to court for the final settlement conference, the judge recommended that she invest the money in what was then a brand new county fund specifically for minors who received money after accidents. The county fund paid 9% interest.

“That was so much better than anything else and I thought, geez, that would really be worth it,” Findlater said.

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Laura Collier knows this from painful experience: When schools have a cash crunch, the teachers’ aides are among the first to go.

Two years ago, Collier was among the aides laid off in the wake of an embezzlement scandal that cost the Newport-Mesa Unified School District about $4 million. Stephen Wagner, director of business support services, admitted embezzling the money from the district, spending it on luxury cars, a gold-plated piano and a diamond-studded tuxedo.

The losses forced the district to lay off more than 100 employees.

Collier got her job back after five months, but now Orange County’s fiscal fiasco has her and fellow aides at Whittier Elementary School in Costa Mesa hanging on rumors and wondering about their future.

“I wouldn’t say this has been an enjoyable thing,” Collier said Monday as she answered phones at the school’s main office. “We’ve heard a lot of talk . . . and rumors today. People are concerned about what’s going to happen.

“I don’t think it’s close enough yet for there to be deja vu, “ she said. “If we get letters from the superintendent, then there might be panic. Right now, it’s still in the talking stages.”

Collier became a teacher’s aide four years ago, as much for the chance to get involved in her children’s education as for the extra income. Until this year, the Costa Mesa resident was an aide at the school her children attended.

“I wanted to participate in the education of my children,” she said. “It fits my schedule because I can be home when the kids are there.”

She was recently transferred to Whittier School, where she is now a bilingual aide. She works in the main office answering phones and helping Spanish-speaking parents communicate with school officials.

“It’s a nice feeling to be here helping people,” she said. “I’ve worked in offices before, like at an insurance company. It was OK. But it’s just not the same as helping parents with the education of their children.”

Collier said she feels confident that she will survive a first round of layoffs--if they come--because of her seniority within the district. Still, she admits she has thought about what would happen if she were let go again.

“It’s not an enjoyable thing, but I understand it,” she said. “You don’t want to let teachers go.”

Because her husband works, the family does not rely on her income from the aide job to make ends meet.

“I don’t know if I’d get another job. I love what I’m doing now,” she said. “I don’t know if I’d be motivated by just money.”

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It was bad enough to buy a home in pricey Newport Beach at the crest of the market in 1990, bad enough to see its value steadily drop in bad economic times.

But to know the county owes you tax money because of that loss, money you might never collect--that stings.

“What’s really kind of fried us is that we just sent our next property tax check to Bob (former county Treasurer Robert L. Citron) under the old rate,” homeowner Joyce Pedlow said. “Now we don’t know if we’ll get any money back.”

On Monday, the county announced that for now, it would not be paying the property tax refunds.

When they found out a couple of years ago that several neighbors were getting their home values reassessed, Pedlow and her husband, Cerry, jumped on the bandwagon.

They waited 18 months for the county tax assessor’s office to set a hearing. Just before the October hearing, the county made a $2,000 settlement offer that the couple accepted. Now the county has filed for bankruptcy, and the Pedlows find themselves somewhere in a long line of creditors, wondering if they will ever see their money.

Joyce Pedlow, who declined to say how much she and her husband paid for the house, readily acknowledges that the $2,000 refund is not necessary for survival: “But it’s our money and it’s a substantial amount. Two thousand dollars is nothing to sneeze at.”

Front and center in her mind is a single question: “Where do we sit in the pecking order? We’re certainly not alone, because they’ve been handling tons of reassessments in recent years.”

For now, the Pedlows are resigned to waiting for a check that may never come.

“This will be a continuing saga,” she said. “All we want is our money back that’s owed to us.”

*

Attorney Ernest L. Eady was attending to business as usual, defending indigent clients in Orange County Superior Court and following the county’s financial debacle in the papers without too much concern.

Then he learned that he is listed as a vendor for the county.

“Oh, that is disappointing,” the Santa Ana attorney said. “I’ve been reading in the paper that vendors may have a hard time getting paid.”

His county contract is worth $60,000 to $100,000 a year, Eady said.

“As contracts go, it’s not really a big amount, but it’s a significant part of my practice,” he said. “It’s important to me financially. I have a secretary, and I have to pay her whether the county pays me or not.”

Typically, Eady submits bills to the county at the end of the month and is paid at the end of the following month. Unless he is told otherwise, he said, he expects a check at the end of December, and he expects to keep representing people at least until the dust settles. What will happen after that, to him and to indigent people accused of crimes, he doesn’t know.

“Now I’m concerned like anybody else. Nobody likes to work for nothing,” Eady said. “There’s no point in calling the county and asking if I’m going to get paid. Everything is up in the air at this point. I see no point in asking somebody to tell me something they don’t know.”

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The way camera repairman Scott Helberg figures it, Orange County’s money crisis might hurt now but bring more business later. Helberg, who owns a shop in Santa Ana, has a three-year contract with the county.

Although he declined to say how much the contract is worth, he said it amounts to less than 1% of his business. Most of his income is from servicing and repairing cameras of professional and portrait photographers, he said.

Working 10- to 12-hour days, he has no time to get caught up with the news. It took a call from his father in Florida for Helberg to know that one of his clients--Orange County--had filed for bankruptcy.

With so little of his income coming from his county contract and having to wait as long as six months to get paid for his services, he finds the county’s insolvency at worst a minor irritant.

At the moment, Helberg’s biggest concern is “having to pay extra taxes to make up for their loss.” But he sees a silver lining in the county’s bankruptcy.

Because county officials will now be looking for ways to cut costs, Helberg said, the coroner’s office will probably put off buying new cameras. That means the old cameras will need to be repaired and serviced more.

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Foster parents are also listed as vendors because they receive a small monthly stipend from the county for providing home, food and security to youngsters whose parents are unwilling or unable to care for them.

Even if the county is forced to take extreme measures and stop support payments for foster children, Ernestina Reyes said, she and her foster children will endure.

Reyes and her husband are retired, but they are the foster parents of four children who are also their grandchildren and range in age from 3 to 11.

“What the county gives me for this is very little anyway. We didn’t ask for help; they said we had to keep it in order to keep the children together. Most of the support comes from us,” said Reyes, who lives in Fullerton. She declined to say how much the county provided or why her daughter was unable to care for the children. “Even if I wasn’t getting anything from the county, I would still have them with me. We see it as our obligation to help our children and keep them together.”

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Although emergency services have not been affected by the bankruptcy filing, Scott McDairmant, a fire captain at the Orange County Fire Department’s Station 4 in Irvine, said remarks about the county’s ability to pay have become the norm when he answers calls for assistance or when vendors arrive to do work at the station.

“People will come up to you in a joking kind of way and ask if there’s still going to be fire protection. But I’m sure they’re half serious,” he said.

McDairmant is not worried about losing his job. “We’re an essential service,” he said. “There’s always going to be a need for the Fire Department.”

But the testing for new firefighters has been put off, which means none of those new applicants can be hired, and promotions that are coming due cannot be made. Overtime pay for non-emergency tasks is also on hold.

If layoffs come, McDairmant said, they will be made on the basis of seniority.

“I’ve been with the county for 15 years, so I’m not too worried,” he said. “But the people who’ve just started, I imagine they’re on the edge of their seats.”

Times staff writer Ross Kerber and correspondents Bert Eljera, Shelby Grad, Frank Messina and Leslie Wright contributed to this story.