District Fears Loss of Interest Income From Pool Funds

In addition to worries about its $18.9-million investment in the county securities pool as required by law, the Huntington Beach Union High School District is concerned that lack of interest income will further add to district budget problems.

Supt. David Hagen told the school board Tuesday night that the district had counted on earning $1.7 million in interest this year from its investment.

“That (projected interest income) is money the county would pay us on the balance we had in their account,” Hagen said. “But for the first six months of this fiscal year, it is obvious the county has lost money, so we do not believe we will be able to count upon the entire $1.7 million in interest income. That, therefore, will have an impact on this year’s budget.”

Hagen said that prior to the county’s bankruptcy, the county treasurer’s office had predicted that school funds would earn a 6% return. “We think that instead of 6% that figure will be closer to 2% or 3% on investments,” Hagen said.

Loss of interest income worsens an already bleak financial outlook for the school district. In a financial report Tuesday night, the school board was told that expected income this school year so far is running about $500,000 less than the district had budgeted. A decrease in state and redevelopment funds is the major reason for the income drop, the board was told.

Hagen said the school district would “only spend money that is absolutely essential” to keep employees paid and schools open.

The school board chopped two spending items from its agenda Tuesday night. The board postponed a $58,000 repair to the Edison High swimming pool in Huntington Beach and deferred action on leasing a copy machine for the district, thereby saving about $75,000 this year.