ORANGE COUNTY IN BANKRUPTCY : Schools, Cities Seek Residents’ Views, Input

Cities and school districts across Orange County are turning to their own residents in an effort to recover from the financial crisis that could cost the agencies tens of millions of dollars.

Over the past few weeks, about a dozen agencies have established or considered forming special citizens committees to analyze investment strategies, review past policies and suggest budget cutbacks.

Some city and school district leaders said assistance from residents--especially those with financial backgrounds--will provide a new layer of oversight and advice they need in the wake of the county’s bankruptcy.

“We’re business administrators and instructional leaders,” said Terry Bustillos, chief financial officer for the Laguna Beach Unified School District, which formed a citizens panel last month. “These are people on the other end of it. They’re in the financial world where hundreds of thousands, possibly millions, of dollars are made or lost in an eye blink. It’s a different world. And to have them as a resource. . . . “

The creation of the new committees was praised by local activists, who hope it will shed light on the agencies’ investment practices. But some residents insisted that the actions also serve as political cover for some leaders who approved putting tax money into the county’s investment pool, which has plunged $2.2 billion in value in the past year.

“I think they have mud on their faces, so now they want to listen to the people,” said Carole Walters, a member of the Committees of Correspondence, a taxpayer activist group.

The city of San Clemente and the Laguna Beach Unified School District already have created citizen committees. Others agencies, including Huntington Beach and the Santa Ana Unified School District, are considering the idea.

Officials hope the panels will attract accountants, brokers and others financial specialists.

Huntington Beach City Councilman Dave Garofalo said that more than 25 local financial experts have called him to offer free services since the county filed for bankruptcy protection Dec. 6.

Garofalo wants his City Council to create a committee of local specialists that would act as an “independent auditor” on investment matters.

The Laguna Beach Unified School District formed an advisory committee last month.

“It’s an additional resource, so it helps us out,” Bustillos said. “We don’t think we can get enough resources from people who are on the breaking edge of what’s happening” in the financial world.

The district’s committee, which includes top school officials and three community representatives, has already examined ways of seeking emergency funds from the U.S. Bankruptcy Court.

The team also serves as a “conduit to the community” that inspires confidence that the district is doing all it can, Bustillos said.

“The school district belongs to the people,” said Irvine Unified School District trustee Hank Adler, who wants to form a committee in Irvine. “We need to find out what they think. It’s the right thing to do.”

The Santa Ana Unified School District is turning to the community for suggestions on possible cutbacks because of the financial crisis.

Supt. Al Mijares said he plans to create a community advisory committee next week that would recommend $2.5 million in possible cuts.

In Tustin, a parent group called “The Crisis Response Committee for Tustin Public Schools” has urged the Tustin Unified School District to consider new cuts beyond the $1 million approved by the school board last month.

Ernie Ching, the committee’s acting chairman, said each campus should submit a plan to reduce expenses. He also said the district should impose a 90-day freeze on hiring and salary increases.

While stopping short of forming a special committee, the Newport-Mesa Unified School District plans to seek suggestions from residents at a Jan. 24 meeting.

Times correspondents Debra Cano, Bert Eljera, Leslie Earnest, Russ Loar, Lesley Wright and Times staff writer Greg Hernandez contributed to this report.