NEWPORT BEACH/COSTA MESA : District to Decide on Settlement Offer

Trustees of Newport-Mesa Unified School District are set to vote tonight on a resolution that would accept Option A of the settlement offer in the Orange County bankruptcy case.

“The bottom line is that it gives us a significant amount of our cash now,” said Michael Fine, the district’s finance director. “For us it’s a matter of survival.” Option A would pay the district $62 million in cash, $11.1 million in recovery notes, $8.1 million in repayment claims and about $1.1 million in miscellaneous interest payments. The district would have 91.4% of its money from the county investment pool by June 5 if the board agrees to the settlement, Supt. Mac Bernd said.

The district, like other agencies, has notes due in June on money it borrowed to invest in the pool--in Newport-Mesa’s case, $47 million of its total $80-million investment.

Consulting bond counsel Katherine Warrick told the board March 28 that accepting the settlement offer would avoid months of litigation “in exchange for the maximum amount of return in the shortest time.”

Board member Edward H. Decker asked Warrick whether the $8.1 million in repayment notes--10% of the district’s investment--would ever yield any return. “Bankruptcy claims are traded and have a value,” she said, indicating that the district might be able to sell its interest to a party with more time to pursue the claims.

The district has an $86.8-million annual budget. The board has approved $3 million in cuts to cope with the fiscal crisis and has taken steps toward selling the Bear Street school site, which is expected to bring in $4.5 million by October.