TUSTIN : School Trustees Back County Rebate Plan

Tustin Unified School District trustees have tentatively accepted Option A of the settlement agreement the county has offered to investors in the failed county investment pool.

The school district had more than $12.2 million invested in the pool when the county declared bankruptcy Dec. 6. The school district’s investment was held in three separate accounts--$8.6 million in general fund money, $3.5 million for the construction of Tustin Ranch Elementary School and $2,277 from Tustin High School.

Under Option A, the district would receive 76% of its cash immediately and 14% in notes, for a total of about $10.9 million. The rest would be in IOUs.

But in voting unanimously Monday, trustees said they were worried the notes might not be converted to cash at their face value. They said it’s likely the notes may have to be sold at a discount to get buyers interested.

“I’m uncomfortable with this,” said school board President Jane Bauer. “There is no language (in the agreement) that says the notes are cashable at face value.”

The trustees directed the school district’s attorney to review the agreement and seek written guarantees from the county that the notes can be redeemed at their full amount.

Paul Fisher, the district’s assistant superintendent for business services, said that the agreement calls for the county to make “a best effort” to make the notes convertible to cash at face value by June 5.

Otherwise, school districts that chose Option A, such as Tustin, may instead select Option B by June 8. Under this plan, school districts may receive 75 cents on the dollar immediately and sue the county for the rest.

Under a third choice, school districts can sue the county to recover their money, but will not receive anything up front.

“We’re made to make a selection between the swine and the pigs,” said Trustee Jonathan W. Abelove. “There’s actually no choice here.”