O.C.’s Hard Lesson in School Economics : State Funds, Gifts Help, but Long-Term Ills Remain

An increase in state funding for students and a heartening groundswell of community support have made the back-to-school season in Orange County less devastating than was predicted soon after the county declared bankruptcy.

But if there have been short-term solutions, the long-term problems remain. County schools are set to recover 90% of their investments in the county’s pool, which lost $1.69 billion and led to Chapter 9 last December. That recovery still means a loss of $74 million, money that will be recovered only if the county prevails in the lawsuits it has filed or plans to file against brokerage firms and other companies.

School districts have coped with their losses by buying only materials considered essential. Travel has been scrapped. Computer purchases have been put on hold. Secretaries and custodians have lost jobs. In some schools, newer, lower-paid teachers have replaced classroom veterans.

The silver lining has come from parents and businesses in Orange County. Donated cash and supplies total about $5 million, school officials said. That is an impressive amount, but it is still less than 10% of the money the districts lost.

One reason for the support has been the correct perception that the schools were innocent victims of the bankruptcy. By most interpretations of state law, they were required to invest funds in the county pool, the one with risky investments that soured. A few districts borrowed additional money to invest in the pool, but most put in only what was required in the form of reserve funds.

Realizing the importance of the schools, parents pitched in.

At one Newport Beach intermediate school, more than 100 teachers and parents showed up shortly after 4 on a March morning to help set up a rummage sale that brought the school $7,700. In Irvine, a couple donated 1,200 new baseballs, worth about $5,500, recognizing that sports can be an important part of education. One business solicited contributions from its workers across the country; the response was so great that after a while the company said employees could stop. But the paper it supplied to two school districts helped mightily.

A major plug for the fiscal leak came from the state, which is sending about $200 more per student than was expected to school districts throughout California. A Garden Grove Unified School District spokesman said the money will about equal what the district lost in the bankruptcy.

That is especially good news because it lessens the possible disparity between wealthy districts, where parents can afford to donate more, and poorer districts. A Santa Ana Unified School District spokeswoman said many parents who offered money or supplies were turned down because officials thought their economic situation was worse than the district’s.

One good move was the founding of the Orange County Public Schools Fund, which consolidated 15 separate educational foundations and hopes to create a $50-million endowment fund in seven years.

Fund organizers said it should be easier to get large corporations to donate. Previously, many companies were concerned about being seen favoring one district over another if they donated.

Still, the schools’ situation is precarious. State funding might be less next year. Volunteers’ enthusiasm and money might wane. Capital projects cannot be delayed indefinitely. Without replacement funds, the schools will have to be leaner than anyone would want.