Blaming the 1993 firestorm, the recession and the Orange County bankruptcy, the Laguna Beach School District said this week it faces a "major fiscal crisis" and a projected deficit of $1.4 million for the current fiscal year.
A statement from the district said a recent analysis of its financial condition has revealed two "very serious" budget problems.
One is the projected deficit and the other is a $1-million imbalance between its expenses and its property tax income.
"A number of factors have intersected at one time," Supt. Paul M. Possemato said Thursday, adding that he and the school board members are "overwhelmed and stunned" by the figures.
"We must cut our expenditures in '95-96," he said.
The worse that is likely to happen now is a severe belt-tightening, Possemato said.
As of Wednesday, the district is cutting all expenditures not related to classrooms or health and safety, he said.
The real pinch, however, will be felt the next year when the district will have to cut deeply.
Schools may have to relinquish some "enrichment programs," such as music and foreign language classes in elementary schools, Possemato said, and make do with fewer teachers and more students in each classroom.
No teachers will be laid off during the current fiscal year, he said.
Previously, the board had said it was expecting a 1995-96 shortfall of $530,817 in a $13.5-million budget and had taken steps to reduce spending and raise revenue, including a move to bring in almost $400,000 by imposing a fee to transport elementary school students.
On Thursday, Possemato met with PTA groups to seek help from the community.
The district will continue the reconstruction of Thurston Middle School classrooms lost in the fire, but it will probably forego some improvements planned for the recently renovated Artists Theater at Laguna Beach High School.
"It's a very serious situation," Possemato said, "but it's resolvable with some very hard decisions."