School District’s $1-Million Shortfall Stuns Community

After surviving fires, floods and mudslides, residents here are wondering what they did to deserve yet another calamity--and why it happened so suddenly.

News last week that the Laguna Beach Unified School District is short $1 million and must lay off an estimated two dozen teachers and possibly eliminate art, music and computer classes in middle schools stunned the seaside community, which always has placed a priority on education.

The school district initially announced it was sending out layoff notices to 33 teachers and two school counselors but has lowered the number of expected layoffs to about 24.

“I feel shocked and angry,” said Julene Austin, a mother of three children in district schools. “I can’t understand how this happened. We stand to lose some new teachers who are excellent.”

Residents and teachers have been asking why they had no warning that the district was in serious financial trouble. But several officials said they were warned; they just weren’t listening.

“The thing that people have been telling me is why didn’t we know about this before,” said Trustee Timothy D. Carlyle. “We did. But there was a convergence of many things, and that’s not an excuse but an explanation.”

The district had to spend about $1 million to repair school property damaged in the 1993 fires. It lost another $700,000 in the Orange County bankruptcy, and there has been a delay in reimbursement of $700,000 in fire and flood damage from the Federal Emergency Management Agency. Finally, the district will receive about $500,000 less in property tax revenue than anticipated.

School board members insist that the district’s chief financial officer, Terry Bustillos, issued ominous warnings more than a year ago that since the county’s bankruptcy, it has become nearly impossible for the district to get workable property tax figures from the county assessor’s office for estimating the budget.

Bustillos, who faced a June 30, 1995, budget deadline, estimated that the district would receive $10.7 million in tax revenue for the 1995-96 school year. (The district’s operating budget is $13.4 million.)

A month later, the district learned that actual tax revenue was $10.2 million, Carlyle said. Facing a $500,000 shortfall in 1995, the district cut $390,000 in supplies and maintenance and imposed the first-ever transportation fee for students.

But the handwriting was on the wall; the district was in serious financial trouble and warnings were aired by Supt. Paul M. Possemato at school board and PTA meetings.

“I can tell you he was giving the warnings,” said Barbara Norton, the district’s PTA Council president. “But not a lot of people participate in these parent meetings.”

Since the district also had received $500,000 less from property taxes in 1994-95 than it had expected, it was $1 million in the hole.

“We took a double hit,” Possemato said. “We have to cut just short of $1 million from next year’s operating budget and continue that cut as a permanent cut until the property tax recovers.”

“I think [Possemato’s] explanation was reasonably received by most,” said Jeff Nelsen, president of the Laguna Beach Unified Faculty Assn. “I think [the teachers] are still mildly suspicious, because it all happened so quickly. Why didn’t we know sooner? He doesn’t own the problem, but the buck stops with him.”

For now, the PTA, among others, is encouraging parents to allow the district to explain its predicament first, Norton said.

“Until we get those answers, I don’t think we need to get our pitchforks out,” she said.

But already there are rumblings about parents starting their own oversight committee.

Some parents also have expressed concern that some of the district’s generous contributors may take their children--and their bankrolls--to private schools when the cuts and layoffs go into effect in September.

“This is a community with very deep pockets,” said one parent who asked not to be named. “People are going to start taking their kids out of the schools.”

In the meantime, Bustillos, suffering from a painful muscle disorder, went on medical leave last month. Harvey Grimshaw, acting finance officer, will help guide the district through the crisis.

In the Newport-Mesa Unified School District, the situation is different. While schools there also were jolted by the county’s bankruptcy, the district raised $5.3 million by selling a surplus school site, said Supt. Mac Bernd.

In addition, he said, Newport-Mesa officials anticipated lower property taxes.

The Newport-Mesa and Laguna Beach unified school districts are the only Orange County school districts that receive funding from property tax revenue rather than from state funds based on attendance.

‘We’re very conservative when it comes to projecting property tax revenue,” Bernd said. “That’s because we’ve been burned so many times in the past by [faulty figures]. And, in Laguna’s and Newport-Mesa’s case, you don’t have the state to make it up.”

Last year, Newport-Mesa also trimmed $3.1 million from its $90-million budget and used several million dollars from its reserves.

In Laguna, some hope lies in the community’s generosity to school projects and SchoolPower, the district’s private fund-raising arm. Since 1991, the community has raised $2.6 million to help pay for renovating the high school, and another $1.5 million through SchoolPower for elementary science and music programs, and visual and performing arts at all levels, and other projects.

Although there is talk that hundreds of parents have tapped their bank accounts rebuilding their homes after the fire, the fund-raising group managed to raise $80,000 in six weeks to soften the bankruptcy’s impact last year, said SchoolPower President Robert Whalen.

But the latest crisis, Whalen said, presents “our biggest challenge yet.”

“We’re not going to be able to raise $1 million in the next three months; it’s not going to happen,” Whalen said.

“But discussions to save individual programs will be going on in many households. . . . We have many strong promoters of education in our community.”