Laguna School Board Fires Financial Chief

Prodded by angry parents demanding a change of leadership for the district, the school board on Monday fired Chief Financial Officer Terry Bustillos.

In a brief statement following a 2-hour closed meeting and a unanimous vote, the board said the action was the result of an investigation that began in June. The board concluded “that the chief financial officer breached material terms of his employment contract with the district.”

Reached at his home after the vote, Bustillos said, “As far as I know I’m an employee of the district. No one has advised me of anything, and until directed by the superintendent of schools, I cannot comment to the press.”

Bustillos, 46, had been on a health leave from the district since February. When it expired on June 30, he was placed on administrative leave while the investigation was ongoing.

The firing is effective immediately, the board said.

The special meeting was called after the board learned last week that the Laguna Beach Unified School District is $800,000 short of a balanced budget for the school year that will start next month. Frustrated parents have made it clear they have lost confidence in the current leadership’s ability to solve the district’s financial problems, and some have called for the ouster of Supt. Paul M. Possemato.

“When you’ve got a basketball team losing games, the ownership doesn’t wait until a coach’s contract runs out to get them back on a winning track,” parent activist William S. O’Hare said Monday. “The first step is to get the right coaching staff in there so you can get a winning team.”

The collapse of community support is a blow for Possemato, 62, who assumed control of the district in 1991 after 33 years with the Los Angeles Unified School District. At the time, he was widely hailed by Laguna Beach school officials as an innovative and inspirational leader.

The district has been mired in an ongoing financial crisis, which Possemato has blamed largely on dwindling property tax revenues and, to a lesser extent, losses incurred in the 1993 firestorm and the county’s bankruptcy.

For months, parents, teachers and school officials worked as a team to patch together what they thought was a balanced budget, laying off teachers and other workers and cutting some popular programs. The board approved the tentative budget in June.

But last Tuesday, Graeme Irish, a former parent volunteer who has since been hired to help develop the budget, announced that the district still did not have the amount required by the state for emergency reserves.

Officials blamed the shortfall on a bookkeeping error of about $300,000 that was first made in the 1995-96 budget. The error was compounded when it was carried over into the 1996-97 budget, bringing the shortfall to about $650,000, Irish said. Thursday night, Possemato revealed additional unexpected expenses that bring the shortfall to $800,000.

In addition, worried about the management of the district’s finances, SchoolPower, the district’s fund-raising arm has threatened to withhold about $500,000 it raised for schools.

*

Last week’s bad news set off a furor, causing some parents to demand a change of leadership. Board members promised they both would deal with the leadership issue and work to find a way to balance the budget.

A rally Monday by about 100 parents and students before the meeting was held to pressure board members into replacing both Possemato and Bustillos.

To further cut costs, school officials are investigating the legalities of an across-the-board pay cut for district workers. About 85% of the district’s budget goes for salaries.

“The bottom line is we must make structural changes in the way we do business,” board member Susan Mas said before Monday’s meeting. “We’re considering everything.”

In 1991, the district had accumulated reserves of $11 million, Irish said. About $7.4 million was spent on major projects, such as the renovation of Laguna Beach High School and the rebuilding of classrooms at Thurston Middle School that burned in the 1993 fire. About $1 million went for maintenance, and the rest went into operating the district.

“We were spending more than we were taking in,” Irish said.

Possemato has warned that the long-term solution will depend on workers accepting lower salaries.

“We continue to face the grim reality that until we continue to cut . . . we will not have a balanced budget,” he said last week.

But some parents say a leadership change is the first thing that must happen.

“If the board takes a strong stance,” O’Hare said, “that’s the beginning of restoring confidence in the leadership we have left.”

The budget will be discussed again tonight at the regular school board meeting, which will begin at 7.