Laguna Board OKs ‘96-97 Budget, but Deficit Remains

Although they will have to borrow money to make ends meet, Laguna school district trustees took a major step toward resolving a fiscal crisis by unanimously approving a $13.3-million annual budget for the current school year.

Laguna Beach Unified School District board members adopted the budget to meet a state-mandated deadline to have a spending plan in place by Sept. 8. But the budget still has a $1.2-million deficit, which must be erased by Oct. 8 or the district will face a takeover of its operations by the county Department of Education.

District and county officials said Friday that a takeover was unlikely because the district has a tentative plan to eliminate the shortfall. It calls for borrowing $600,000 from an undetermined source and making up the balance by negotiating pay cuts with district employees.

“I think this is a plan that can work. I think the employees are willing to help,” said Supt. Jackson Parham, who was appointed Thursday. “[But] we are on the verge of being taken over by that bugaboo, the county. They have the right to do it.”

The board has been grappling with a financial crisis since early August, when an auditor found bookkeeping errors and unexpected expenses in the 2,500-student district’s tentative budget. The deficit was at first thought to be $450,000, but after further scrutiny it grew to $1.2 million.

Dave Slevcov, president of the union representing the district’s 110 teachers, said the group is still analyzing the budget and the deficit and “it’s hard to know how to react” to the board proposal. The deficit has grown steadily in the past few weeks, and teachers aren’t confident the bottom line has been determined.

“We all understand there is a problem, and it wasn’t caused by us,” said Slevcov, who teaches English and political science at Laguna Beach High School. “But it’s past the time to say who is to blame. We just want [the board] to show they’re really trying to cut down expenses.”

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John Nelson, a county Education Department associate superintendent, said his office will work closely with Laguna school officials to help them through the crisis and “analyze the impact of their budget.”

“Obviously, this district has faced a variety of unusual problems, so they are facing a tough time right now,” Nelson said. “Our office is confident they will come up with a solution.”

Nelson’s optimism was shared by John Jenet, president of SchoolPower, a local fund-raising group that will donate $500,000 to the district for the coming school year. That money has already been calculated into the current budget plan.

“I’m more optimistic than I have been in a while, partly because we seem to be getting to the bottom of the costs,” Jenet said Thursday. “I think we will continue to see [costs] bubble up. . . . But I think from the perspective of SchoolPower and fund-raising, you have a community that believes strongly in schools and wants to support the educational process. We have a huge reservoir of goodwill here, particularly when they see signs of leadership.”

Such optimism was severely strained in recent weeks, when the growing financial crisis brought on a community uproar that led to the firing of Chief Financial Officer Terry Bustillos and the early retirements of Supt. Paul M. Possemato and Nancy Hubbell, the district’s special services director.

The district’s financial problems came in two waves, the first arriving in February. District officials learned at that time that their major revenue source, property taxes, were plummeting because of the 1993 Laguna fires that damaged or destroyed hundreds of homes and school facilities.

The fire, coupled with losses from the county bankruptcy, cost the district about $1 million, which was cut from the tentative budget for the 1996-97 school year. The cut forced the elimination of three teaching positions and the layoffs of 60 other employees, mostly clerical workers and teachers’ aides.

That loss was compounded last month by the auditor’s new discoveries. They have meant more cutting of resources and job losses for clerical workers, teachers’ aides, library staff members and campus supervisors as well as the potential for salary cuts.

After classes started Thursday, school principals also said that enrollment is higher than anticipated, which could also mean future adjustments in teaching staff levels. Laguna Beach is one of the few districts in the state that does not get more money for higher enrollment, relying primarily on property tax revenue.

Board members suggest that the district’s financial problems may continue for several years.

“There is still a lot to be done. This budget doesn’t really solve our problems,” said board member Kathryn A. Turner. “We are going to have to project out two to three years. As soon as we get this budget put to bed, we will be looking at fiscal year 1997-98 and 1998-99 so we can see our way clear to getting this district back on track.”

But board members hailed the budget’s passing as a sign that progress is being made.

“This is a recovery budget that allows us to stabilize the district and plan ahead for the next few years,” said board member Timothy D. Carlyle. “When all is said and done, and the dust settles, people will again realize we have a great district, great teachers, a supportive community and a school system the community can be proud of. I really believe that.”