Keep an Eye on Bottom Line to Get Schools Back on Track

Months after summer vacation ended and the school doors swung open again, the Laguna Beach school system still is trying to avert fiscal disaster.

There have been good examples of cooperation among workers for the Laguna Beach Unified School District, from the acting superintendent to the janitors, but more effort is required.

What started as a $300,000 bookkeeping error was carried over to a new budget and expanded until it climbed toward an estimated $1 million. That was bad enough, but the problems were compounded by a flattening of property tax revenue. Laguna Beach is the only school district in the county to rely on property tax revenues; the others depend on a state formula based on how many students attend classes. Laguna Beach can benefit from its method when property taxes remain high or climb; when they flatten, there can be problems.

Making the financial picture worse was the district’s loss of nearly $1 million when the county declared bankruptcy nearly two years ago. In addition, the devastating fires in the city three years ago destroyed more than a dozen classrooms.

Added together, the district has a budget of more than $13 million, but is over $1 million short in funding. The discrepancy was big enough that the county and state Education Departments rejected the proposed budget, making the district a potential candidate for a county takeover. Both the county and state Education Departments are investigating what went wrong, trying to work out solutions, and thinking about methods of preventing a recurrence. That is just what the Education Departments should do. Monitoring the functioning of local school boards and offering suggestions based on their experiences across the state and the county are part of the agencies’ missions. The county department has been especially helpful, providing officials all through the process of Laguna Beach’s attempted comeback.

Several months ago the school board fired the district’s chief financial officer. The superintendent resigned and still has not been replaced on a permanent basis. One school board member declined to seek reelection; another was defeated at the polls this month.

The acting superintendent set a good example for the district by slashing his $8,000 monthly salary by 20%. Members of a union representing clerks, custodians and secretaries voted to accept a 5% cut; so did nonunion workers, including principals, assistant principals and others. Teachers also reached an agreement with the district.

Because the pay cuts are retroactive to July 1, the amount deducted from paychecks for the rest of the school year actually will be 7.5%. That is a substantial reduction for those at the lower end of the pay scale. It also represents a refreshing acknowledgment of fiscal reality.

Laguna Beach is not the only school district to experience financial problems in recent years. Well before the bankruptcy, the Newport-Mesa Unified School district suffered problems when its chief financial officer was convicted of embezzling $3.7 million. Before that, the maintenance supervisor of the Orange Unified School District was convicted of misappropriating public funds.

All school districts in the county were forced to scramble because of the bankruptcy, caused by the failure of a county fund in which the districts were required to deposit cash temporarily. Most of that money was recouped, but the budget difficulties should have prompted district trustees to keep a sharper eye on their budgets. Laguna Beach trustees will have to make the restoration of parents’ faith in the schools their top priority. The best way to do that is by keeping an eagle eye on the budget.