The former chief financial officer of the Laguna Beach Unified School District has sued the district for alleged breach of contract in the wake of his firing last year following the discovery of a budget deficit.
Terry A. Bustillos, 46, filed the lawsuit Wednesday in Orange County Superior Court in Santa Ana, seeking $179,271 in compensatory damages for lost pay and benefits resulting from his termination. Bustillos’ firing, the lawsuit contends, was “without just or good cause” and in violation of his contract with the district.
The school district fired Bustillos in August after discovering it was $800,000 short of a balanced budget for the school year that was to start the next month.
The district had been mired in a financial crisis, which officials blamed largely on dwindling property tax revenue and, to a lesser extent, losses incurred in the 1993 Laguna Beach fire and Orange County’s 1994 bankruptcy. Initially, they 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, and later added to by unexpected expenses.
Bustillos had been on medical leave since February of last year. When his medical leave expired June 30, he was placed on administrative leave during a probe of the district’s financial situation.
Pressured by angry parents who made it clear that they had lost confidence in the district’s leadership, the school board on Aug. 12 fired Bustillos, saying he had “breached material terms of his employment contract with the district.”
The day after Bustillos’ firing, district Supt. Paul M. Possemato tendered an early retirement offer and, later the same month, special services director Nancy Hubbell resigned to take a job elsewhere.
District officials could not be reached for comment on Bustillos’ lawsuit.