For O.C., It’s Bad and Good News

The new state budget means additional cuts -- and some unexpected bonuses -- for Orange County municipal and school governments, officials said Wednesday.

“Overall, cities could have done a whole lot worse, but there are still so many uncertainties,” said Michael Gold, deputy director of the Orange County division of the League of California Cities.

Though there will still be significant cuts to cities, schools and special districts, the worst paring was spared by the state’s plan to borrow $14 billion. Another $8 billion in debt was pushed into next year.

Governments across Orange County have been there before: The state’s historic borrowing was modeled after the recovery plan adopted by Orange County after $1.7 billion in investment losses forced it into bankruptcy in 1994.

Orange County government will see an overall drop in money for social services and health-care programs, according to early analyses of the budget. But there was some good news: The county is in line to get about $4 million more in property taxes.

Assembly members Lou Correa (D-Santa Ana) and Lynn Daucher (R-Fullerton) agreed to the budget Tuesday only after securing promises that Orange and Yolo counties would begin to get back 11 cents for every dollar paid in county property taxes. Both counties now get 6%, by far the lowest in the state. Orange County gets another 1% for its library district.

Daucher also insisted that some $50 million go to school districts across the state that receive below the state average in funding, an agreement that would benefit at least four Orange County districts -- Irvine, Newport-Mesa, Los Alamitos and Placentia-Yorba Linda.

Irvine expects to get an additional $380,000.

“We could find plenty of places to put that,” said Deputy Supt. Vernon Medeiros.

The budget didn’t hold any surprises for county schools, said Placentia-Yorba Linda Unified Supt. Dennis Smith, president of the county’s superintendents’ group.

“We’ve been building to this crescendo for a long time,” Smith said. “There’s a sigh of relief that the legislators finally got the job done and did no further harm to education. But the prospects are not looking bright for next year.”

His district trimmed $10 million by cutting back travel, overtime and supplies to lower its budget to $185 million.

As anticipated, the Santa Ana school district will lose $60 per student in state funding, which already had caused the district to cut about 200 positions mostly through attrition and early retirement. But as many as 40 teachers with emergency credentials did not have their year-to-year contracts renewed.

“They just weren’t rehired,” said Don Stabler, assistant superintendent of business services for the district, whose 60,000 students make it the fifth largest in the state. “We’ve done major reductions already based on what we expected to happen.”

Capistrano Unified said no further changes would be made to its budget, which like those of most school districts was adopted in June.

“They didn’t hurt us any more than they already have,” said Deputy Supt. Carleen Chandler.

Her district cut $22 million from its $300-million budget, eliminating management and classified employees, increasing high school class sizes and releasing 114 temporary teachers who are not credentialed. Through parent fund-raisers, attrition and retirements, the district was able to keep all 233 permanent teachers put on layoff notice in March.

Cities, too, had already prepared for Sacramento’s cutbacks.

Huntington Beach, for example, cut $11 million from its budget plan, which takes effect in October. Two weeks ago, the council made midyear adjustments by cutting 108 positions and laying off 37 workers. The additional cuts from Sacramento will slice about $3 million more.

“To have to cut more is going to be extraordinarily painful,” said Mayor Connie Boardman.

Santa Ana officials anticipated a $14.8-million deficit and adopted a series of maneuvers to close the gap, including raising service fees and water rates and eliminating 18 city jobs. Officials in Irvine, which expects to lose $2 million in state funds, are musing how to accommodate the flow of cash from the state. Instead of receiving monthly sales-tax receipts, the city will now receive semiannual property tax checks.

The city may have to borrow funds to carry it through the cash gap, said budget officer David Tungate.

The city has a reserve fund of about $10 million so will be able to absorb the state cuts in the short term, Tungate said. But the Legislature’s decision to borrow instead of resolving the underlying budget problem will probably mean more difficulties in the future, he said.

“It could be worse, and the cynics among us figure it probably will be,” Tungate said. “All they did was push off the problem. We’ll probably be talking next July about what they did to us again.”