21 Aug 2014
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Capistrano Schools to Take Biggest Hit in County Money Grab

Altogether, school districts across Orange County will face a $110-million shortfall, which, by law, the cash-strapped state must plug. CUSD's share is nearly $19 million.

Capistrano Schools to Take Biggest Hit in County Money Grab

will take the largest hit—nearly $19 million—if the county goes through with a plan to divert property tax money earmarked for schools to county coffers, officials with the county Department of Education said today.

By law, the state is supposed to cover the shortfall, said Darren Dang, director of business services. But even if the state is able to bridge the gap, it would create massive cash-flow issues for school districts.

County Superintendent Bill Habermehl has told Patch .

Ron Lebs, deputy superintendent of business services for the Capistrano Unified School District, isn’t either.

“It’s living in the ambiguity, and not really knowing and trying to be prudent,” Lebs said.

In announcing its plan last week, county officials said they would redirect $73.5 million away from local schools so that they could plug a $49.5-million budget hole of their own and stave off planned layoffs. But education officials were already expecting a $30-million to $40-million shortfall in property taxes in an account called the “ education revenue augmentation fund.” 

Adding it all together, the potential hit to local schools throughout Orange County is upward of $110 million, Dang said.

Capistrano Unified's share of that $110 million is $18.9 million, Dang said. The pain is distributed to school districts based on the property taxes collected in a school district’s area. The high value of property in south Orange County and the size of Capistrano Unified means CUSD takes the biggest hit.

While all counties deal with shortages in their education revenue augmentation funds, and the state has consistently made school districts whole in the past, the $73.5-million more the county seeks is “unique to Orange County,” Dang said.

Last year, the fund was short $23.5 million, some of which was repaid locally by the Orange County auditor-controller, said Chris Lombardo, coordinator of accounting for the Orange County Department of Education. Capo’s share last year was about $4 million.

“The state has always backfilled the schools,” Dang said.

But even if the state—which as Dang says has a “bigger nut to crack” with its own multibillion-dollar shortfall—repays the local school districts, the funds won’t come fast enough, and schools will face cash-flow problems affecting their ability to pay the bills, he said.

At Capo, Lebs said the district was already anticipating a $6.5-million cash-flow problem by year's end without the additional bad news from the county. The Board of Trustees has approved borrowing up to $75 million in short-term loans, but those loans must be repaid by April, so the concern is “what happens in the April, May and June arena,” he said. The fiscal year ends June 30.

The district will feel the first impact of the county move as early as December, when school officials now expect to receive $7.2 million less in property tax revenue than they were counting on, Lebs said.

All of this is on top of news that the state may “” on mid-year state budget cuts that kick in if tax revenues fall short. So far this year, the state is $3.7 billion behind, reports the Sacramento Bee.

If the state makes the full cut to K-12 education outlined in the budget should $4 billion in revenues not materialize, CUSD would need to make a $14-million cut in the current year’s budget.

The teachers’ union, Capistrano Unified Education Association, has agreed to . Up for discussion will be salary, class size and the length of the school year.

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