CUSD Update
Editorial staff

Those who attended the Dec. 3 Capo school district subcommittee meeting on finance have reason to question the district’s financial health. An outline of the presentation from the meeting can be viewed at

http://www.capousd.org/subcommittee/finance/docs/CapitalFundingSourcesandUses.pdf.

Whether or not the presentation revealed anything new, CUSD’s financial woes are obvious. Earlier this year, the district put unused real estate parcels on the market to cover operating expenses. Despite all the spin and years of denial from district officials, former superintendent James Fleming’s financial mismanagement is undeniable. An immediate concern is the district’s cash-flow problems with interest payments coming due later this month.

CUSD’s financial future was wagered in part on an unending housing boom with everlasting price increases. The district might have made ends meet if its “creative” financing and revenue streams from such sources as redevelopment agencies hadn’t gone south.

Building the $52-million administration center was (as reform-minded parents claimed in the 2005 recall attempt) a huge mistake. Children attend class in crowded, deteriorating facilities while administrators push papers in the partially empty Taj Mahal. Constituents asked how CUSD could afford such lavish offices when funds are so scarce for everything else. The district spent money it didn’t have by borrowing from the future.

One person who attended the Dec. 3 meeting responded on the OC Register discussion board, saying a lot of figures were presented. The numbers, when viewed in the context of boondoggles (particularly financing of the new administration center), reveal liabilities. The district’s plan was to retire a portion of its debt with pre-payment of some of the Certificates of Participation used to finance the administration center. Lacking funds to do that, the district will need to formulate a new financial plan.

According to the post forwarded to this blog, the district might have to return $8 million (that it doesn’t have) of the state’s money. The district went after state funds to pay for proposed portables at the new high school, providing data of 27 students per classroom. The person writing the post said the state’s $8 million was granted on the basis of misinformation presented by CUSD. In addition to the district having only 24 students per classroom, the cost of the portables is now estimated at $5 million. If the district doesn’t add the portables (and spend $8 million), CUSD staff members say the state will want the money returned.

The district has no financial analyst, and its CFO lacks relevant credentials. While experience might compensate for formal education, what’s the value of experience equivalent to shell games and kiting checks? According to grand jury testimony of CUSD’s top brass, those involved with building facilities claimed they didn’t know what was going on. Several top officials in Fleming’s old regime – who alternately claimed to be in charge and in the dark – have slipped away into early retirement.

In addition to employees who are unable to dig the district out, inept holdover trustees continue to make irresponsible decisions on the board. In the next round of replacing trustees – in a recall election next spring or the November General Election – voters must look at professional qualifications and legitimate business experience of the candidates. Holdover trustees were appointed by Fleming as a reward for their loyalty, and they’re incompetent. If new trustees are no better qualified to manage a $500-million annual budget, no one should expect improvement.