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State Advances Money to Cash-strapped CUSD

Without it, the district may not have been able to pay its bills this month.

Despite unprecedented borrowing, the would not have been able to pay its bills this month if not for a cash advance from the state.

At Monday’s Board of Trustees meeting, Clark Hampton, deputy superintendent of business services and support services, announced the district had received what he called a deferral waiver, an advance payment of money owed to CUSD by the state.

“It’s a small amount of $5.6 million that was due to be paid in July, but the district received a waiver and received it early,” Hampton said.

A CUSD spokesperson did not return Patch's request for further comment.

According to the state Department of Education, 19 school districts in California successfully applied for the advance.

Districts can qualify for the early payment if they can show “that the deferral of payments during February through June 2012 will result in the school district being unable to meet its expenditure obligations for June,” according to the state.

In its application to the state via the Orange County Department of Education, Clark wrote:

It is imperative that this deferral exemption waiver so that the Capistrano Unified School District can maintain a positive cash balance during June 2012.

Cash flow has become a significant problem for a number of school districts, Hampton said Monday night, because .

Arlene Matsuura, an administrator with the School Fiscal Services Division of the state Department of Education, said the state delayed $2.5 billion of June payments to July.

“In the old days before these cuts came, an ending fund balance was mostly cash. And now it’s mostly IOUs,” Hampton said.

He added that “any amount we can get reduces our borrowing costs.”

In recent months, the district has . CUSD took out a $75-million short-term loan last July, a practice it is has done for several years to help handle cash-flow needs.

But in January, the trustees . It was the district’s first-ever loan to cross fiscal years. Ultimately, however, the district borrowed just $12.5 million because .

Still, it wasn't enough to get Capo through the end of the school year, according to the district's application for relief.

"The district has exhausted all external and internal borrowing options and without the deferral exemption, may not be able to meet its operating obligations through June 2012," Hampton wrote in his letter of application.

Matsuura said the $5.635 million would cover the first payroll in July, as the normal July payment won't arrive until the end of month. This was the first time the school district has requested such an advance.

"These are payments they would've gotten in a normal year," Matsuura said.

Hampton said Monday that the district was already in the process of applying for more cash advances for next year.

Also at Monday's meeting, trustees voted on two other items that indicated financial duress. They approved:

  • Borrowing money from several district funds, such as the cafeteria fund and adult education, which typically are not used to pay for regular school expenses 
  • Giving themselves the ability to take money pegged for specific programs and "sweep" them to the general fund

Of the 19 school districts that successfully applied for cash advances, 11 – including CUSD – are in what the . Capo is by far the largest school district of the bunch. The only other Orange County school district to apply for and receive an advance payment was Anaheim City School District, which received $4.465 million.

Sharon Y. June 15, 2012 at 12:34 PM
A lot of the blame falls on Vicki, the CUEA president. In 2010 she spent most of the year lying about the reform board, telling the public she was willing to take a cut but reform board was mean and unreasonable,and lying about and attacking anyone who supported reform. The truth, in black in white came out in the fact finders report, the union offered nothing. Even after that more union lies, strike, recall, and now bankruptcy.......... The losers in all of this, the students and the teachers, no money left for student programs, teachers have lost pay and the respect of community, if I were them I would dump Vicki and get a honest, reasonable, fair-minded president willing to conduct union duties part time and spend the other teaching. I also as a sign of good faith have my salary be paid by my union not the general fund, that could save another teaching job!
Craig Alexander June 15, 2012 at 09:19 PM
The long term solution is the stop the massive flow of money into the union's political action committees which allow them to spend hundreds of thousands of dollars on campaigns (I refer to the almost $400,000 spent by the unions in CUSD for the 2010 elections). On the November ballot will be an initiative called the Stop Special Interest Money Now Act. If it passes, unions and corporations will not be able to take money from their members/employees via involuntary payroll deductions and spend it on political contributions. It will not solve CUSD's immediate fiscal Waterloo but it will help level the playing field so that Trustees will not be owned by the unions in the future. To find out more go to: http://www.stopspecialinterestmoney.org/
CUSD Parents Are Selfish @55h0|35 June 20, 2012 at 08:56 PM
@Pacific Coast Mama The people of this district (except for you and me, of course) are so self-focused and sure that someone, everyone is getting a free ride at their expense. The incredible shame is that these are the freeloaders. They point fingers and shout slogans rather than step up and do the right thing.
CUSD Parents Are Selfish @55h0|35 June 20, 2012 at 09:08 PM
Okay, that was kinda fun for a while, but now I think we'd all agree, at some point you gotta go. You've said you're leaving about 1500 times. Any progress? CUSD has no end of issues, but currently, at least, my kids get a good education. It's time. Go. Hey I know, let's have a Pacific Coast Mama going away party. Oh, it'll be fun. We can all reminisce about your fantastic "I hate this place", "I love Irvine" , "I'm moving" and then, at the end, you'll go. Deal?
Frieda Wales June 20, 2012 at 09:41 PM
CUSD PASelfish. Deal. I will go and throw a party. So many good choices to choose from - Irvine, Singapore and Arizona.

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