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Capo Schools Go on Borrowing Binge

To fix cash-flow problems, the school board eyes another short-term loan, bringing Capo Unified's total borrowing this year to $100 million.

The is about to borrow more money than ever to make ends meet through the end of the school year.

On Monday, the Board of Trustees will consider taking out a short-term loan of $25 million. That's on top of a $75-million loan taken in July, after the board authorized .

Half of the first bridge loan is due to be repaid this month, and half in April. Property-tax revenues will cover those payments. But by June,  will leave the district short another $21.3 million, creating the need for a second loan, according to a staff report.

The combined $100 million in loans represents 27 percent of the district’s $372-million budget.

“The district has never borrowed that much,” said CUSD spokesman Marcus Walton.

The short-term bridge loans are offered through a financial vehicle available to school districts called Tax and Revenue Anticipation Notes (or TRANs). It pools together other cash-strapped school districts, community college districts and county offices of education to get better terms for the loans.

Capistrano Unified has used TRANs regularly because it relies on property taxes as its primary source of income, and the payouts mostly arrive twice a year, in December and April, according to a staff report.

In addition to cash-flow issues created by the normal ebb and flow of property taxes, the state in recent years has routinely delayed payment to local school districts, the staff report says. For example, in the 2011-12 state budget, $2.1 billion owed to school districts this year won't be paid until the next fiscal year.

“This latest deferral brings the total amount of deferred payments the state owes to all school districts from February through June to over $8.3 billion,” the staff report states.

“This means approximately 40 percent of the total state-apportionment payments the district should have received before June 30 will now not be paid by the state until after the start of the next fiscal year,” the report says.

Staff cannot yet estimate the cost of borrowing the funds, paying interest and the cost of issuing the TRANs, the report states. 

The trustees meet at 7 p.m. Monday at the district headquarters, 33122 Valle Road in San Juan Capistrano.

shelly January 10, 2012 at 11:44 PM
Greg, Did you consider the fact that the former board signed the trigger language into the contract and the state increased the ADA money coming to our district so the trigger was pulled? If the former board would have just negotiated cuts in the first place instead of imposing there would have been no trigger language. The cuts would have been for the length of the contract and there would have been no trigger to pull. So if you have a problem with the trigger language you should take it up with the former board. There are still 4 of them on the board. Trustees Addonizio, Palazzo, Brick and Bryson were on the previous board and all ran as reform trustees against union endorsed candidates. The current board is 4 reform trustees and 3 non reform trustees. The former board still has majority vote.
Shripathi Kamath January 11, 2012 at 12:06 AM
"Capo Borrows Record Sums as State Defers Payments"
shelly January 11, 2012 at 03:05 AM
Greg, I don't know if what I say is "simply not true" given that in the last couple of years since the economy tanked education has been a target. Gimmicky? K-12 and higher education funding has been cut every year since the economy tanked. Governor Brown actually didn't cut education this year as much as he could have because education had already been cut.. And Brown may be increasing the budget 6 to 7% but it is a budge that has already been slashed. Our class sizes are bigger and programs have been cut. Are you satisfied with the status quo and the same funding for education? I'm not. As a country we should actually value educaton. And value the people who work in education. Now since we are in a financial crisis some call teachers hacks, only in it for the money, and not as intelligent as other professions. These are people who previously had nothing but praise for teachers. So to me it seems like it is all about the money for the critics not the teachers. Finland has teachers union and almost all schools are public and their students are highly educated. They value education. We, the public, had better stop nickle and diming education and start viewing our taxes that go into education as investments into our countries future.
Capo Parent January 11, 2012 at 06:14 AM
Given your comments, then I assume you agree tenure for teachers should be abolished, and teaching jobs should be based on merit, not time on the job. I understand that defining merit is not easy, but it can be done in a reasonable, appropriate manner to address legitimate concerns regarding how merit is to be measured.
shelly January 11, 2012 at 03:37 PM
Capo parent, Public school teachers do not have tenure.

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