ORANGE : Schools Not in Crisis, Officials Say

The Orange Unified School District could lose up to $5.2 million in the county’s bankruptcy, but a careful borrowing strategy has kept the district out of crisis, officials told school board members Thursday.

“I think we were very prudent and only borrowed what we needed,” said Supt. Robert L. French after the meeting. “We didn’t go out and borrow big sums of money just to make money.”

The district must borrow some money in the form of Tax Revenue Anticipation Notes every year because property taxes are only distributed twice, he explained. But the district had projected cash-flow needs so accurately that officials only had to borrow $11 million, which is the lowest possible amount. “That’s why the (bankruptcy) impact was not greater,” he said.

The district had $19.2 million in the county treasury when it was frozen as part of the bankruptcy on Dec. 6, said Interim Assistant Supt. Harvey Grimshaw. The court later released $5.5 million of that so the district could meet its payroll, he added.

Grimshaw and other officials have drawn up cash-flow projections in the event every agency that invested in the fund is forced to accept a 27% loss. For Orange Unified, that would amount to $5.2 million.

“I am simply going to state that I don’t think anyone believes that is the hit that is going to occur,” Grimshaw said.

But the district still will lose interest income that had been projected for the year and that could affect all categories of funding, Grimshaw said.