When public-spending watchdog John Moorlach singled out Fountain Valley Elementary School District as the one and only in Orange County boasting a positive balance sheet, Superintendent Mark Johnson didn’t take the honor personally.
“It’s largely due to the decisions of people who came before me,” he modestly responded. “I’ve only been superintendent for four years.”
In a column that ran last month in the Orange County Register, California State Senator Moorlach wrote that out of the county’s 27 public school districts, only Fountain Valley Elementary is in the black.
According to his math, Moorlach said, Fountain Valley Elementary clocks $78 per capita – putting it in the top 10 percent financially of California’s 944 school districts.
“It’s all negative after that,” he said. Laguna Beach is Orange County’s “second best” at minus $223. Santa Ana Unified, at minus $1,805, places last.
A certified public account, Moorlach found fame after predicting the county’s bankruptcy in 1994. He served as Orange County Treasurer-Tax Collector from 1995 to 2007.
Moorlach still enjoys crunching numbers.
“I like to open the hood and see what’s inside,” he said in an interview. “And what I’m seeing is massive debt.”
Over the past few months, Moorlach has been studying the financial soundness of not only school districts but also cities and colleges. For school districts, he scoured online annual financial reports. Then he divided each district’s “unrestricted net position” figure by its population.
And only Fountain Valley Elementary, a century-old district that oversees 10 elementary and middle schools, won bragging rights.
“We’re thrilled whenever we get positive press,” Johnson said. “But most districts do a great job managing their budgets thoughtfully. We have a few advantages. Because we’re small with fewer employees, we don’t have the same scope or scale of unfunded pension liabilities that other districts face.”
Serving about 6,300 students, the district has 680 employees.
By comparison, SAUSD has 48,000 students and 5,000 employees. Superintendent Stefanie Phillips said that in a larger picture, taking into account other factors than the measure used by Moorlach, the district is solvent and paying its bills.
“Are we about to go bankrupt? I don’t think so,” Phillips said.
Moorlach’s figures “do not represent a balance due,” said Ian Hanigan, spokesman for Orange County Department of Education. Rather, they reflect a change in reporting requirements for public agencies, which, starting six years ago, must report all unfunded liabilities for pensions.
“They do, however, signal a need to develop long-range plans (regarding pensions), and this work is already taking place,” Hanigan said.
Every district in Orange County, including SAUSD, has a “positive certification” – meaning that each can meet its financial obligations for the current year and the two subsequent years, Hannigan said.
Serving as a cushion, Fountain Valley Elementary benefited from “an extremely fortunate” windfall of $35 million from property sell-offs over the first decade of the 2000s, Johnson said.
“The community of Fountain Valley underwent a population boom in the ’70s and ’80s,” Johnson said. “That’s why so many schools opened in a short period of time. But the population has aged, and many people here are original homeowners without school-aged children. So we found ourselves with nine surplus schools.”
The district held on to one of those properties – “just in case we need it,” Johnson said – and sold the rest. “Then the board made the wise decision to put the proceeds from those sales into a conservative investment portfolio,” he said.
Over the years, proceeds from the investments have gone toward modernization of school sites, he said: “The principle remains invested, and each spring we have a conversation about our priorities and where we need to allocate money.”
Johnson declined to judge the financial prowess of other districts.
“We really do believe that school districts in general do an extraordinary job working for the futures of our children,” he said. “Larger districts manage huge budgets. For them, $35 million wouldn’t go as far as it does for us.”
However, it’s not all luck. The district could have frittered away the initial lump sum “on all sorts of things,” Johnson admitted.
“Instead,” he said, “we are committed to using it as an ongoing revenue stream.”
Source: Orange County Register