Schools Favored to Receive Settlement

Readers, by a 2-to-1 ratio, believe that the $30 million Merrill Lynch & Co. has agreed to pay Orange County to avoid prosecution over the 1994 bankruptcy should go to the school districts that lost money during the financial debacle.

Many of those who responded to a Times reader survey are educators, who said that school districts were legally required to deposit their funds with the county before its investment pool lost $1.64 billion.

“I understand that the county has other needs,” said Santa Ana Unified School District controller Bob Giritz, “but the money we had in the investment pool was our interest-bearing checking account. That was not our savings account by any stretch of the imagination.

“Most of us in education are surprised that any other suggestions would be seriously considered for more than five or 10 seconds.”

Santa Ana Unified had $50 million in the investment pool, of which $5 million has not been recovered, Giritz said.

Public schools countywide have not been paid about $107 million of the roughly $1 billion they had on deposit in the county investment fund, along with additional funds from cities and special districts.

The recovery plan approved in 1995 by the U.S. Bankruptcy Court calls for school districts to receive the first $55 million of “litigation proceeds.” But officials generally agree the plan does not specifically address how proceeds from the settlement of a criminal investigation should be disbursed.

Only 6% of those responding to the informal telephone survey said the $30 million should be retained by the county government, with an equal percentage saying the funds should be returned to cities first. Officials have said that $3 million from the settlement should pay for investigative costs.

About 3% of those taking part in the survey suggested infusing the county’s cash-strapped library system with the settlement money.

Environmental causes, park acquisition, social service funding and retiring the county’s bond indebtedness were also deemed worthy of at least a portion of the settlement money. Several callers suggested the funds should be used to make interest payments to the independent contractors who have had to wait for money owed them by the county.

But educators say the county’s public school districts are in crisis, trying to cope with rising enrollments and state-mandated reductions in class size. Both are draining district budgets to pay for additional classrooms, teachers and equipment, said Saddleback Unified School District teacher Bryan Steele.

“It’s taking away from our quality of education, so any kind of dollars could definitely help at this point,” Steele said. “I’m wondering what other uses the county could justify for this money? Perhaps they just want to collect some interest on it.”

County resident Richard Needham believes the money should bypass the bureaucracy and be returned to county residents in the form of lower taxes.

“If the county officials get their hands on it, they will take half for themselves and then waste the other half on needless things,” Needham said. “They will end up spending $5 million of it trying to figure out what to do with the $30 million.”

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My wish would be to see that the money from the Merrill Lynch settlement goes to the schools. They were required to deposit their money in this account. They weren’t guilty of mismanagement. I would trust it being used better by the schools than by the county.

Joanie Lahage

44

Dana Point

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The loss of funds due to the Orange County fiscal crisis and subsequent bankruptcy resulted in a significant loss to schools, teachers and children. In good faith, the school districts agreed to a comprehensive settlement agreement with the County of Orange, in exchange for 90% of their claims. The agreement promised that schools would be the first claimants to receive any of the first $54 million in proceeds from either settlements or judgments.

Connie Belda

48

Laguna Beach

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I would like the county to give $2 million to me, and I would give $1 million of it to the Wildlife Waystation. I think that’s fair. I’ve been in Orange County forever; I’m a good citizen and I could use the money. I’m old and I’m going to get older. What I’m looking for is a chauffeur that can cook--it’s a very practical reason. It’s probably going to be thrown down the drain anyway.

Grayce Webster

85

Laguna Beach

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Orange County firefighters have been without a contract for over a year, they’re one of the lowest-paid fire departments in the state. Perhaps some of this money could go toward the [county] Fire Authority to get their contract settled.

Richard Chavez

41

Orange

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Give it back to the people, it was our money in the first place.

David Penman

28

Santa Ana

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The county should keep its promise to pay back the agencies that it promised it would pay back, if it got a windfall of money. This $30 million should go to satisfy those promises, then the rest could be negotiated, if there is any left.

Nancy Nimmo

48

Laguna Niguel

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I feel compelled to respond to this survey, simply because as a taxpayer that’s partly my money that’s coming back from Merrill Lynch on that $30-million settlement. I know up front it’s going to be misused.

P.L. Kelly

44

Irvine

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The county should keep the money and restore the agencies they cut back, especially agencies responsible for public health and safety. Since the bankruptcy, there’s not been regular monitoring of the restaurants for standards of cleanliness, nor monitoring of ocean water for pollution or maintenance of public parks. I’m wondering: What good is anything if we don’t save our environment?

Ramona Zutavern

70

Laguna Beach

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All of the money should be used for schools; they’re the most important thing.

Ellen Goldsmith

83

Westminster

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The $30 million should be divided among the school districts, because by law, the school districts had to put their money in the county fund. The other agencies did have a choice, but the school districts did not.

William Thompson

57

Anaheim

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The settlement money should definitely go to the schools. We desperately need the funds, especially in Laguna Beach where we are facing a critical financial shortage.

Sandy Chambers

48

Laguna Beach

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Some of the money should go to northwest Orange County for the acquisition of new parks. Northwest Orange County has few small parks compared to the rest of Orange County. The balance of the money should go to those schools who voluntarily administered the national standards test of President Clinton, for fourth, eighth and 12th grades in math and English proficiency.

Devon Showley

65

Cypress

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The first $54 million is supposed to go to education, that’s the agreement. It doesn’t seem like it should be an open question. I thought this had been settled.

Paul Snyder

59

Irvine

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We should use the $30 million to buy one of the Canadian Super Scoopers and use it for fire protection for the entire county.

Chris Lench

48

Cypress

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It should go to air-conditioned classrooms and teachers’ lounges so that when the hot weather hits, everyone will be comfortable and children and teachers can work together for better education.

Tracy Bowling

47

Garden Grove

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The $30 million should be paid on a pro-rated basis to all the public agencies that lost money in the debacle caused by [former county Treasurer-Tax Collector Robert] Citron and company, and permitted by the Orange County supervisors.

Neil Brady

68

Yorba Linda

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The people who were mostly affected by the bankruptcy were the county workers. They should be compensated for the loss and the excess work they had to incur.

Greg Ohannessian

45

Santa Ana

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The schools deserve to have the money returned.

Jane Schwanbeck

48

Lake Forest

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I’m the mother of eight children. That money should be spent on education. There are many things that the schools still need, and if we don’t invest in the education of our young, who is going to lead the country later on? We need to spend the money on them so that we have a better country in a few years.

Sheila Kendall

37

Laguna Hills

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Any monies left over after recovery costs should go into safe fund investments. The annual interest would be divided in proportion to losses among various agencies involved. The approximate $27 million should return enough to make an impact on all concerned.

Bill Chase

64