$250 Million Flies Into Thin Air

At the June 10 public budget session preceding its regular meeting, the Orange Unified School Board received a report from its outside accounting firm that should have attracted instant media attention: The Mercer accounting firm lowered its projection of the so-called “unfunded liability” for teachers’ retirement benefits from $400 million to $150 million.

Poof? A quarter-billion dollars vanishes into accounting never land and no inquiring minds want to know what happened?

That vanished liability money was the crux of the school crisis that affects every property owner and business in Orange, Villa Park and Anaheim Hills. Public schools are the No. 2 reason why people buy or don’t buy in an area. When homes don’t sell, everyone suffers. Chambers of commerce members should demand to know what’s going on because this crisis keeps generating negative newspaper headlines that undermine local businesses.

The so-called “unfunded liability” never was real money, only a hypothetical projection. In this case, the projection was what the district might have paid if every teacher eligible for retirement benefits stayed with the district and lived a full actuarial number of years. The district’s original 1995 Epler Report projection was seriously flawed because it treated the retirement plan as an open plan, when in fact the plan closed in 1992. This immensely inflated the results. Furthermore, hundreds of people have left the plan, dramatically reducing projections.

The retirement benefits can now be paid on a simple, affordable installment basis. So, since the retirement issue is gone and since the district is sitting on a $20-million budget reserve, the only roadblock to settling the crisis is the stubborn politics of just four school board members. Without them this phony crisis would go poof!

JOHN ROSSMANN

Tustin