Valley school district reels from financial blows

Orange Center works to recover from a series of setbacks.

Published online on Monday, Jul. 06, 2009

It was a perfect storm of financial catastrophes: an $80,000 loss linked to declining student enrollment, state budget cuts that continue to mount and the whopper nobody expected -- a $422,000 theft by a longtime trusted employee.

And now, Orange Center Elementary School District finds itself on a statewide watch list for school districts that won't be able to meet their financial obligations.

But John Stahl, superintendent of the small, one-school district south of Fresno, said he believes the district will meet its obligations, in large part because insurance money will help cover the theft. He said the district is beginning to recover after a tumultuous few months.

The 308-student district and its K-8 school are based on Cherry Avenue.

The school year started out badly. Student enrollment dropped from 324 students to 308 -- a loss of about $80,000 in state attendance money. California's budget cuts chipped away at school finances even more.

What the school didn't plan for was a $422,000 embezzlement scandal that led to the resignation this year of 52-year-old Leonard Robinson, business manager for 21 years. The theft came to light just as the school was preparing for its annual winter audit.

Choosing his words carefully so as not to jeopardize the ongoing prosecution of Robinson, Stahl said: "We had suspected something was going on." There was an effort by Robinson to stall this year's audit, he said. The theft, which had been going on for several years, had become difficult to hide because of the district's tighter budget, Stahl said.

District officials initially suspected $200,000 was taken, but it turned out to be more than twice that amount -- about 14% of the district's nearly $3 million annual operating budget. Robinson, who has no criminal record, was allegedly fueled by a gambling addiction. He has a hearing scheduled for July 14 in Fresno County Superior Court.

The shortfall meant the district didn't have the state-required 4% financial reserve. The Fresno County Office of Education forwarded the information to the state Department of Education. Orange Center last week appeared on a list of districts on shaky financial ground.

The school is one of 19 on the list, but the only one from the central San Joaquin Valley. Since 2004-05, at least four Valley school districts have made the list, including Fresno Unified, Parlier Unified, West Fresno Elementary and Stone Corral Elementary in Tulare County.

This year's state budget situation played a role in pushing more school districts onto the list; last year, there were five.

But Stahl said the state watch list was based on the district's earlier financial plight. Since then, the district has received $177,544 in federal stimulus funds that tempered state cuts, was able to borrow $100,000 from the county education office to help manage temporarily and recently got a $415,000 insurance check.

"We should be able to pay our bills. We are paying them now," he said. Stahl said he even expects to rehire one of three teachers laid off earlier this year.

Larry Powell, superintendent of the Fresno County Office of Education, said he, too, believes the worst is behind Orange Center. The key will be whether the district can keep an adequate reserve, he said.

Orange Center was projected to end the fiscal year June 30 with an 8.23% reserve, said Jamie Perry, senior director of financial services with the county office of education.

Michael Gonzalez, president of Orange Center's board of trustees, said no one believes the superintendent or board could have known about the embezzlement. Trust, he said, was broken in the small school community where everyone knows everyone.

"Our eyes are a little more open now," he said. "We are questioning everything now."