Charter School Emerges as Financial Lifeline for Struggling Orange County District

Times are tough in Orange Unified, Orange County’s fourth-largest school district. Already facing a years-long decline in state funding that followed the district’s plummeting enrollment, school officials in June 2024 nevertheless agreed to a teachers union demand for a 10 percent pay hike. Union officials celebrated – but only briefly. In September, internal documents show, assistant superintendent Sulema Holguin was warning board members that the ill-advised pay hike had shattered the district’s finances. The situation was so dire, Holguin said, that her office was tapping reserve funds intended for school maintenance just to make payroll.

Now there’s more bad news. Documents obtained by California Policy Center reveal that Orange Unified has asked state officials for permission to sell school property in order to slow the collapse.

It’s ironic, then, that Orange County Classical Academy, a charter school that wasn’t supposed to survive its first year, is now in a position to save the district that tried to kill it.

By next year, OCCA will have more than 850 K-10 students and another 1,222 on its waiting list. While other schools in the district sit empty, OCCA is growing.

OCCA needs more space, in other words. In separate May 20 letters to state and district officials, OCCA says its willing to pay as much as $20 million for any campus the district declares surplus. One of those, Peralta Junior High School, has been empty since Bill Clinton’s second term.

Selling the property to OCCA looks like a win-win. The district would get badly needed cash to help fund the pay hike it promised teachers. OCCA would continue to educate more of the district’s children and would have the room to accommodate them. Orange residents, notorious for their hatred of new construction, would escape the potential sale of neighborhood schools to developers who would naturally build anything (from commercial to high-rise projects) to generate revenue from each location.

But politics may kill this elegant solution. Leaders of the Orange Unified Educators Association, the local teachers union, hate charter schools – and particularly OCCA. Like other public schools, charter schools are publicly funded and they’re required to accept all students on a first-come, first-served basis. But they’re independently operated schools that have more flexibility in their curriculum, staffing, and governance than union-run public schools, in exchange for increased accountability. Like OCCA, most are nonunion and their superior performance makes the union-run schools look bad.

That’s why union-backed trustees and teacher union activists tried to block the school’s start-up application in 2019. School board president Kris Erickson, then a board member, declared, “OCCA is the wrong vehicle [to be a charter school in OUSD] because it is not going to make it.” Union-backed board member Kathy Moffat echoed that prediction: “OCCA is unlikely to attract and retain an adequate professional teaching staff. The teachers will not be the best or brightest, and there will be high rates of turnover.”

OCCA survived that political challenge and emerged in its very first year as the district’s highest-performing elementary school – and its only state-recognized Blue Ribbon Distinguished School. It remains one of the district’s highest-performing school and ranks in the top 5% statewide. Quite an achievement for a school the teachers union tried to kill before it ever got started.

Despite OCCA’s established quality, its need for additional space and the district’s need for money, the Orange Unified Educators Association would like nothing more than to smother OCCA – to limit its growth by denying it empty or near-empty campuses elsewhere in the district. And because a majority of Orange Unified’s elected school board trustees – including board president Erickson – owe their elected positions to union campaign money and political activism, they may be tempted to ignore OCCA’s bid and attempt to sell the schools to other, wealthier bidders. In that bargain, the district’s poorest kids would lose.

Indeed, in March the board asked the state Board of Education to allow it to sell the property, not to the city’s Parks and Recreation department or to OCCA but to the highest bidder. That could be a well-endowed private school or a real estate developer who, eager to maximize his investment, would naturally build a dense, high-traffic residential or commercial project.

District officials know that OCCA is eager to make a deal. But that didn’t stop them from misleading state officials. In that same March request, the district claimed its newly formed “Asset Management Advisory Committee” had “informed the Board that the [surplus] property would not be needed in the future for school facilities and recommended designating the property as surplus.”

Whatever the state board decides this year, the Orange Unified won’t have much breathing room. By 2027, the district will be forced by yet another state law, Proposition 39, to accommodate OCCA’s swelling student population somewhere else. In that scenario, OCCA would pay the district far less that its $20 million offer – about $200,000 annually for the privilege of occupying the new school. At $200,000 per year, it will take the district about a century to make up for its refusal to accept OCCA’s $20 million bid.

There’s at least one other possible outcome: that the failure to act now will drive Orange Unified into bankruptcy. In that case, a federal judge will drop the hammer. Everything will be on the table. District property will be sold to the highest bidder. The district’s contract with its teachers union may be voided. Its bond debt will become the subject of a death struggle between local taxpayers and powerful creditors. It wouldn’t be Nikita Khruschev’s description of a post-nuclear world in which the living envy the dead. But it won’t be like playtime on the schoolyard, either – in part because the jungle gym will have been sold for scrap.

Will Swaim is president of the California Policy Center and co-host with David Bahnsen of National Review’s “Radio Free California” podcast.