Bad News
By Michael Ray
It was the early spring 2002 when my brother Walkie called. He was Chair of the Foundation for the Orange County School of the Arts (OCSA) and said I had to show up at a Special Meeting at 3 p.m. the next day, Thursday. The usual meetings were held at 7 a.m., a time I—a night owl—couldn’t possibly attend. So I thought, bad news. It had to be bad news.
Ralph Opacic, founder and president of the school, chaired the meeting. The other major attendee was Santa Ana Mayor Miguel Pulido. The school had recently moved from its original home in Los Alamitos to Santa Ana. Los Alamitos needed its campus back and OCSA found another one in Santa Ana. It was a six-story building in the Downtown core, retrofitted for OCSA’s needs.
Ralph started the meeting by stating payroll was due the following Wednesday. It was for $300,000. And this is what the School had in the bank: $0. Oh boy.
Miguel looked blank for a bit: the School was a huge part of the revitalization of Downtown. He immediately called the City Manager and found the cash in the pothole budget. But that was it. The City did not have more.
I would have to call the Treasurer of the State of California, Phil Angelides, to tell him the bad news. He is a good friend and at my urging, had arranged a $20 million loan from the California State Infrastructure & Development Bank (The I-Bank). Without it, OCSA could not open (and if had to be by September, the beginning of the school year) and if the school could not open, it probably would fail.
Phil had arranged the loan despite the Bank’s staff opining the School’s repayment plan was “Fairy dust.” I had not looked at the plan because I figured the school knew what it was doing. Bad move.
I called Phil that night at his home. His reply, “Mike, you know we State officers each release an annual report on their office.” Pause, “Guess what is on the cover of my annual report this year?” He paused again, “A photo of the school.” Another pause “You will figure a way to repay us, won’t you?” It was not a question.
We begged for large donations and each threw in as much as he could, scratching our heads for a permanent solution. Finally, I talked to my foster brother, Gary Long, whose stepdaughter attended the school. Gary is a well-off attorney. “Hey Gary, do you donate any money to the School of the Arts?”
“Yeah, $1,000 last year, but my friends whose kids attend the school think I’m a sucker. It’s a public school, why do they need more money?”
“Because of the extra arts programs, and it is a charter school and unlike public schools, must pay for its own upkeep, debt service, and so on. The difference between what they get from the State ($5600 per pupil in those times) and what it actually costs is $4,000 per kid, or almost $5 million a year.”
“Oh.”
That is when I had my “ah ha” moment. I realized the parents thought they were getting something for nothing.
I called Ralph, said here is the solution: you must get the parents of each kid to donate $4,000, and since many parents don’t have it, those parents who do must give more. Ralph immediately understood, adjusted the school’s systems, and in another two years of begging, the school had righted itself.
Phil still reminds me when I see him. Gotcha, he thinks. Whoa, I think, better check the business plan next time. I did, and it would become useful in the years ahead for a series of other non-profits.
Michael is Co-Founder of Orange County School of The Arts and The Discovery Cube.
