Decision on selling school bonds on hold
10/20/2013 12:00 AM
10/18/2013 9:49 AM
Concerned with how much it’ll be paying back, the Los Banos Unified School District board of trustees has postponed a decision on whether to issue bonds to help build a new junior high to ease massive overcrowding.
Built for 900, Los Banos Junior High School recorded 1,570 students this month. To pay for a new facility, district officials can access nearly $10 million in funding left over from a $44 million 2008 bond used for the construction of Pacheco High School.
The district would have $9.5 million if it starts selling the bonds this year. School board members are reluctant to make such a move because the repayment will be $43.5 million.
“I know loan sharks that don’t charge that,” Trustee Tommy Jones quipped. “I’m desperate that we build a new school. The situation over there is unbearable, but $43 million for $9 million, I just can’t.”
School board members unanimously agree with Jones. The board was scheduled to vote to issue the bonds Oct. 10, but decided to delay the decision until a special meeting Nov. 7 in hopes of the public offering a better solution.
“There are people right now shaking their head and going, ‘What are we doing?’ I’ll let them know right now I want an opinion. I want ideas on how this is going to be fixed,” Trustee John Mueller said. “If you got no better ideas, then that’s the route this board is going to end up going down. We got an obligation to take care of the kids and education first, before the taxpayers.”
Along with leveraging the $9.5 million, school officials may use another $6 million in general fund reserve monies. Superintendent Steve Tietjen said that would decrease the district’s reserve funds to $8 million. The extra money is necessary because the district estimates a new junior high school will cost $23 million. Officials are also trying to build the school without state matching funds that typically accompany such projects. California has not decided whether it will place a school construction bond measure on the ballot next year. To afford the new school, the district is discussing using modular buildings similar to Mercey Springs Elementary, not having a gymnasium and possibly getting the U.S. Department of Agriculture to pay for a cafeteria.
Trustee Dennis Areias indicated he is uncomfortable with using the reserve funds because the district will eventually need that money for other projects.
“In a couple of years, we’re going to need money for things like interim housing K through sixth grade. We sure don’t want to deplete our general fund by no means,” he said.
Tietjen’ said Areias’ concern basically makes the case for the district to put another bond measure on the ballot.
Time is a consideration for the district. State Assembly Bill 182 decreases the time school districts have to pay back bonds from 40 to 25 years. The law goes into effect Jan. 1 and will decrease the amount of bond revenue districts can raise at one time.
Tietjen said it may be best for the district to wait and obtain a certificate of participation, which operates as a lease-purchase agreement, and wait to see if California passes a construction bond.
“We could handle our situation where we’re looking at a BAN (Bond Anticipation Note) so the money is available and a COP (certificate of participation) when the time comes. I don’t think we have to get the COP today. “We can give it a year and see where it is with the state money and then make a decision about the CO P November or December of next year,” Tietjen said. “That’s the other alternative.”
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