Why are our schools so deep in debt?

By Superintendent Bob Graeff

Ramona Unified School District

(This is the fourth in a series about fiscal issues related to the Ramona Unified School District.)

This week, the governing board will be asked to consider the adoption of our First Interim Budget report (posted this week on our website). As required by law, the district must project revenues, expenditures, and ending balances for the current year and the two years which follow. Just a quick glance will reveal that the district has a near-crippling indebtedness problem — which may have devastating results in 2014-15 and beyond.

Why are our schools so deep in debt?

In 2002, the community responded to the district’s fourth attempt at passing a school bond with a “No” vote. Faced with consistently increasing enrollment, lack of suitable housing for students, a rapidly deteriorating elementary school, and classroom shortages in an alternative school and middle school, the board approved a staff recommendation to borrow money.

A loan (specifically a certificate of participation or COP) in the amount of $25 million was approved by the board in 2004. As part of the deal, the state provided matching funds of an additional $34 million. All together, the district borrowed $25 million from its lenders but received $59 million for capital improvements.

With this money, the district built the new Hanson Elementary School on Boundary Avenue and the new Ramona Community School on Ramona Street. The district also built a new two-story bank of classrooms at Olive Peirce Middle School, while making other improvements at both OPMS and Ramona High School. While part of the plan was to add parking and athletic fields on the 40 acres behind Ramona High, the funding fell short and that plan was never completed.

The new classroom space created on these four sites house more than 1,500 students on a daily basis, providing our families and the community a source of pride and a high-quality education.

Like any loan, however, bills become due. While the original plan for the loan was to repay the loan with special funding created during the loan process and developer fees, local building has dried up during the Great Recession and the district will exhaust all of the funding this year earmarked to pay back this loan. Although refinanced in 2007 to provide better interest rates, the district will have no option next fall but to begin using General Fund money to make COP payments.

Under the current terms, we will owe about $1.7 million in 2014-15, $1.8 million in 2015-16, and so on until the loan is repaid in 2032 with a final payment of $3.4 million. With a total district annual state revenue stream of about $36 million in the General Fund, these annual payments will be crippling.

Twelve years ago, did the district need to replace Hanson School? Undoubtedly. Did the district need to add more capacity at the dual RCS programs? No question. Did the district need to modernize both OPMS and RHS? Of course — with many more needs still outstanding.

But what the district was not able to project at the time was the largest national building recession in 75 years — drying up our ability to repay the loan with developer fees as projected.

Options for loan repayment now have become a critical issue for our schools. Look for future articles as I lay out the few obvious options remaining available to the district.

Related posts:

  1. Spring Open House dates set at Ramona public schools
  2. Ramona’s public schools
  3. Schools schedule spring open houses
  4. Letter to the editor: Ramona schools need Prop. R
  5. Schools schedule graduations, promotions

Short URL: http://www.ramonasentinel.com/?p=29715

Posted by Maureen Robertson on Dec 17 2013. Filed under Commentary. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.

20 Comments for “Why are our schools so deep in debt?”

  1. Guest

    So, obviously, the reason for the school's financial woes lie at the feet of the electorate who refused the district's bond funding on four occasions? If it wasn't so sad this article would be comical. Nobody disagrees that Hanson Lane needed replacing. What we did not need was a school in the dairy fields on the southwest side of town. We needed a school on the east side of town where the existing population at the time was underserved. Then, to top it off, the old Hanson Lane site was repurposed to expand RCS; a nice-to-have in good times, but an unnecessary luxury when times are tough. RE was not addressed, despite the obvious issues with the site. Had common sense prevailed then, we would not be in this mess now. Many at RUSD who made those decisions are still making decisions today. Why should we trust them to fix the mess when all they seem to propose is for the taxpayers to give them more money? We all know what needs to be done. Why not at least begin rather than make excuses and try to soften us up for another bond? Despite the district's belief otherwise, we are not stupid enough to not see through this rather poorly veiled PR campaign.

    • Jane Tanaka MD

      Agree with you, and with Dr Graeff that those decisions are concrete reasons for our school district’s debt. However, in 2004, were any of the current board members in place? Yes, one, the current board president. He was the only one on the board in 2004 who voted AGAINST borrowing $25 million. Was the current superintendent the one who made this decision? No, that superintendent retired. Back in those days it was not considered germaine for the public to ask questions about the budget at board meetings.

    • Jane Tanaka MD

      The solutions I hear talked about in the community range anywhere from the extreme of closing down Ramona Elementary, Montecito HS , RCS and one of the elementary schools in SDCE, and eliminating all the administrative staff, and selling any /all properties not occupied by students….. to another extreme of doing nothing and letting the district go insolvent and let the state school czars take over….. to passing a bond only to pay off the COP debt ( a middle path solution perhaps?) …. to passing a bond that would pay off the COP and fund deferred maintence projects and also build a multimillion dollar athletic training center (to give back to the community )… to cutting all district’s employees salaries by 10%. We need to meet again as a community, to have a dialogue. Its been 4 months since our last community workshop. These non-conversations we have on the web and in print are not enough. Understood that the community was ignored by the governence committee in 2004.. That was the underlying cause for the mess today.

    • Jane Tanaka MD

      “Many at RUSD who made those decisions are still making decisions today”
      WHO? Bob Stoody is the only current board member who was on the board in 2004, and he voted against taking out the loan that paid for the new schools, and this was before Dr Graeff’s time as superintendent.

      • Guest

        Dr. Graaff was there, not as superintendent at the time, but he was there. Besides, nearly every senior member of RUSD was either there in another capacity or was hand-picked by the previous administration. Regardless, the more relevant issue is the complete lack of progress this administration and this board have made in even the smallest operational improvements. I don't see any action taking place to address the issues facing the district other than softening up the electorate for yet another run at a bond. Make some improvements FIRST, then come to the community requesting financial support. If RUSD does that, there is a decent chance a bond effort will succeed. Unfortunately, I have my doubts as to whether the district has the fortitude or the leadership to make the difficult decisions.

        I respect and appreciate your efforts with FORUS, but we need to start holding our elected representatives and RUSD administration responsible. Community workshops are nice and give well meaning people the feeling of making a difference, but it is time for those we pay to run our schools to put on their big boy pants and take some concrete steps to stop, or at least slow, the bleeding. We can talk all we want but it is past time for action. "Its been 4 months since our last community workshop". What has been achieved in those 4 months? No more excuses.

        • Big Daddy

          What are your ideas that you would consider "concrete steps"?

          • Guest

            Concrete steps would have to include a reduction in fixed costs. Those may include the closing of a school. When I read about the 21% decrease in students district-wide, this became a no-brainer. I, for one, believe RCS is an expensive luxury that the district can no longer afford, and it's site provides at least a partial solution to the closure of a school. Also, the district needs to reduce its administrative costs. I cannot be convinced that we do not have an excess of assistant principals, counselors, and other administrative staff at both the school sites and at the district office. I don't care if Poway has the same or more. In desperate financial situations you just have to make do with less. That's the way it works in a business where you can't just go out and tax people to support your bloated overhead structure. These are just some of the obvious steps that even a first year business student in college could suggest, and yet the district does nothing.

  2. Guest

    I'm not so sure 2 elementary schools are needed in the Estates. Consideration should be given regarding closing James Dukes, as from what I've seen, the facility is quickly becoming a maintenance nightmare.

    • Anon

      Read this link: http://www.ramonausd.net/cms/lib07/CA01000789/Cen...

      Projected enrollment for the 2013-14 school year between both Barnett and James Dukes is just short of 1,000 students. (467 students at James Dukes and 502 students at Barnett) Do you realistically think one school in the estates can handle all of those students? What about class sizes and classrooms? There is not enough physical space for either school to handle all those extra students.

      If we are realistically thinking about closing a school Ramona Elementary makes the most sense. The school is in shambles and the displaced students of RE could be equally distributed to the other 2 elementary schools in town so as to lessen the increased student load.

      However, all of this is a moot point because neither the administration or the school board have ever mentioned closing any schools.

      • Guest

        Close a school (take your pick), move 6th graders to OPMS, go to a year-round school schedule….changes need to be made, not just business as usual, for things to turn around in the RUSD.

  3. Guest

    Our shabby schools are a disgrace. Maybe you can't afford to reroof but are you telling me you can't afford a few gallons of paint? If not then maybe some cuts in the maintenance department are in order.

    • Jane Tanaka MD

      The problem is the opposite… they've been cut down to the point of schools sharing custodians.

      • Guest

        Really? And custodians can't slap a few gallons of paint on some buildings during the summer? People need to quit being apologists for RUSD.

        • Anon

          If you're so concerned about it why don't YOU pick up the paint brush yourself. Nothing is stopping you from volunteering.

          • Guest

            As a matter of fact, my friends and I have voluteered our time and donated money to the schools and to the local athletic programs for well over 20 years. It is my understanding that the snack bar at the high school gym is being painted over the holidays, so that should provide YOU with the opportunity to put your money where your mouth is and pick up a paint brush yourself. For my part, the money I have already donated this year will more than cover the cost of the paint.

  4. Guest

    I'll tell you what, whoever approved the designs of our schools has done a disservice to the community. What looks great on plans doesn't always translate to efficient structures. Bare wood, sharp angles, exposed ducting, non-essential embellishments such as fishbowl windows quickly become maintenance nightmares. The exterior materials used need to be able to weather the relentless sun in Ramona, and the configurations intelligently designed for longevity not just for flash (unfortunately, it appears to be too late).

  5. Parent

    Guest, our district has performed fine academically. Why change everything when we should fix what's broken like the infrastructure and student teacher ratio? What we need to do is get rid of the tea party idiots who follow freaks like Glenn Beck and Sarah Palin as if they are qualified to do more than process oxygen. The facilities need work. We need more teachers. The money either comes now from a bond, or later when the district collapses in debt, at the expense of our children.

    • Guest

      Parent, I have yet to read, nor have I personally suggested, that a single teaching position be eliminated. To the contrary, I believe the district should focus a larger proportion of its resources on teachers rather than administrative costs. The facilities do need work, BUT we don't need as many of them because of reduced enrollment. With fixed revenue, less sites to maintain=more $ for each site's maintenance. As for your Tea Party comment, NONE of this has anything to do with Glenn Beck or Sarah Palin. Why is it that anytime somebody suggests a common sense approach as an alternative to a tax increase it is assumed to be some sort of Tea Party conspiracy? Maybe you should turn off MSNBC, study the facts as they relate to local issues, and think for yourself instead of regurgitating sound bites.

  6. Guesticular Gemini

    Cathedral Catholic is looking better and better. After what I have seen here I might just have the join the if you aint cheating you aint trying brigade. My kids play sports, I am sure someone will "sponsor" them to play.

  7. Mom

    I personally know of several teachers that got Pink Slips a few years in a row but of course Never got let go. All of these teachers are still teaching and making a lot of money when the school district was supposedly out of money. Letting those teachers go would have saved a lot of money a few years in a row. I don’t think they are all needed and it is long past due to buckle down in every aspect.

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