School bond should pay off district loan

By Mischa Dobrotin

I think the Ramona community agreed that we need and have a high quality school system. Good schools graduate knowledgeable students, are an asset to the community, and help to maintain property values. They are also something we can be proud of.

However, the Ramona Unified School District is on the verge of a financial disaster. The problem was created by a prior school board which entered into a certificate of participation (COP) when a previous school bond was rejected by the Ramona community. This COP was for the amount of $25 million and has to be repaid by the school district. Today’s repayment cost is about $34 million and, due to accruing interest, will increase as the years pass by.

This COP was primarily used to construct two schools, and part of the money was used for additional classrooms and other items for the other schools. While it did bring in millions of dollars in matching state funds, it saddled the school district with a formidable debt. With the decline in school enrollment, and a slump in construction, the school district does not now, nor is projected in future years, to have the money to pay off this COP.

Because of this COP, the financial projections for the school district are that the district will run out of money in about three or four years. Should that happen, the state of California may be forced to step in and take over management of the school district.

If that happens, the state will make a loan to the school district on the order of $20 million, but then will immediately set up a recapture plan, under a state representative, whose primary duty will be to recapture the money to repay the state loan. His or her primary concern will not be in the educational aspects, not in the financial condition, wages or other financial aspects of the school system, but rather solely in the recapture of money to repay the state loan. Under this circumstance, the school board, the school superintendent and the entire Ramona community have virtually no say with regard to the financial aspects of the Ramona Unified School District.

We, the Ramona community, can help ensure that we will continue to have our high quality school system by agreeing to pay off the COP.

A bond issue is necessary to raise the money for the repayment of the COP. Restricting the bond issue to the necessary amount to pay off the COP will minimize the cost of the bond issue.

The school board is preparing to ask the Ramona community for a bond issue. They are proposing a partial payment of the COP, with other portions going to various other items such as deferred maintenance.

The complete repayment of the COP should be the objective of the bond issue. Prior bond issues have failed in the Ramona community for various reasons, including vague identification of the uses of the money, and the adding of various nonessential items. If only a partial repayment of the COP is made, it only kicks the problem into future years, after the present school board and school superintendent have retired, bringing the same financial problem right back to the Ramona community.

The Ramona school board can set the uses of the money from the proposed bond issue. If they do not pay off the COP in its entirety, and/or add other large uses for the bond issue money, I feel they will risk another rejected bond issue.

Mischa Dobrotin, a Ramona resident, is a graduate of Ramona Unified School District’s Class of 1951.

Related posts:

  1. A look at Ramona school district finances
  2. Ramona school district inches toward bond bid
  3. County treasurer-tax collector calls for school bond reform
  4. School bond will be Proposition R on Nov. 6 ballot
  5. Budget talks turn to school bond for Ramona

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Posted by Maureen Robertson on Jun 13 2014. 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.

3 Comments for “School bond should pay off district loan”

  1. Guest

    Very well put. Nobody wants the district to default – that is not in anybody's best interest. Having said that, a few things MUST be included as a part of this bond. 1 – The bond should only be used to pay off the COP. 2 – The district needs to either further cut expenses, or be very transparent and vocal about the cuts that have already been made. We are talking fixed costs, not teacher reductions and classroom overcrowding. 3 – The district staff who were a part of the bad financial decisions in the past, whether in their current role or in another high administrative role, need to go. Many will have trouble trusting the leadership that caused this mess with fixing it, funds or no. Unless all three happen, it will be difficult for the district to gain the publics trust enough to have the taxpayers pass a bond. Hopefully the districts bond consulting company will reinforce this, rather than be "yes men".

  2. guest

    I agree. Pay off the COP. It should also be enough to fix anything related to health or safety. The bathrooms at the elementary schools are vile. I would agree to anything up to 60 million as long as not one dime went to salary or benefits for anyone. Every penny should be spent on the COP and repairs and maintenance.

  3. Jane Tanaka MD

    Mischa…..How much of a parital payment of the COP is the governance team proposing, and on what basis, please? And which deferred maintenance/health/safety projects specifically? ( The list is llllllooooooong…)

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