The Bonsall Unified School District will not be utilizing a Certificate of Participation loan to fund the new Sullivan Middle School building, at least for the time being.
During the Feb. 13 BUSD board meeting, the district’s staff was directed to pursue funding options for the two-story, 12-classroom building with an estimated cost of $3.9 million. The likely means of funding was a Certificate of Participation loan, but revenue uncertainties led to a 5-0 board vote March 13 to delay pursuing the COP funding until the California Department of Education can provide more certainty on the Bonsall district’s Local Control Funding Formula revenue.
“Without really having a clear understanding of what our future income is, we just don’t feel it would be prudent,” said BUSD superintendent Justin Cunningham. “That’s not a risk that we want to take.”
The state has changed its program of funding local schools from solely a per-student amount to a base per-student amount with adjustments for certain grade levels, a supplemental grant amount for targeted disadvantaged students, and a concentration grant for schools whose targeted disadvantaged students constitute at least 55 percent of the total enrollment.
“We don’t really know how much we’re going to get,” Cunningham said.
BUSD staff has worked with the California Department of Education, the San Diego County Office of Education, and School Services of California, Inc., to develop reasonable revenue projections. School Services of California, Inc., provides independent assessments of district finances. “The folks at School Services, by their calculations, they feel it was a lot less, like one or two million less, than what we were thinking,” Cunningham said.
The School Services of California assessment was approximately $1.2 million less than the estimate provided by the San Diego County Office of Education. “This money would have gone towards construction of some new buildings at the middle school,” Cunningham said.
“We really should wait until we do know before we jump into something like that,” Cunningham said. “We don’t want to put the district in a place where debt is becoming too big for us.”
The school district had plans to borrow $4 million through the Certificate of Participation program and expected a four percent interest rate, which would equate to annual payments of approximately $250,000 for 25 years.
The school district originally planned to use a Qualified Zone Academy Bond loan with an approximately 1 1/4 percent interest rate for the new building. At one time QZAB loans could be used for new construction but, after the district’s tax attorneys advised that new building would be an ineligible use of the loan district, staff was directed to pursue other sources of funding, including COP loans.
The Feb. 13 change from the initial proposal to fund the building with a QZAB loan and the March 13 rejection of a near-term COP loan will likely delay the construction schedule for the new building which had a January 2015 construction start date and an August 2015 completion date.