Two Salinas Valley school districts will be able to borrow money for construction in an amount that exceeds limits in state law intended to protect taxpayers.
Today (March 9) the State Board of Education approved waiver requests from the Alisal Union School District and the Soledad Unified School District to exceed debt limits set in state law for construction bond measures.
- In the November 2016 election, voters approved Measure M, authorizing Alisal Union School District to borrow $90 million and pay it back over time – with interest – to pay for school construction.
- In the November 2012 election, voters approved Measure C, authorizing Soledad Unified School District to borrow $40 million and pay it back over time – with interest – to pay for school Soledadconstruction.
In order to borrow this money from investors from selling bonds, both school districts need to exceed the debt limits set in state law in 2000 (in conjunction with the passage of Proposition 39 reducing the threshold for approval of school bond measures from two-thirds to 55%).
That’s what the State Board of Education did today: allow Alisal Union School District and Soledad Unified School District to exceed the debt limits.
This practice is relatively uncommon. A few dozen school districts have sought waivers since 2000, when Prop 39 passed. See Table A-3 Details of Bond Indebtedness Waiver Requests from California School Districts to State Board of Education 2002 through March 2015.
With property values perhaps near their zenith right now in the Salinas Valley and thus maximizing property tax revenue to pay back bonds, it’s not wise to seek debt waivers at this time.
The Alisal Union School District board approved the waiver request at its December 14, 2016 meeting: see Alisal Union School District Staff Report to Board – Debt Waiver Request – December 14, 2016.
For your convenience, here is a compilation of the State Board of Education documents related to these waiver requests: March 9, 2017 Tax and Debt Waivers – California State Board of Education. These staff reports provide plenty of background information in a clear and accessible way.
You can collect the information from original sources at the State Board of Education website here: Agenda for the California State Board of Education (SBE) meeting on March 8-9, 2017
The Salinas Taxpayers Association OPPOSED the Alisal Union School District Measure M in November 2016 because of the district’s proclivity to seek fiscally-irresponsible debt waivers. (The district had already received two waivers from the State Board of Education.) We pointed out the dangers of these waivers in the official opposition argument to Measure M in the Voter Election Guide: see Alisal Union School District Bond Measure – Salinas Taxpayers Association Opposes Measure M (November 2016).
Also, the Californian former education reporter Roberto Robledo wrote skeptically about the waivers: see Too Soon to Ask for School Bonds – Salinas Californian – October 28, 2016.
For more information about waivers for school districts to exceed state tax and debt limits, see Debt and Tax Limits Always Waived When School Districts Want to Borrow More Money and the section about State Board of Education waivers in a comprehensive study on school construction bonds here: Tricks of the Trade: Questionable Behavior with Bonds.