SAN FRANCISCO — The San Diego Unified School District’s board, after warning in October that the district could face insolvency and after being downgraded last week, is now talking about placing a $1.5 billion to $2 billion bond issue on the ballot in November 2012.
The funding would pay for school repairs and upgraded classroom technology when California state funding covering those costs runs out, said Bernie Rhinerson, the district’s chief of staff.
The school board approved a measure last week asking SDUSD staff to craft a feasibility study about a bond measure and report back in February, Rhinerson said.
“The idea is in the early stages,” he said. “The board doesn’t need to make a decision until next June or July.”
The district’s last bond issuance was the $2.1 billion Proposition S approved in 2008, which extended but did not raise the current property tax assessment. The school facilities’ needs at that time were actually $7 billion, so $5 billion in building maintenance costs remain unfunded, according to Larry Remer, president of the San Diego-based Primacy Group, a political consultant hired to evaluate the school district’s bond proposal.
The SDUSD’s current proposal would result in an increase in property taxes of between $30 to $40 per $100,000 of assessed value, according to a school board presentation.
The school district always contemplates putting a bond measure before voters during a presidential election year because that is when they tend to be successful, Rhinerson said.
“Larger school districts in California, such as San Diego and Los Angeles Unified, do tend to do better during presidential elections, because they draw a bigger base of liberal voters, who typically support school bonds,” said Larry Tramutola, president and chief executive of Oakland-based political consulting firm Tramutola LLC. “If a district has a good plan and its needs are great, it can pass a bond measure during a variety of different elections, however.”
SDUSD officials said in October that the state’s proposed “trigger” spending cuts could force the district into insolvency. In September, state officials predicted automatic spending cuts to California’s budget might be necessary to make up for revenue shortfalls.
The district was already anticipating a $57 million deficit for 2012-13 before the state’s announcement, but had reached a balanced budget for 2011-12. The state’s cuts would create a $30 million shortfall for this year and ratchet up the following year’s deficit to $118 million, school officials said.
District officials are feeling more hopeful that the state won’t enact the cuts, which would come mid-school year, Rhinerson said.
“The legislative analyst’s office releases a budget report on Nov. 16 and the governor’s finance director issues a report in mid-December. The better of the two reports will be used to determine if mid-year cuts are needed,” Rhinerson said. “If the legislative analyst’s report is positive, we will just focus on our deficit for next year.”
Though employee contracts don’t expire until June 20, 2013, officials have been meeting with employees about renegotiating contracts, he said. When Standard & Poor’s downgraded the SDUSD to AA-minus from AA last week, it cited the district’s inability to renegotiate employee contracts as a concern. Moody’s Investors Service downgraded it to Aa1 from Aa2, citing a significant draw on reserve funds in its report.
The talk of insolvency might actually help the district pass a bond measure, because it makes the case that it really needs the money, Remer said, but the district has to put together a bond measure that outlines a specific spending plan.
Remer said that even with the downgrade, the school district still ranks among the highest-rated in the state.