Cash Strapped TUSD Seeks to Borrow $12 Million
At its last meeting, the School Board authorized a complicated lease financing arrangement that would allow the District to borrow $12 Million. According to the approved resolution, the monies are needed to fund the construction of gymnasium facilities and school modernization projects such as roofing, electrical and pavement improvements, science labs, lockers upgrades, painting, and related site work.
Gymnasium facilities and the aforementioned school improvements were previously listed among those projects that would be completed with funding from the nearly $200 Million voter approved bond measures T and U passed in 2014.
In addition to the listed projects, the monies may be used to fund a reserve fund. District reserves have plummeted in recent years as TUSD deficit spending has soared. As recently as Fiscal Year 2013-14 the District had a budgeted $46.1 Million in reserves. Shortly after receiving a qualified certification from the California Department of Education last June, the District released a budget showing the reserve amount was expected to drop to only $5.2 Million by FY 2019-20. That figure was $2.3 Million below the state mandated minimum.
TUSD Deficit Spending – June 2017 Budget
Per the approved resolution, the terms of the lease financing agreement shall not exceed 30 years and true interest costs shall not exceed 4.50% per annum. The transaction will cost TUSD approximately $417,374 in fees. The total payment amount of the $11,870,561 loan was calculated to be $19,148,454.
As part of the complicated financial transaction the District authorized a ground lease of the Levy Adult School, and the Griffith Adult School (including the Gene Drevno Community Day School) to the Torrance Unified School District Public Facilities Corporation. If the valuation of those properties is deemed insufficient, then the District authorized that J.H. Hull Middle School and the District offices could be added to the Lease Agreement. The District will then sublease the property back from the Corporation.
Per one resource, an advantage of the complicated financial instrument is that it allows a government body to fund a project without incurring a debt that might normally be subject to voter approval. Potential risks include high interest rates and risk that the government body could lose its accumulated equity in the leased property if it cannot make the lease payments and is forced to return the leased property to investors.
The District will be obligated to make the payments owed due to the lease financing agreement from its General Fund. The School Board passed the measure without discussion.
Well now this is interesting game plays made here and God in heaven only knows if what they did will ever work. Why is the School Board permitted to make such important decisions w/o proper presentation to the community who will be the loser big time if this idea fails. Since when is a body of a board able to put the School District at so much risk that it could be essentially shutdown and the school district taken over by the Los Angeles County Board of Supervisors and an appointment made to another school district of the assets. Can the School District really afford the risk here that is being taken by this action? I personally wonder why tighter controls have not been put in place regarding such actions here. I believe that the taxpayers should have voice in a decision of this type and I don’t believe the School Board should have the power left to themselves. The risk on this decision is beyond comprehension without an explanation and all avenues of opportunity being known prior to taking this action. The confidence in the current members of this board are brought into question by the action to deny the public input to this matter as is normally done. Why was there no public comment taken on this matter? Why were the taxpayers in the city boundaries not notified nor given an opportunity to vote this idea up or down. The school board has acted w/o authority as a body and making decisions that should be made by either those who live in residence in the school district or the city. Further taxpayers hakve been put at risk of having to cover this indebtednes if the school board plans don’t pan out. This is so wrong and should be subject to reversal since no comment or discusion was held. Further actions taken in this manner need to be reviewed for prosecution of a violation of trust, of WE the People in Torrance Unified School District. What do you say?
Arthur, as an FYI the public was given an opportunity to provide input on this decision at the School Board meeting.
Hello Clint:
Maybe there was opportunity for input at the School Board meeting and maybe those who were in attendance there may have given some but I guarantee right here that many residents in this city who come under the auspices of the this board and who do not have children enrolled but are paying the price in their tax bill to support this private venture for the sake of the city, sure should be notified with a document in writing addressing the expenditure to be considered with pros and cons of the issue so that people can be informed and submit their feelings if not in person in writing. I would hope that this forum might be able to be utilized as venue to seek opportunity to speak up prior to having the School Board or any other Board in the City or Community making decisions of a serious vein which will impact all taxpayers, and remove more money out of our pockets. I have been a resident of this city since the early 70’s and I am appaulled at the activity that goes on without WE THE PEOPLE knowing or being able to vote on things or discuss them. The city belongs to WE THE PEOPLE, not the CITY COUNCIL, NOR THE CITY WORKERS! The Community within the city is ONLY as Strong and Valuable to assuring continuity, value, and consideration of city business and activities as is brought forward to them for consideration and input. NO VOTE should be forthcoming w/o the Community of Taxpayers having an opportunity to voice their opinion and request more information prior to any vote being considered on an issue. The city of Torrance is spending too much of the tax payers Dollar w/o due diligence being enacted. I remain ready and willing to continue this conversation with you or anyone else.
If the school board really wanted to hear our input they would have done their due diligence to make sure the public was aware of an important issue to be discussed. Majority of the public does not even know there is a school board meeting. This was a calculate move to not have the least amount of people at the meeting. That’s what we get when we vote in a noon Aid, and insurance salesman.
I can foresee that the school district may, from time to time, fall short in their “day to day” operational expenses. I am a more than a little concerned that voters approved an increase in their taxes on a bond measure for CAPITAL IMPROVEMENTS … not a bail out of the District when they found themselves in a shortfall for failing to appropriately manage their funds for salaries, benefits, supplies, etc. I do not believe the voters would have permitted an increase in their taxes to fund the School District’s potential mismanagement of funds.