Funding for the Garden Grove Unified School District modernization projects may soon be changing, which could speed up construction.
Board members heard several different plans and options about the next possible steps of the GGUSD’s modernization project during a special study session held before Tuesday’s board meeting.
The session, which featured a presentation from financial firm George K. Baum and Company, mainly served as a review of potential legislation that impacted or could potentially impact the Measure A bond. The firm serves as the advisor of the Measure A bond initiative.
Passed in 2010, Measure A allocates about $250 million to modernize and repair facilities for the GGUSD. However, due to new regulations from the State Allocation Board, the district’s remaining projects will need to be rushed ahead of the budgeted Measure A schedule in order to not lose the promised state funding.
In order to not lose funding, the district staff will be proposing issuing the last $120 million of the Measure A bonds this summer, in order to keep the timeline that will keep the state funding from the allocation board.
So far, $130 million of bonds have been issued.
The scope of the entire modernization project is budgeted at more than $450 million with 60 percent of the funding coming from the state.
Superintendent Laura Schwalm said that the bond initiative has served the GGUSD well, despite the economic downturn suffered in 2010. But she expressed concern that the district may jeopardize the promised state funds if the board does not approve issuing the remainder of bonds in a timely manner.
“It really has to do with changes put up by the state allocation board and how they divvy up money,” Schwalm said. “In order to access the state funds, we need to sell the remainder of the bonds sooner than later.
“Our fear, our belief is we will not keep our promise to our community,” she added “That promise is threatened unless we make some decisions soon. We knew we had to do this all along. We just didn’t know that we have to do this quickly.”
Board members did voice some unease about the hot button topic of cash appreciation bonds. Cash appreciation bonds offer a higher interest rate than capital interest bonds.
“No board in their right sense of mind wants ‘CAB’ bonds at all,” Board President George West said.
The first series of bonds offered both capital interest bonds and cash appreciation bonds. However, it only accounted for roughly $ 2.1 million raised in the first two series, according to the presentation.
West asked staff, during the session, if the district was guaranteed the state funding from the allocation board.
Margie Brown, director of facilities for the district, reassured the Board that the funding from the state will be coming if the project continues to be bidding for new contracts.
“We are guaranteed state funding if we award contracts,” she said. “We are on a good list. But we are only good if we award contracts.”
Lynn Paquin, executive vice president of the firm, offered several options for the next issuance of bonds during the presentation. Multiple considerations included a tax-rate hike from the current $35 rate per 100,000 to up to $45 per 100,000.
A higher tax rate will minimized the need of cash appreciation bonds.
Paquin also offered options of another series combination of the two types of bonds, which could keep the tax rate at the current $35 per 100,000.
Although the board was offered several options, no formal decisions were made to the board during the session
During the regular meeting, 17 students were honored during the presentation as the 2013 Simon Scholars. Sophomores from two high schools, Rancho Alamitos and Los Amigos, were recognized for their aspirations and pursuit of college education in spite of their personal hardships. The program offers mentorship and education, as well as scholarships and other financial items, for the scholars.
The Simon Family Foundation, which administers the program, serves to help students with difficult and economic hardships in their life. Kathy Abels, executive director of the foundation, said that 2013 was the seventh year of the program.
She commended the students for their efforts and she said she looked forward to the future
“We are so proud of this class,” Abels said. “The decision was very difficult and we took it very, very seriously. We can’t wait to get to know them over the next several years.”
Christian Hernandez, one of the first scholars in the district’s program, shared his experience in the program. He was a graduate from Garden Grove in 2010,