Shutdown of local schools is possible if long-term debt is not alleviated
By KRIS REILLY, Editor
LUCERNE VALLEY • Local schools are in big financial trouble.
Lucerne Valley Unified School District is considering $800,000 in cuts for the 2010-2011 school year in order to achieve solvency by the end of January.
Compounding the problem is the fact that the state may make budget cuts on Jan. 8, which would affect the current school year as well.
Furthermore, the district may need the passage of a general obligation bond in June that would increase local property taxes in order to avoid major changes in educational services or even a shutdown of the schools.
The LVUSD Governing Board held a budget workshop on Dec. 16 to discuss the cuts. LVUSD Superintendent Mike Noga and the board will soon begin the process of determining how the reductions will be made. The next board meeting is Wednesday, Jan. 6 at 6 p.m.
Because the district has already slashed $1.5 million from its budget since March, these upcoming cuts figure to be painful. It appears inevitable that teacher salaries will be affected in some way. This could involve pay cuts, furlough days or even layoffs. Noga said that about $6 million, or roughly two thirds of the annual budget, goes to personnel.
If the district does not make the cuts and correct the budget by the end of January, local control of the schools could be lost. The State of California would either take over the district or Lucerne Valley schools would be absorbed into an adjacent district. Under the first option, the state would appoint a trustee, paid by the district, to make all financial decisions. The state trustee would essentially control the district, and this arrangement would continue indefinitely until the district becomes solvent — which could be several years.
There’s also a possibility of additional cuts that will affect this school year.
“We have the governor coming out with the State of the State on January 6 and his new budget January 8, so we don’t know if that’s going to have any midyear cuts, because education has had a series of midyear cuts,” Noga said.
The state budget crisis is affecting all California public schools — but LVUSD’s problems go even deeper.
The second issue for the district is debt stemming from a certificate of participation (COP) — essentially a loan — signed by the board in 2007. Noga said approximately $6.5 million was borrowed to build an early childhood development facility behind the elementary school, upgrade the bus fleet and install more efficient temperature controls at the high school/junior high facility.
“It’s secured by property,” Noga said. “Basically the sites, the school sites, are collateral for that note. … Last year and this year we’ve been paying interest only. It was (approximately) $135,000 last year and then it went up to $354,000 this year. And then next year we kick in with principle and interest that takes it to $550,000. And then, subsequent to that, we have annual payments that vary between $406,000 to $410,000 until 2039.”
Jean Morgan, who has been a member of the board for six years and took over as president at the Dec. 16 meeting, said the COP money was used for projects that were beneficial to the community and that the loan wouldn’t be as big of a problem if it weren’t for the drop in state funding.
“At the time (the COP) made a lot of sense,” Morgan said. “If we didn’t have this state budget crisis it would still make a lot of sense.”
If the district is unable to make the payments, the state could step in to pay off the loan and take over the district, Noga said.
Another, more nightmarish scenario is that the state would be unable to help, LVUSD would default on the loan and the schools would close down.
Students would be transported to a neighboring district such as Apple Valley. One of the obvious drawbacks would be the brutally long bus rides — more than an hour each way for most students. Just as troubling would be possible poor treatment of Lucerne Valley students once they arrived at school.
“We were treated as second-class citizens by both students and teachers,” said Millie Rader, who as a teen had to bus to Apple Valley High School because Lucerne Valley had no high school of its own.
One of the ways Noga and the board might try to avoid this is by proposing a general obligation bond that would be voted on by all citizens of the school district’s attendance area in the June primary.
“We would have to garner 55 percent of the vote to pass that general obligation bond,” Noga said. “We would need $7.5 million on the general obligation bond which would be around $32 per year per $100,000 of property.”
This tax would stay in place for a yet-to-be-determined number of years, affecting landowners directly and renters indirectly (increased costs would likely be passed on to renters).
Noga said he plans to create a panel including board members, union leaders and other people in the community to hammer out the specifics of the bond and gauge whether it would get enough support to pass.
The passage of the bond may save local schools in the future, but the more immediate problem is the state budget squeeze facing the district for the next school year and possibly even sooner than that. Morgan said it remains to be seen what kinds of changes the situation will necessitate.
“All we can guarantee to the community is that if there is a way to fix this, we will,” Morgan said.
Kris Reilly can be reached at email@example.com or at (760) 985-8372.