Tulare County school bonds 101

Grand Jury recommends adding projected interest to voter guide

Written by Crystal Morales, Visalia Times Delta -

Tulare County voters may not get all the information needed about potential costs when voting on school district bonds, according to a Tulare County 2012-2013 Grand Jury Report.

The Grand Jury recommends publishing information about estimated interest, fees or other costs associated with school bonds in voter ballot information pamphlets as well as in the local media.

The Grand Jury found Tulare County school districts together had accumulated more than $653 million in bond indebtedness, including interest and additional fees, for 93 bonds.

The average voter may not understand how the interest works on bond measures they are voting on, said Jon Coupal, president of the Howard Jarvis Taxpayers Association.

“That is of great concern to us,” Coupal said. “We have always said, you’re at least paying twice the principal value. I don’t think people realize that.”

Doing the math

The best way to understand voter approved bonds for school districts is to compare them to home mortgages, said Robert Groeber, Visalia Unified School District assistant superintendent of administrative services.

The current mortgage interest rate for a homeowner with great credit is about 4.67. On a $250,000 home with a mortgage spread over 30 years, a homeowner would pay a total of $465,152.

The recently passed $60 million Visalia Unified Measure E is an example.

The interest over the life of the bond comes out to about $61.6 million. Combined, a total of $121.5 million will be paid back.

That’s just over a 1-to-1 ratio, much better than what some residents are paying on their houses, Groeber said.

“Bonds are just mortgages for public agencies,” said Groeber, who is also a part of the Association of California School Administrators and sits on the businesses services council. “That mortgage gets paid by our taxpayers, and they get to decide, ‘Do I want to buy that mortgage or not?’”

Bond Measure L in Tulare, which paid for Tulare Western’s pool and Mission Oak High School, had an initial principle of about $45 million, said Tulare Joint Union District officials. The interest on the bond will eventually equal about $59.4 million, about a 1-to-1.3 ratio.

The recent College of the Sequoias’ Tulare Center $33 million bond is estimated to cost taxpayers $70 million in interest, or a 1-to-2.4 ratio.

“In every decision and action taken, [board members] have tried to minimize the impact on our local taxpayers while still fulfilling the voter-approved projects they desire through use of the funding tools provided by the state,” Stan Carrizosa, College of the Sequoias president/superintendent, said in an email.

Some districts in California have accumulated much higher bond ratios than measures E, L and J. According to a California Watch article, the Poway Unified School District in San Diego’s 2011 $105 million bond will cost its taxpayers $982 million in interest alone. This comes out to about a 1-to-9.4 ratio.

Informing taxpayers

Currently, the projected amount of interest paid is not given in the voter information pamphlet on bond measures.

Districts do provide the legally required information and are not doing anything illegal in not presenting the interest, according to the Grand Jury report.

The VUSD would like more ways to get information about school bonds and interest rates out to the public, Groeber said.

“I think it’s important for everyone to understand that the more good information we get out there, the more informed our voters are, the better off we are,” Groeber said.

Though the exact interest amount cannot be calculated until after the sale of the bond, an estimate based on current market interest rates can be, Groeber said.

It is this number, and other costs like it, that the Grand Jury report states should also be included in the informational pamphlet.

Typically, interest rates are presented during school board meetings while they are being discussed and voted on.

What taxpayers get for their investment

Recent bonds in the area have helped build Mission Oak High School in Tulare and are currently funding projects in Visalia for solar panels in a new middle school. College of the Sequoias’ Hanford Center and Tulare Center were also results of voter approved bonds.

Bond measures are critical funding sources for new projects and existing building improvements, local school officials said.

“The only mechanisms available through California Government Code and the legislature to fund public construction are General Obligation Bonds and other short-term bonds and notes,” Carrizosa said in an email.

Groeber agrees that the only way to fund construction and campus updates is through bonds.

The money raised through bonds allows schools to qualify for state matching funds for projects by showing the state that the local community supports the school project.

Still, more ways to inform the public of their investments in school bonds is good in his opinion, Groeber said.

“Public stewards of public funds should welcome questions,” Groeber said.