School plans on borrowing against its future income
By Rebecca Ray
After scratching their heads over how to compensate for an estimated $5 million shortfall in construction costs, the Saratoga Union School District Board of Trustees is considering some creative financing options.
The shortfall affects construction at Argonaut, Foothill and Saratoga elementary schools. The district plans on obtaining a certificate of participation, which is a form of lease that allows the district to borrow money against anticipated income. The district also postponed the construction of five classrooms at Foothill and seven classrooms at Argonaut. The strategy was decided during the board meeting on Feb. 7.
Mary Gardner, the district's superintendent, maintains that the shortfall is approximately $5 million--money it expected from the state and didn't receive. She had previously reported that the district expected $9 million from the state and has only received $2.7 million, for a difference of more than $6 million.
Board members have postponed building these classrooms because demographics haven't been growing as fast as predicted, they said. But the buildings are still in the construction plan, which the state has approved, and they will be phased in, if they're needed, when there's more growth and more funds become available, the board said.
Although board members don't know yet where the district will get the certificates of participation, or for what amount of money, the district should receive the funds in about three months, board members said. Once the final construction bids for Argonaut and Foothill come in on Feb. 27, district administrators will know how much money they need to borrow.
District officials said they hope to pay off the financing with the $5 million in modernization funds they are waiting for from the state. Although the state has approved the district for about $1.4 million in modernization funds for Argonaut, the district has not yet received the funds. Although district officials are still waiting for the state to approve their applications for modernization funds for Foothill and Saratoga, which come to $3.6 million, they expect the state to approve them fairly soon, district business manager Ellen Tipton said. The district already has the $2.7 million it needs for eligible modernization and construction of Redwood Middle School and the new two-story addition to Saratoga School.
If voters pass the next State Facilities Bond for education in June 2002, the district can use the bond money to repay the funds it gets from the certificate of participation. If voters don't pass the bond, the district will pay back the certificate with other available funds, such as developer fees, deferred maintenance funds or general unrestricted funds, Tipton said.
"Due to facilities conditions in California, the district is confident that the bond will pass," Tipton said. But, even if the bond doesn't pass, Tipton added that "if worst comes to worst, we are confident we will have the funds to pay for the certificate of participation."
In addition to skyrocketing construction costs, the shortfall occurred because the state ran out of money, the district said. The construction project, which covers all four schools in the district, has been funded by a $40 million Measure D local bond that was passed in a June 1997 special election and state matching funds. But within two years, the state money was gone, Tipton said.
According to Carol Shellenberger, a special assistant in the state office of public school construction, state money was never a guarantee because by the time the district submitted a complete, approved plan to the office, the funds from Proposition 1A, the school facilities project, were gone. The office decided to fund all projects it received by April 5, 2000, and the district submitted its complete plans in May, Shellenberger said.
But board members argue that it wasn't that their request wasn't on time, it was that an unexpected problem with the foundation at Saratoga School caused the project to go over budget. The district didn't know there was no steel reinforcement in the foundation until December 1999, when construction workers broke down the wall of the foundation to attach the foundation to the new building.
At Saratoga School, construction workers will probably finish the interior and stucco and the work on the foundation of the historical building in April or May, board members said. They estimate that construction on Argonaut and Foothill will begin this month and be complete by May 2002. Board members predict that Redwood Middle School, where construction workers are currently making sure that systems are working smoothly, will probably be ready next month.
"We've waited patiently, and now we're delighted," Argonaut Principal Sue Brooks said. "The only disappointment is that there are no specialty rooms planned at this point." Brooks said that she would have liked for a music room, art room and science labs to be built at Argonaut and that she hopes that these rooms will be added down the line. Currently, the art teacher carries her materials on a cart, and the school plans to have music classes in the new multipurpose room, Brooks said.
At Argonaut, the multipurpose room has been demolished and will be replaced with a larger one. Unlike the old multipurpose room, the new room will be big enough to accommodate all students during an assembly. The school will also get new work, staff, health and conference rooms and a computer lab.
The multipurpose room at Foothill, which was abated this summer, will be renovated to become a new library and multimedia center. The school will also get new multipurpose and student services support buildings and three kindergarten classrooms. At both schools, wings of classrooms are being modernized, and work is being done on the parking lots and playgrounds.
"I think it's great that we're going to be able to move forward," said Foothill Principal Helen Sullivan. "We're very excited and very pleased."
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Saratoga, California Since 1955
