Schools rate low priority in spending from new bond sale

Last weeks successful sale of $6.5 billion in state general obligation bonds will be used to pay back contractors for work completed since December and to refill the states public works loan funds.

Most of the $500 million in money set aside for new projects, however, will go to transportation and water works not school construction, administration officials said Monday.

Although there had been high hopes that some of the proceeds from the states infrastructure bond sale last week would go toward new school projects, Mike Genest, the governors director of finance, said the focus for new projects was on highways and flood control projects because of the high job multiplier.

Some of the bond proceeds, however, will go toward paying back school projects shutdown or suspended in December.

Finance officials said that they believe bonds offered through the federal stimulus package would be a better fit for schools thats the $1.4 billion in Qualified Zone Academy Bonds, $22 billion in Qualified School Construction Bonds and an unknown amount of tax-credit bonds that will be issued under the Build America Bonds.

Of the $6.5 billion in general obligation bonds sold last week, the administration has decided to use $3.8 billion to replenish the Pooled Investment Fund.

An additional $1 billion will be used to pay back agencies and contractors that spent their own money to keep exempted projects going since the state ordered a freeze on public works lending in December.

Another $1 billion will go toward infrastructure projects that have put on hold since the states budget crisis earlier this year.

Most of the $500 million for new projects will be used for such projects as the high-speed rail plan, work at state prisons and veteran affairs as well as highway and flood control projects.

Officials said that they are optimistic that the state will go back into the bond market again next month, although that decision as well as how much the state might borrow will be decided by state Treasurer Bill Lockyer in the coming weeks. more