Small rural LEA needs waiver to finance improvements
(Calif.) In a clear sign that California’s economic recovery hasn’t reached all communities, a small elementary school district deep in the Central Valley has requested a waiver from the education code restricting borrowing.
Pixley Union Elementary District, which serves slightly more than 1,100 K-8 students at two school sites, needs a new gymnasium and an upgrade to a cafeteria and some classrooms. Voters approved $7.8 million in bonds two years ago, of which they still have $2.1 million available.
But property values in Tulare County have not risen as they have in many other parts of the state. As a result, selling the remaining bonds would bring Pixley’s indebtedness beyond the state limit of 1.25 percent of the taxable property valuation inside the district boundaries.
The Pixley board had the choice of trimming the capital improvement project, delaying the program altogether and hoping values rebound, or seeking more expensive financing options.
A fourth alternative, which they will bring forward next week, is to seek a waiver from the borrowing limit from the California State Board of Education–a request that was granted many times to other districts during the depth of the recession.
Pixley, which is located about halfway between Fresno and Bakersfield on state Highway 99, was like most of the Central Valley battered by the housing meltdown and subsequent recession. Although property values have rebounded somewhat since 2012, the drought has taken a toll on the region’s agricultural industry, putting many farms under pressure and forcing some to fallow their land or get out altogether.
Unemployment in Tulare County was 10.2 percent in September–almost double the statewide rate of 5.3 percent during the same period.
The waiver Pixley is asking for has been recommended for approval by the California Department of Education with conditions.
As proposed, the district would be allowed to raise its debt limit to 1.4 percent, allowing for the sale of the $2.1 million in bonds.
The CDE would limit the period that the district be allowed to carry the higher amount of debt through July, 2020.
Prior to 2001, local educational agencies were required to obtain a two-thirds majority for the approval of general obligation bonds. Voters passed Proposition 39 in November, 2000, which allowed school bonds to win passage with 55 percent of the vote.
LEAs utilizing the Prop. 39 option, however, were required to keep their tax rate imposed on property owners to finance the borrowing to $30 per $100,000 of taxable property.