The Los Angeles Unified School District (LAUSD) today announced that the current economic crisis is not only impacting the General Fund, but the District's Bond Program as well.
Like most homes in Southern California, the assessed value of property within LAUSD is also declining, and that limits the ability to sell local bonds over the next few years.
"No one is untouched by this economic crisis," LAUSD Superintendent Ramon C. Cortines said. "We have hit a hurdle, but still we have a plan in place to deliver on the District's commitment to enable every student to attend a neighborhood school operating on the traditional, September-June calendar instead of a year-round schedule by 2012."
In addition, the State has frozen voter-approved bond funds for the construction and modernization of schools for an indefinite period of time. As a result, by Fall 2009, LAUSD anticipates the State will owe $1 Billion of construction matching funds to the District.
Despite California's fiscal emergency and the freeze on State matching funds, LAUSD has been able to continue execution of its Bond Program because of its ability to sell local bonds. In February, the District sold $950 million worth of local bonds at a 4.86 percent average interest rate. This has enabled the District to remain on schedule to deliver the new schools and school repairs promised in the current Bond Program, while employing approximately 10,000 workers daily.
"The current Bond Program will be completed for the students of Los Angeles," LAUSD Chief Facilities Executive Guy Mehula said. "In addition, we are exploring every funding and financing opportunity that would enable the District to undertake additional projects at our aging and deteriorating schools as early as possible, as well as creating much needed jobs."
Given the impact of the economy on the Bond Program, the District's Facilities Services Division no longer plans to recommend to the Board of Education later this month a plan to fund additional projects valued at nearly $500 million with savings from the current Bond Program. Discussions on the priorities for the first several million dollars of the Measure Q Bond Program, LAUSD's most recent Bond Measure, have also been postponed. These plans will be put on hold until the State's economic situation improves.
Construction bond funds are prohibited from being spent on teacher salaries and other LAUSD operating expenses by the State Constitution. These Bond Program issues have no direct impact on the District's funding or budget for school operations.
As circumstances warrant, the District will continue to provide updates to the Board of Education, the School Construction Bond Citizens' Oversight Committee and the public on this important issue.
