After submitting their financial advisors to an inquisition, the Santa Barbara school board approved the issuance of $55 million worth of bonds on Tuesday night. What would normally have been a pro forma decision turned into a multi-meeting discussion due to a confluence of events including intense public scrutiny the last few months of capital appreciation bonds (CABs). Because they don’t have to be paid off for decades, these bonds allow districts to limit tax rates, but they accrue gargantuan amounts of interest.
At a board meeting last month, Trustee Ed Heron delivered a peroration in which he read from several documents — emails with the district’s former business manager, campaign literature from 2010 Bond Measures Q and R, and newspaper editorials (including one he wrote) — promising taxpayers that rates would not increase. Heron, who also said he would not approve a financing scheme involving CABs, was concerned about the moral implications of ignoring those promises. It turns out, however, that without CABs, and with the real estate market having nosedived, it is impossible to sell more bonds without raising tax rates.
Other trustees pointed out that tax rates depend on some factors that a school board cannot control and that, furthermore, they also made promises to the community to repair and upgrade schools. Parents from Washington and Adams elementary schools, who have been waiting for years for new libraries, showed up to the last board meeting to make that point. In the end, Heron did not oppose the new bond sales, but he did say, “I just need to apologize to all of the supporters of the bond issue in 2010.” The board voted unanimously to sell $35 million worth of bonds for secondary schools and $20 million for elementary schools, all traditional current interest bonds.
The board also approved a list of priority projects based on discussions with principals and an audit of the system’s facilities by consulting firm Telacu. They include items like fire-alarm replacement at Monroe Elementary School and roof repairs at secondary schools. They also include the libraries. According to the Telacu report, the district’s needs total nearly $300 million.