Posted on Thu, Oct. 02, 2003
By Kara Shire
CONTRA COSTA TIMES
Gov. Gray Davis signed on Tuesday night legislation allowing the West Contra Costa school district to refinance its $18.4 million state loan, saving the school district $6 million over 15 years.
The bill, authored by Assemblywoman Loni Hancock, D-Berkeley, gives the school district a one-time chance to take advantage of low interest rates that have had homeowners refinancing mortgages in droves.
"I am very pleased that Gov. Davis has agreed with us that the state should not benefit financially on the backs of the district and the children it serves," said Fred Stewart, the state fiscal trustee charged with overseeing West Contra Costa's finances.
The legislation does not take effect immediately, which means the district will have to wait until January to refinance. But school officials still expect the move to save $409,000 a year for the life of the loan.
For West Contra Costa, a school district that endured $14 million in painful budget cuts less than six months ago, the extra money is helpful, though it adds less than 2 percent to the overall budget.
"Now, in what promises to be (another) challenging and tight budget year, we'll do our best to continue to improve student achievement while ensuring that every dollar is spent wisely," said school district Superintendent Gloria Johnston.
Lawmakers gave West Contra Costa a $29.5 million bailout loan in the early 1990s, when the district's fiscal mismanagement and budget errors landed it on the verge of bankruptcy.
It was the first such loan ever given to a school district and resulted in new legislation aimed at keeping others from the same fate.
West Contra Costa has been repaying the loan, plus 5.7 percent interest, in $1.86 million annual payments for more than a decade. With the interest rate expected to drop to 2.15 percent, those payments will be cut by $409,000.
The debt is scheduled to be cleared by 2018.