Comments (29) | Add a comment
Sandoval proposal spurs school district debt fears
-
John Locher/Las Vegas Review-Journal
West Career and Technical Academy students huddle for warmth Tuesday during lunch. The Clark County School District opened the campus on West Charleston Boulevard near Desert Foothills Drive this school year at a cost of $83.5 million. District officials worry that their ability to pay for West CTA and other new schools might be hurt by Gov. Brian Sandoval's proposal to divert state school systems' capital reserves to their operating budgets. » Buy this photo
Tools
-
Students in a biomedical sciences class at West Career and Technical Academy work on a project Tuesday. The campus, which opened this school year on West Charleston Boulevard near Desert Foothills Drive, cost $83.5 million. Clark County School District officials worry that their ability to pay for West CTA and other new schools might be hurt by Gov. Brian Sandoval's proposal to divert state school systems' capital reserves to their operating budgets. John Locher/Las Vegas Review-Journal » Buy this photo
LAS VEGAS REVIEW-JOURNAL
Homeowners facing loan default: Move over.
The Clark County School District might be joining the ranks of those unable to make their monthly payments if legislators accept the governor's proposal to divert state school systems' capital reserves to their operating budgets.
For 2011-12, the district -- once the fastest-growing in the nation -- anticipates paying $551 million in principal and interest on its bond debt while tax revenues are expected to generate $413 million.
"Our mortgage is more than our income," said Jeff Weiler, the district's chief financial officer.
That is where capital reserves would normally come into play. Because tax revenues have fallen off during the recession, district officials were counting on using reserves of $479 million for debt service costs over the next five to seven years.
Without that cushion, the district would have to do what new GOP Gov. Brian Sandoval has vowed to avoid -- seek a tax increase, Weiler said.
Sandoval's proposal would deplete the district's capital reserves by $300 million over two years, Weiler said. That figure previously was estimated at $400 million.
District officials then probably would have to seek a debt service property tax rate increase of 10 cents a year over three years sometime within the next two years.
The rate is now 0.5534 cents per $100 of assessed value, Weiler said.
The district, which has a general operating budget of $2.1 billion, anticipates a funding shortfall of about $250 million for 2011-12 alone, an expectation based on declining tax revenues and Sandoval's proposal to reduce state support for K-12 education by 9 percent.
The governor's proposed state operating budget of $5.8 billion is 6.4 percent less than current spending.
Monday was the deadline for Nevada's 17 school districts to update the governor's office on the state of their capital reserves.
"Obviously we don't want to put (school districts) into a situation where we have to force them to raise their property tax rates to service the debt," said Andrew Clinger, the state budget director.
But Clinger thinks the Clark County district's analysis of its capital and debt service funds is off the mark. It's based on the old assumption of diverting $400 million, which is $100 million more than the current estimate of what would be needed.
Clinger also thinks the Clark County district's tax revenue projections are "more conservative than the numbers we are using."
The district is anticipating annual revenue of $377 million from its share of property, room and real estate transfer taxes between 2012 and 2017, which is down from this fiscal year's anticipated tax revenue of about $509 million.
If the real estate market rebounded significantly, raising property taxes might not be necessary, Weiler acknowledged, but analysts such as Jeremy Aguero of Applied Analysis and John Restrepo of RCG Economics think a market recovery is unlikely.
"Anemic job creation combined with massive overbuilding during the boom is not a prescription for a spike in real estate development and property values in the foreseeable future," Restrepo said.
Aguero added that the Las Vegas area has "50,000 more housing units on the market than we should" and a surplus of "office, industrial and retail space. The combination of those things suggests that pricing will remain depressed over the next few years."
As an alternative to raising property taxes, the district could refinance its bonds, extending them from 20 years to 30 years. The Clark County School Board has a policy that calls for refinancing bonds whenever interest rates are low, but in this case, the district would be refinancing at a higher rate.
"It would be like if you extended your mortgage, it would cost you more in interest," Weiler said. "Your interest rate would go up. It's the same idea. Financially, it's not the prudent thing to do."
Because state law is structured to prevent school districts from defaulting on bond debt, a tax increase in this case would not require approval from voters or the county, Weiler said.
The School Board would have to vote to seek the increase, and the district would have to document the need for it with the Nevada Department of Taxation.
The district, the fifth-largest school system in the nation, is paying off a bond program originally approved by the voters in 1998. It generated $4.9 billion to build 101 new schools and 11 replacement schools. It also paid for $1.6 billion in renovations to existing facilities.
Officials for Clark and Washoe school districts worry that using capital funds for operating expenses will impair their ability to gain public support for future bond programs because voters might doubt whether the money will be used for building schools.
Gary Kraemer, the chief financial officer for Washoe County School District, said its capital reserves could be depleted by $25 million.
Kraemer said the district would not be put in the position of having to raise taxes, but the loss of $25 million would hurt its ability to refinance and issue new bonds.
He said Washoe County is being forced to choose between "construction jobs" or children's education.
Contact reporter James Haug at jhaug@reviewjournal.com or 702-374-7917.
Comments
Terms & Conditions
The following comments are provided by readers and are the sole responsiblity of the authors. The Review-Journal does not review comments before publication nor guarantee their accuracy. By publishing a comment here you agree to abide by the comment policy. If you see a comment that violates the policy, please use the Report Abuse button.
Some comments may not display immediately due to an automatic filter. These comments will be reviewed within 24 hours. Please do not submit a comment more than once.
Note: Comments made by reporters and editors of the Las Vegas Review-Journal are presented with a yellow background.
RSS
Twitter
Facebook
Worried about the future fate of our schools? Blame it on Terri Jansion, Larry Mason, Sheila Moulton and Mary Beth Scow. These are the idiotic, gutless, idea-less, know nothing morons who ran out school district in the gutter for so many years. They followed the lead of Carlos Garcia and Walt Rulffes like dumb sheep following the Judas goat to slaughter. These morons are the ones that greatly enlarged and enhanced the central school administration and loaded the district with former administrators rehired as consultants, counselors, mentors, experts, specialists, managers, directors of this-n-that, and an variety of worthless description-less, unjustifiable administrative positions. Without independent thinking and investigations of their own they approved carte blanche these appointments from two superintendents. All the while it was about power and position of each Trustee. They refused to allow open public discussion and descent on the least trivial matter to say nothing about much more serious matters. We the taxpayers of the CCSD are indebted to these morons who believe each to be capable of replacing God as well as to make decisions without consent or discussion of those who voted them into office. They have proven to be so dumb as to believe that they were smart enough to lead this district.
How about a new motto Governor? Maybe 'No More Illegal’s in Nevada" would be nice to hear from you. You can save the state over $1 billion dollars governor...that is $1,000,000,000.00 dollars that we are giving away to these parasites. You want to destroy the public education that Nevada has but you are not very concerned about the drain on our state economy from the illegal trespasser invading this state every day. Why, Governor? Why? To paraphrase Bernard Shaw, You see things as they are and say why? I see things as they never were and ask why not? Why not put the pinch on these leeches from Mexico and other foreign countries that have no legal right to be here?
How about a new motto Governor? Maybe 'No More Illegals in Nevada" would be nice to hear from you. You can save the state over $1 billion dollars governor...that is $1,000,000,000.00 dollars that we are giving away to these parasites. You want to destroy the public education that Nevada has but you are not very concerned about the drain on our state economy from the illegal trespasser invading this state every day. Why, Governor? Why? To paraphrase Bernard Shaw, You see things as they are and say why? I see things as they never were and ask why not? Why not put the pinch on these leeches from Mexico and other foreign countries who have no legal right to be here?
Maybe this will teach voters NEVER to approve another bond issue. Public education is all about lucrative fees for municipal bond underwriters -- big donors all.
You know, taxes carrying over to the next biennium are expected to generate ~$4.2B. The Republicrat, BIG Government consensus wants to spend all of that PLUS another $1.6B++. In fact the gang is looking to borrow and steal (increase future taxes) to do so.
Why not raise the taxes on Weiler's house? In January 2009 I predicted this at the Debt Management Commission meeting. At that time Weiler insisted that CCSD could sell another $250 million of bonds and still avoid raising taxes. Commissioner Sisolack disbelieved him and CCSD was (only) allowed to sell another $100 M. The idiot trustees then used $50M of that to build 3 unneeded elementary schools. Why not report that the CCSD bond oversight committee decided to vote for an emergency expenditure of $31 million to fast track a new CTA school. The BOC was told that the delivery method would cost millions more but CCSD staff wanted to get the money spent as fast as they could. This delivery / bid method is called CMAR by the head of CCSD facilities but is actually cost plus because incompetent management at CCSD can never make up their minds what they want. So it is a no risk cost plus job for the contractor. CCSD has no plans to change or improve this end of the donkey and the same thing keeps coming out.
Sandoval’s plan for education pledges “no new taxes” yet he says absolutely nothing about the billions of state dollars that are wasted on illegal, trespassing aliens from south of our borders. What is he going to do to stop the drain of our tax dollars to serve these illegal’s ;non of whom have any legal right being here and for whom there is no legal justification to support them and their continual drain upon our Social Security, Medicare, Medicaid, medical facilities like UMC, health care facilities, welfare support services, schools to say nothing of our jail and prisons in this state. He was supported by the Chamber of Commerce who wants open borders and unlimited access to all social services by undocumented workers because of their drive to garner cheaper labor for their supporting members. The COC is trying desperately to kill public employee retirement guarantees, kill public education and force us into becoming a third rate impoverished nation all in the name of greed and big profits. How will Sandoval save the billions going to the Mexico from Nevada? Let us hear of your plan for this Governor! Lead from the front and show us how to really save big dollars before you kill our public education K thru College. Your mantra and motto should be “No More Illegals! Not one dollar more for Illegals.”
sandoval was elected to GUT the unions, and state workers. he is doing that nicely.
71% of all Vegas homes are underwater. odd how they pretend not to lower prop taxes, if I lived in Vegas I would be pretty upset about that.
@BURKIT Oh yea, lazy kids and kids who speak no english have NOTHING to do with it.
Let's see. The money's in the bank now. The school district is going to need it to cover their debts (hence why it's in reserve in the first place) and Sandoval wants to take it away. To borrow a phrase, that's robbing Peter to pay Paul. And that is a STUPID way to do your accounting!
Sandoval makes a promise he can not keep unless he makes liars out of the trustees who help pass those bonds. The voters of counties who have voted for bonds in the recent past PROMISED their constituents that the funds would NOT be used for operations. State Senator Settlemeyer YOU HELPED PASS A BOND IN DOUGLAS COUNTY. How could you even be remotely favorable of using capital improvement money for operations? Now you want to help change the law that prohibits using those funds, making it virtually impossible for future boards to pass bonds when needed. Question? Who did you lie to, the voters in Douglas County or the voters during the last election? "Oh no, fool me once" It will never be forgotten.