SAB Oks $240 Million in Deferred Maintenance; New Bond Sale Adds $541 Million to School Projects

SAB OKs $240 million in deferred maintenance; new bond sale adds $541 million to school projects By Tom Chorneau Thursday, April 23, 2009

In action aimed at closing the book on a complex deferred maintenance apportionment this spring, the State Allocation Board approved Wednesday final authorization of $222 million in basic grants and $18.2 million in hardship awards.

Meanwhile, State Treasurer Bill Lockyer also announced Wednesday the sale of nearly $7 billion in long-term, general obligation bonds, of which about $541 million has been earmarked for new and ongoing school projects.

A list of the projects expected to be funded by the new bond sale is included below.

The allocation board’s action on deferred maintenance comes as welcome news to districts that have been waiting for the money since February when the allocation board initially moved to distribute the deferred maintenance money. A conflict soon surfaced, however, between the allocation board’s hardship apportionments and the recently adopted state budget that could not be finally resolved until this month’s meeting.

The deferred maintenance funding is one of 40 categorical programs that the Legislature and Gov. Arnold Schwarzenegger granted flexibility spending options as part of the new budget agreement and therefore can be spent for any educational purpose.

A complete list of the basic grants and hardship awards can be viewed by visiting the allocation board’s website listed below.

A total of $240.5 million was available for distribution this year, which represents a split of 92.4 percent to basic grants funded proportionally to all participating districts and 7.6 percent for hardship awards.

Meanwhile, the treasurer announced the largest general obligation bond sale in state history, most of it issued under the ‘Build America Bonds’ program created as part of the federal stimulus package.

When added with proceeds from a $6.5 billion bond sale last month, the state’s public works finance pool has been brought back to life following a closure in December forced by the state’s budget impasse and cash shortage.

The sale is especially good news for school facility managers because the allocation board is expecting to receive $541 million.

“We just sold so many bonds, whether you are tenth in line or 110 won’t matter anymore,” said Tom Sheehy, chief deputy director of finance and a member of the state allocation board.

About 5,000 public works projects around the state were stalled by the loan pool closure, some of which were school projects.

Under the federal bond program, state and local governments can sell taxable bonds but use the proceeds to fund public projects that typically are funded with tax-exempt financing. The federal government pays issuers a cash subsidy equal to 35 percent of the interest costs.

To see a list of the deferred maintenance awards by district visit: http://www.documents.dgs.ca.gov/opsc/SAB_Agenda_Items/2009-04/DMP.pdf

To view a list of the new or ongoing education projects expected to receive funding out of Wednesday’s bond sale click below: