Senator Anthony Cannella (R-Ceres) today announced that legislation has been presented to reduce the excessive interest rate on King City’s school district emergency loan. The budget trailer bill, SB 97, includes language that will help the school district perform on a level playing field and allow it to emerge out of the cycle of debt in a reasonable time frame. School districts in Oakland, Vallejo and Contra Costa County have already benefitted from refinancing their emergency state loans. The bill passed the Senate unanimously.
“I am pleased that we were able to find a way to provide economic relief for South Monterey County Joint Union High School District,” said Senator Cannella. “Nearly 80 percent of the district’s students are either English learners, from low income homes, or are foster youth. There is no reason that they should be unfairly penalized when other school districts have seen their loan interest rates reduced.”
“I applaud Senator Cannella for pursuing this issue through the budget this year. Senator Cannella and I have worked together on this effort over the past three years. I introduced legislation last year to lower the interest rate of the emergency loan and this will now save the district hundreds of thousands of dollars each year,” says Assemblymember Luis Alejo (D-Salinas).
“Thanks to the diligent work of our local legislators, the legislative solution reached will allow the district to channel $240,000 to $260,000 annually directly to the high school classrooms. It is such good news that together we have been able to achieve relief as soon as new money was available,” said Monterey County Superintendent of Schools Dr. Nancy Kotowski.
The school district received an emergency state loan in 2009 as it was projected to be fiscally insolvent. By law, the school district was forced to finance with the state-run California Infrastructure and Economic Development Bank (I-Bank). At time the interest rate for I-Bank was at 5.44%, causing the school to be in a less desirable fiscal situation. In California, only three other school districts have emergency loans and their interest rates are below 2%.
“This is a huge victory for our community in South Monterey County,” said Daniel Moirao, state administrator at South Monterey County Joint Union High School District. “Our school district is currently paying $1.2 million annually in debt. In fact, we pay 5.44% in interest, the highest interest any school in California has ever paid. This relief results in major savings to our district and will allow us to restore programs focused on student achievement.”