SACRAMENTO, CA - Senator Anthony Cannella (R-Ceres) today announced that the governor has signed Senate Bill 97, a budget trailer bill to reduce the excessive interest rate on King City's school district emergency loan. 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.
"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 Sen. Cannella. "Nearly 80 percent of the district's students are either English learners, from low income homes or are foster youth. They don't deserve to be unfairly penalized when other school districts have seen their loan interest rates reduced. This bill will ensure that they aren't."
"I applaud Governor Brown for signing SB 97 and our local legislators Senators Anthony Cannella and Bill Monning, and Assemblymember Luis Alejo, who worked diligently to pass this important legislation for the South Monterey County Joint Union High School District. This means an additional $240,000 to $260,000 each year for the next 16 years will provide the students of the SMCJUHSD with greater educational opportunities," 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 percent, 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 percent.
"This is a huge victory for the students of South Monterey County," said Sen. Cannella. "The school district is paying $1.2 million annually in debt and carrying the highest interest rate any school in California has ever paid. This relief means major savings to the district and will allow it to restore programs focused on student achievement."