Measures N & G: Savanna's School Bonds
We are grateful to the Savanna School District community for its support of Measure N, which passed with an outstanding 72.5% approval rate at the November 4, 2008 election as well as Measure G, passed by the voters in June 2012. The passage of these two General Obligation bonds will fund capital improvements at each of our four elementary schools and will affect our children's education and our community for generations to come. The Savanna School District Board of Trustees (Board) determined specific projects to be funded by Measure N and Measure G bond authorizations; copies of those projects can be found on the School Boundaries section of this web site.
Savanna School District’s bond programs authorized the sale of bonds to modernize all of our schools. We're extremely proud that District received an A+ rating from Standard & Poors on each of our bond issuances, allowing the District to issue bonds at lower interest rates. The following information is provided to help our community understand some of the financing structures used for our construction bonds.
There are two types of bonds that the District is utilizing: Current Interest Bonds and Capital Appreciation Bonds; both are important tools for school districts to achieve their funding goals. Capital Appreciation Bonds (“CABs") are long-term issues with interest compounded over time and due at maturity. While they typically have a higher interest rate because the investor must wait until maturity for the proceeds, they can be an essential element when utilized as a component of an overall funding structure. CABs have been widely used in financing school facilities over the past decade. According to the State Treasurer’s office, in 2012 85% of California school district bond issues have used some component of CABs when issuing debt for voter approved projects.
Savanna School District passed two general obligation bond authorizations (Measure N on November 4, 2008 and Measure G on June 5, 2012). These are the only two local general obligation bonds that Savanna has ever taken before our community. These bond issuances authorized the District to issue up to the stated amounts in general obligation bonds over time to fund its long-term facilities needs. Like other districts, we timed each bond sale in a chronology that ensured smooth financing as we addressed the District’s long-term facilities needs.
By utilizing CABs in the District’s bond structure, we’ve been able to achieve approximately 40% more proceeds for District facilities authorized under each of the Measures because these funds gave us the capital we needed to access state and federal money that required a dollar match. Without the CABS, our modernization efforts would have been curtailed by 40%.
However, in recent news articles, the focus has been only on the CAB portions of the bond program, not the overall cost of the program which truly represents the cost to the taxpayer. To date, the District has issued $19,609,784.97 under Measure N with a 4.55 repayment ratio (that’s $4.55 interest for every dollar sold). The District has also issued $22,608,945.40 under Measure G with an overall 3.65 repayment ratio. These bond issuances include a variety of maturity dates, interest rates, and current interest bonds as well as capital appreciation bonds; 70% of the said bonds are callable, meaning that the District retains the ability to refinance or restructure these in future years. Highlighting components of a single issuance within the overall bond program leads to faulty assumptions regarding rates.
The use of these bonds has allowed us to continue our modernization projects while construction costs remain low, providing much-needed modernized facilities for our students and staff. Without these funds, which have been approved by voters, we would be unable to address significant and required renovations and repairs that aging buildings need. The CABs will be paid annually and mature at various dates over the next 39 years, at which time all other bonded indebtedness will be paid. We do not face a balloon payment.
It is important that community involvement and oversight continue as our schools are improved and renovated. Savanna School District has nine community members who are currently serving on the District's Measure N independent Citizens' Oversight Committee as well as the Measure G independent Citizens' Oversight Committee. The mission of the independent Citizens' Oversight Committee is to oversee the expenditure of bond money for the repair, modernization and improvement of our schools. The Citizens' Oversight Committee is responsible for communicating its findings to the Board and the public in order to help ensure that school bonds are utilized as the District voters authorized, and that bond-funded projects are completed in a cost-effective manner. The District would point out that the Citizens' Oversight Committee does not approve projects or the allocated funding; its role is simply to assure funds are expended appropriately. This is a volunteer position and, by law, no compensation to the members of the Citizens' Oversight Committee can be provided.
The members of the Citizens' Oversight Committee include the following:
- David Appling, member representing a bona fide taxpayer association
- Carrie Hernandez, member as a parent of a child enrolled in the District
- Wendy Labasan, member at-large
- Jenny Lacayo, member at-large
- Meredyth McClure, member representing a senior citizens organization
- James Pai, member representing the business community within the District
- Ken Pinnegar, member at-large
- Mike Thoman, member at-large
Agendas for upcoming meetings as well as agendas, minutes, and materials presented at prior meetings are available on the School Bond Materials link on this web site. Agendas will be posted on this site 72 hours in advance of each regularly scheduled meeting.