Phil Stover is the guy who has to put the San Diego Unified School District board’s decisions to work. He’s also the guy who has to answer the phone when Wall Street calls worried that a board members thinks the district is already insolvent.
Last week, school board Vice President Scott Barnett announced that he believes the district is insolvent, since it doesn’t have enough money to pay next year’s bills without laying off more than 1,600 staff. Barnett called on his colleagues on the board to rescind those layoffs, a move that would trigger insolvency and result in a takeover of the district by a state-appointed administrator.
Since the announcement, Stover said his phone has been ringing off the hook.
“Within an hour, underwriters and financial analysts knew about it, and we’ve spent hours on phone calls trying to hold on to our ability to get bonds at the same interest rate we had budgeted,” Stover told me this morning.
“We’re getting pummeled,” he added.
San Diego Unified borrows hundreds of millions of dollars every year by selling bonds. In recent years, the district has had to increase its borrowing because the state hasn’t sent schools their money on time. Instead, the state has written school districts IOUs, forcing districts to borrow from Wall Street while they wait for the state to make good on its payments.
Next month, the district plans to borrow about $230 million. District staffers are in the process of putting together the bonds that they will sell to raise that money.
Board President John Lee Evans said he will be putting a motion on next week’s board agenda to ask his colleagues to publicly commit to maintaining control of the district and avoiding insolvency. Evans basically wants the three other board members to send a message to the public and Wall Street that they will do everything they can to keep the district solvent.
Next Tuesday may be too late, however.
Stover said he should know within a week whether the district will still get the same interest rate for its $230 million loan.
If it can’t, the district could end up getting charged an additional $250,000 or more in interest to borrow the money, Stover said.
Will Carless is an investigative reporter at Voice of San Diego currently focused on local education. You can reach him at will.carless@voiceofsandiego.org or 619.550.5670.
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