By Marsha Sutton
The San Dieguito Union High School District is poised to ask voters to approve a General Obligation bond measure this year for over $400 million — for school renovation, technology upgrades and new construction — to serve its more than 12,000 middle and high school students.
Three contracts related to the bond were discussed at the district’s Feb. 2 board meeting. The board unanimously approved agreements with the Dolinka Group of Irvine for financial advisory services and De La Rosa & Company for bond underwriting.
The third item ‚ selecting Tramutola LLC as the public information and ballot measure consulting company — was given a first reading and will be voted on at the Feb. 16 board meeting. All firms were chosen from published Requests for Proposals.
Eric Dill, SDUHSD’s associate superintendent of business services, said Dolinka is a firm with a long history with SDUHSD and “has great insight” into the community and the district. He said the district has also worked successfully with De La Rosa in the past.
He said the two firms will work together. Dolinka will analyze the district’s tax base, review and fine-tune the project list, and determine the bonding capability. The underwriter, he said, knows what the market will bear, forecasts the reaction of credit rating agencies, coordinates with Dolinka on the sizing and pricing of the bonds, prepares documentation for issuance, and markets the bonds.
“It starts with the financial advisor, but they need to be talking with the underwriter,” Dill said in an interview. “They’re going to work in tandem [but] they’re independent.”
Dolinka’s Phase 1 work will evaluate whether the district should place the bond measure on the June or November ballot. Dolinka’s cost is $20,000, payment of which is contingent upon a successful effort, Dill said.
Phase 2, at a cost of $65,000, is to provide advisory services on the issuance of the bonds if the GO bond is approved by voters. Funding for Dolinka will come from “campaign donations and future bond issues,” according to the district report.
De La Rosa will be funded by money collected from bond sales, at an unspecified amount. John Addleman, SDUHSD’s director of planning and financial management, said the price depends upon the size of the sale. The maximum amount is $7 per bond and the first issue is expected to be about $3.75 per bond, he said.
The third item involved the selection of Oakland-based Tramutola LLC, to do three phases of work: a feasibility study, a public information campaign and post-election follow-up.
In Phase 1, the feasibility study, Tramutola would gather data, assess the mood of voters, and ascertain what dollar amount and what projects would most likely garner approval. The purpose, Dill said in an interview, is to “make sure that what we are proposing to put on the ballot is something that the public will support.”
This work is necessary, he said, because “we are in uncharted territory” and the district needs to know if the public will support the measure – and if so, in what form. If there is little support, “we need to know that too,” he said.
If approved by the school board next week, the district’s Capital Facilities Fund would pay Tramutola $44,500 for Phase 1.
Phase 1 work is neutral data gathering, Dill said, while Phase 2 work, which urges support for the measure, crosses over into advocacy. Since the school district is prohibited from engaging in political campaigning, funding for Phase 2 would be provided by private donations to a campaign fund.
“When they switch over and do work that would be urging support, that’s when we have to stop,” Dill said in an email. “No public funds or resources would be used to urge passage of the bond or for any other political activity. All funds used in support of the measure would come from private donations.”
He said the district can provide informational material, but “we need to make sure that our actions don’t cross the line into political activity.”
Tramutola’s costs for Phase 2 would be $6,000 per month if the measure were placed on the November ballot and $10,000 per month if the June ballot is selected.
Should the bond be approved, Phase 3 would provide post-election updates to the public on how the money is being spent, for a cost of $12,000, to be paid by campaign donations.
Trustee John Salazar opposed Phase 1, saying, “I don’t think this is a good use of taxpayer money.”
He worried that in the polling phase the firm would be manipulating voters and would not be asking neutral questions.
“I think the bond is needed, [but] I don’t understand the political need,” said Salazar, calling Tramutola a political consulting company.
Trustee Barbara Groth disagreed, saying there is “a definite firewall” between the information-gathering phase and advocacy. “It’s not a campaign to make it happen,” she said, calling the bond “a huge project.”
She said it was good fiscal management to gather the information “so our decisions are data-driven.”
Board president Joyce Dalessandro said San Dieguito has not pursued a bond measure since 1971 when money was sought to build Torrey Pines High School.
“I think we can use all the information we can get,” Dalessandro said. “We need some assurance we have a shot at it.”
SDUHSD superintendent Ken Noah said he needed the expertise “to engage our community” and learn if this is the right time for a bond.
“I don’t see it as going out and trying to change people’s minds,” Noah said.
In an interview after the board meeting, Noah said the board has the right to dissent, “but on something this significant I think it would be important for the [full] board to be supportive.”
Salazar indicated that he supported the bond measure, only opposing Phase 1 of Tramutola’s proposal.
About $450 million is needed to provide facilities renovations, improvements and construction, according to SDUHSD. Upgrading technology is a large component of that cost.
“We’re managing to do lots of great things in the classroom right now, but we see that the way kids learn is changing,” Dill said in an email.
He said some schools are behind others in capability. For example, San Dieguito Academy in Encinitas was built in the 1930s, and many classrooms don’t have the required bandwidth or power to accommodate new technology.
Because technology can become obsolete quickly, Dill said the district wants to establish a technology endowment. “We’re going to spend a lot on technology, and that has a lifespan to it,” he said. An endowment would allow funds to be set aside, he said, so money is available “when you get to that next replacement cycle.”
Twenty-eight members of an SDUHSD long-range facilities planning task force, created in 2008, met regularly and reviewed student demographics, economic trends, housing development and other factors to determine district facilities needs for the next 50 years.
In addition to technology, proposed projects include modernization, capital improvements, demolition, expansion of existing facilities and new school construction.
Following are cost estimates for projects the bond money would fund:
Middle Schools ($94.9 million):
• Carmel Valley -- $8.9 million
• Earl Warren -- $35.1 million
• Diegueno -- $30 million
• Oak Crest -- $20.9 million
High Schools ($260.8 million):
• Canyon Crest Academy -- $35.2 million
• Torrey Pines -- $88.1 million
• San Dieguito Academy -- $76.2 million
• La Costa Canyon -- $41.3 million
• middle school in La Costa Valley -- $15.5 million
• middle school in Pacific Highlands Ranch -- $71.1 million (includes land purchase)
• Sunset/North Coast alternative schools -- $10.5 million
• District-wide technology -- $18 million
In the southern portion of the district, the total comes to about $167.3 million. In the northern portion, the total is about $168.4 million. The overall total is about $451.1 million. State funding and developer mitigation fees are expected to provide about $42.3 million, leaving the district with a bottom-line need of about $408.8 million.
Cost to taxpayers
The need for more dollars, according to the district, has been driven by the state’s severe cuts to education in recent years, as well as diminishing developer fees, deteriorating facilities and the desire to provide equity for students at all district schools.
The bond money could only be spent on school facilities and capital improvements. Districts are restricted from using the money to offset general fund operating costs.
The cost of the bond is limited to a maximum of $30 annually per $100,000 of assessed property value. After preliminary work by Dolinka, De La Rosa and Tramutola (if approved next week), pricing and terms will be determined, and the school board would then vote to adopt a resolution to place the bond measure on the ballot. A GO bond would need 55 percent of voter approval.
A telephone survey conducted in December 2010 asked 600 randomly selected registered voters in the district if they would support a $350 million bond. About 32 percent said definitely, 27 percent said probably, 21 percent said definitely not, and 11 percent said probably not. The margin for error was 4 percent.
The San Dieguito Union High School District serves over 12,000 students in grades 7 through 12 and stretches along the north county’s coastal region from Carmel Valley in the south, east to Pacific Highlands Ranch and Rancho Santa Fe, and north to the southern edge of Carlsbad.