Governor Jerry Brown has signed a budget trailer bill to reduce the interest rate on South Monterey County High School district emergency loan. The bill includes language that will allow it to repay its debt to the state in a shorter amount of time that originally designed. School districts in Oakland, Vallejo and Contra Costa County have already benefitted from refinancing their emergency state loans.
The school district received a $13 million emergency 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 the time, the interest rate for I-Bank was at 5.44 percent. 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. Anthony Cannella, co-author of the bill. "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."