DUSD considers multi-million dollar bond options

Dinuba Unified School District reviews funding options to address improvements across district facilities through proposed general obligation bond

The Dinuba Unified School District Board of Trustees discusses current events at a meeting June 13, 2024. (Serena Bettis)
Serena Bettis
Published June 25, 2024  • 
10:30 am

DINUBA – Dinuba Unified School District (DUSD) is weighing its options for a general obligation bond that would fund millions of dollars in school site improvements over the next few decades. 

After a survey conducted last fall revealed that local voters would likely be in favor of a bond if the district brought it to the November 2024 election, the DUSD Board of Trustees revisited the topic at its June 13 meeting. Trustees reminded the public that even though the district received more than $100 million from the state to build the new high school, other facilities still need attention.

“We built the new high school, and the community should be — and will be — very, very proud of that, but there’s still a lot of other things that are incurring costs later; the district would like to be able to get those,” DUSD Board President Bev Keel-Worrell said. 

General obligation bonds are a form of voter-approved municipal financing that allow school districts to enter into long-term debt agreements that fund major capital improvement projects. The school district then levies a property tax within the district’s boundaries and uses that tax as the source of repayment on the bond. 

Jenny Bruner, vice president of financial advisor Keygent LLC, walked the board through two different financing mechanisms DUSD could use for its bond. Both options would cost taxpayers the same annual amount but would assume different interest and growth rates over the term of the bond, which would impact the total amount the district can access.

Regardless of the total amount raised by the bond, it would levy a rate of 6 cents per $100 in assessed property value, the maximum amount allowed under California Proposition 39. 

Put another way, the bond would cost property owners $60 per $100,000 of assessed property value, which — based on the 2023-24 median assessed value of $174,982 for a single-family home in Dinuba — would add approximately $105 to a homeowner’s property tax bill, Bruner said.

As assessed value grows over time, the district’s repayment source grows, which allows it to either pay back a larger amount within the same time frame, or pay back a smaller amount in a shorter time frame.

“So the more your assessed valuation grows, the lower your existing tax rates are, because your source of repayment is growing,” Bruner said. “So we look to these long-term averages when you make any assumption going forward about a future bond.”

Bond options

Unified school districts are allowed to have general obligation bond debt, including new and previous bonds, that total up to 2.5% of the assessed value of taxable property within the district; DUSD’s assessed value in fiscal year 2023-24 was approximately $2.2 billion. 

Taking into account the growth rate of the district’s assessed valuation of 4.6% to 4.7% over 10-, 20- and 30-year averages, as well as current interest rates, Bruner proposed a more conservative option that assumes less growth and higher interest rates, and a less conservative option that assumes more growth and lower interest rates.

The first option would propose a $35 million bond — the same one put forward to voters in the survey last year — that would levy $2.5 million annually. This option assumes a more conservative assessed value growth of 4% annually and higher interest rates between 5% and 5.75%. 

The second option proposed a $42 million bond that would levy $2.8 million annually. This option assumes a slightly less conservative assessed value growth of 4.25% and lower interest rates between 4.75% and 5%. 

Bruner emphasized that the second scenario, while using less conservative assumptions, still has some “buffer” built into it to protect the district and is not considered aggressive. 

DUSD trustees did not comment on which bond option they preferred, but did discuss that the bond, if passed, will raise funds for multiple district facilities as well as the final stages of the new high school campus. The proposed bond measure will include a list of facility improvements that it would fund, which the district must abide by under state law. 

Included on the list are goals to ensure water fountains have clean drinking water, upgrade security and fire systems, repair and upgrade heating, ventilation and air conditioning systems, remove hazardous materials from older schools, upgrade and increase special education classrooms and more. 

“Of course, we don’t like to hear about taxes or paying more taxes, but the benefit of a bond, a local bond, is the accountability,” Trustee Mary Villarreal said. “We will be held accountable, and you could actually see where the money is going into.” 

If the bond is placed on the ballot and passes, the district will form a bond oversight committee consisting of residents within the district. 

The DUSD board plans to vote on a resolution that would place either the $35 million bond or the $42 million bond on the November ballot at its meeting June 27.

Serena Bettis
General Assignment Reporter