County Proposes $12 Million Loan to Embattled Sweetwater
San Diego’s County Office of Education is proposing a $12 million loan to help the Sweetwater Union High School District meet its financial obligations.
In an ongoing effort to stabilize Sweetwater Union High School District’s finances, which have been teetering for months, San Diego’s County of Office of Education is proposing a $12 million loan to help the district meet its financial obligations.
The proposed loan comes as students are beginning to feel the pinch of $30 million in overspending by the district, first revealed last September by Voice of San Diego. High school seniors will not receive laptops this school year, as NBC San Diego reported, and free bus routes have been slashed at San Ysidro High School, which has a majority of low-income students.
Students at San Ysidro, who returned to school Monday, are planning a walkout Friday and demanding district leaders be held accountable for their financial missteps.
“They are making us responsible for losing the money, but they should be paying for their mistakes not us,” said Paul Downey, a senior at San Ysidro during a call with four student activists. “We want the world to know it wasn’t us who lost the money but them.”
“We want the superintendent to put ‘Students First’ the way they say they do in the district slogan,” said Kimberly Gonzalez, a junior. “They say equity is their main value, but we’re not receiving that.”
County staff are recommending the $12 million loan to help Sweetwater get caught up on some of its previous borrowing. County trustees will make a final decision on whether to make the $12 million available at a board meeting Wednesday.
In the past, when the district was short on cash it would borrow from its building fund, an account funded by a construction tax. The building fund is only supposed to pay for school construction, but districts can borrow from it to plug spending gaps as long as they pay it back quickly. In this case, Sweetwater hasn’t been paying the money back quickly enough.
On July 1, the district drifted out of compliance with state regulations, which stipulate that building fund loans be paid back by the end of the school year. The district still owes $12 million to its building fund, also known as a Mello-Roos fund, that it borrowed last year, but hasn’t been able to pay back. The county loan would help the district come into compliance.
But district spokesman Manny Rubio said he isn’t sure Sweetwater will take the loan, should the county make it available. “We’re weighing our options right now in terms of what makes the most sense for us,” he said.
The district will have to pay interest on the loan if it borrows from the county. But Sweetwater will be paying interest back to its own building fund if it keeps the loan on the building fund books, Rubio said.
Rubio acknowledged that rejecting the county’s loan would mean staying out of compliance with the state regulations.
“It’s just the right thing to do,” said Michael Simonson, deputy superintendent of finance for the County Office of Education. “We currently have the ability to cure their violation and we’re more than happy to help them do so.”
County and district officials have had a tumultuous relationship since Sweetwater’s financial woes were revealed. The county office, which has some oversight authority over school districts in San Diego, appointed a fiscal adviser, who can overturn financial decisions made by the district’s elected board. Sweetwater officials have argued county officials don’t fully understand the district’s true needs.
Sweetwater’s controversial relationship to its building fund goes back several years. The amount of money it owed to its building fund skyrocketed between 2017 and 2019. Auditors from a statewide watchdog agency noted the over-reliance on borrowing from the building fund was likely the only thing standing between Sweetwater and an emergency state loan. By the end of the year, however, Sweetwater officials were able to pay more money back into the fund than they originally expected.
Sweetwater board members have expressed an interest in moving away from borrowing against the district’s building fund, which some community members have railed against for several years. Despite the interest, district officials just can’t quit the fund. Within recent weeks, they borrowed more than $20 million to help with beginning-of-the-year expenses.
Simonson, the county official, said he’s “concerned” about the district borrowing money from a fund that is already out of compliance with state education code.
Rubio said it’s normal for districts, especially year-round districts like Sweetwater, to need funds at the beginning of the year as they wait for state money to come in.
Regardless of the financial solution, district students are crying out to be heard and have their needs met. Both Downey and Gonzalez say their bus route was eliminated and now they are having to wake up two to three hours earlier than last year, just to find a way to get to school.
“For Friday we are encouraging other students to walk out with us so the district will pay attention to us,” said Alexis Romo, a third student. “Because, obviously at this point they aren’t.”