Sale of West Covina Schools Has Hitch: Who Gets Money?

School district officials hoped their request was in the clear. A friendly staff report, extensive groundwork and sympathetic members on the state Allocations Board indicated that it was a shoo-in.

But then a consultant to the board noticed a hitch. And that was enough to kill the request, possibly denying the financially pinched district more than $3 million in funds needed for next year.

School officials had sought to use income from the sale of two closed schools to flesh out the district’s lean budget, fix leaky roofs at West Covina High School and three elementary schools, and help repay a $3.3-million loan from the state. But the consultant recalled a state law written in the 1950s, which specified that money from the sale of schools had to be used to repay the state for construction of the schools.

The district will make $11.5 million from the sale of the Tonopah and El Dorado school sites.

“We were ready to re-roof the high school and the three elementary schools and then someone said, ‘You can’t do that,’ ” said H. C. Tanner, the district’s assistant superintendent for business services. “It appears they are right.”

School officials are now looking to state Sen. William Campbell (R-Hacienda Heights) to steer a measure through the Legislature to allow the district to use some of the funds for maintenance and operating expenses. Campbell, who represents West Covina, is chairman of the Joint Legislative Budget Committee and engineered the $3.3-million loan that saved the district from bankruptcy in the last school year.

The district, in an effort to cut costs and avoid another deficit, moved in February to close Hollencrest and Willowood Intermediate Schools, Cortez Elementary School and Edgewood High School. Edgewood will become a middle school and West Covina High School will become the district’s only high school.

The first installment on the bailout loan is due this year. The $982,000 payment is less than the $1.5 million scheduled under the loan legislation because state Supt. of Public Instruction Bill Honig granted a district request to ease the first-year burden.

Tom Burns, an aide to Campbell, said the senator’s staff is studying the problem and will probably decide this week how to try to circumvent the 1950s law.

“At this point, we’re still examining our alternatives,” Burns said. “But the only (alternative) we know will work would be to carry legislation specific to West Covina Unified.”

Tonopah and El Dorado were built during the state Schools Construction Program of the 1950s, under which the state loaned districts funds to build schools rather than issue general obligation bonds, Tanner said.

He said the district paid about $1.5 million this year and will pay equal installments in each of the next two years on the construction loan.

The specific requirements of the construction program did not come to light until last week, when district officials were scheduled to testify before the Allocations Board.

“What they discovered, much to the surprise of both the Allocations Board and the district, was that the late ‘50s bond act said that no matter what you do, you can’t sell the property and put it into the general fund,” Burns said.

He estimated that there are only a handful of school districts in the state that have outstanding debts on schools built under the program. None have encountered financial difficulties similar to West Covina’s, he said.

Campbell may attempt to attach the West Covina measure to an existing bill, Burns said. New legislation would be tied up for months, slowly winding its way through committees, he said.

Strategy Used Before

The same strategy was used with the original bailout bill, which was attached to legislation carried by Sen. Robert Presley, (D-Riverside), which sought a similar loan for an elementary school district in Riverside.

Tanner said he hopes an amendment can be approved before July 1, when the district is to receive $3 million from the sale of the El Dorado site.

The district will receive the first of three $660,000 installments from the $8.5-million Tonopah sale before next May. At the end of four years, the balance and interest will be due.

“Essentially, what we would propose (to the Legislature) is that a ‘bankrupt school district’ be allowed to override that requirement and be allowed to use the money for these capital improvements and the general fund,” Tanner said.

The $55,000 for roof repairs is not included in the $27-million budget the district is considering for the 1988-89 school year, Tanner said. Two inspections at West Covina High School--one by a fact-finding group opposed to the consolidation plans and another by an inspector from the State Architect’s Office--have disclosed extensive water damage.

Repairs Necessary

Years of substandard maintenance and more extensive use of the campus under the consolidation plan at West Covina High make the repairs a necessity for next year, Tanner said.

Even with Campbell’s support, Tanner said he was only guardedly optimistic that legislation would solve the district’s problems.

“It depends upon the feeling of the other senators and assemblymen,” he said. “They might say that school district down there needs to be taught a lesson. That they have had bad management.”