College District OKs $3-Million Loan Plan

Citing looming state budget cuts and a poor economy, the Rancho Santiago Community College District Board of Trustees has approved a preliminary plan to borrow $3 million.

On Monday, the board unanimously approved the issuance of certificates of participation, which would immediately raise $3 million to be repaid over five years. The money would be used to buy educational equipment, portable classrooms and pay off the district’s computer system.

Certificates of participation provide a way for public organizations to incur debt without approval from voters. Investors lend money to a public entity for use on capital projects and are repaid with interest over five to seven years, according to a report to the board.

The move would enable the district to refinance the $1.8 million it still owes on its 1990 computer system, saving more than $100,000 on interest. It would also allow the district to purchase 13 portable classrooms for its Orange campus and buy $400,000 worth of educational equipment, said Stephen G. Garcia, vice chancellor of business and fiscal services.

Chancellor Vivian Blevins told the board: “It’s quite a lot to ask to go into debt this way, but we always have to look at the service to students.”

Board member Charles W. (Pete) Maddox agreed. “To think of going out and borrowing money for the first time in district history, even with this economy like this, is a tough decision to lay on people,” he said.

Garcia said Tuesday that “the idea behind it is to use somebody else’s money and hold onto ours. The advantages far outweigh the disadvantages. It allows you to purchase things immediately instead of waiting a number of years. In view of the fiscal state of the state and the nation as a whole, we have to use whatever means are most beneficial to the institution.”

The board will decide whether to grant final approval to the plan in the next few months, following extensive studies of the district’s financial health and creation of a specific list of projects to be funded by the certificates of participation.

The district has campuses in Santa Ana and Orange, and also offers classes at Centennial Regional Park in Santa Ana and other locations.