IRVINE : School May Be Used to Back Bond Sale

The Irvine Unified School District board tonight will consider selling a middle school in a lease-back arrangement intended to help make up for losses from the county bankruptcy.

But the deed for Rancho San Joaquin Middle School would not travel far if district trustees approve the plan.

Legal title for the 760-student school would be transferred to the district’s Education Financing Corp., a legal entity board members are expected to create tonight.

School district finance experts plan to use the school as collateral to back the sale of $8 million worth of fixed-asset bonds, called certificates of participation.

Irvine Unified had $96 million--more than any other school district--in the Orange County investment pool, which collapsed late last year. The county subsequently filed for bankruptcy protection.

“The bankruptcy is not going to be behind us because of this,” school board President Tom Burnham said. “This is going to cost this district about $1 million a year over the next 10 years.”

The school district covered $9.6 million in bankruptcy losses in part with money set aside for building projects. But the money must be repaid to keep about $2 billion in school construction projects on track.

The financing plan was made possible by state legislation passed in September intended to help the county recover from its financial plight, said Deputy Supt. Paul Reed, who oversees the district’s $102-million budget. “The law allows us to create an alter ego for financing purposes,” Reed said.

District officials are also trying to reach agreement on stalled teacher contract talks. Teachers are asking for a 4.5% salary increase.

After breaking off talks last week, teachers will meet with district negotiators Wednesday.