LAND O'LAKES — Tough financial choices have put the Pasco County School Board in a strong position to save millions of dollars in interest payments for new construction loans.
But other economic factors — specifically, the county's rapidly rising unemployment rate — have wreaked havoc on the district's 2009-10 spending plan, in the form of skyrocketing unemployment insurance costs that officials didn't expect.
Chief financial officer Olga Swinson told the board that the district had paid out $250,000 in unemployment insurance during the first quarter of the fiscal year, compared with $100,000 for all of fiscal 2009. If the trend continues, Swinson said, the district could fall $700,000 short on this line item, which would have to be supplemented from some other part of the general operating funds.
"We didn't budget enough," Swinson said.
That despite the fact that the school district has not been the source of layoffs.
Superintendent Heather Fiorentino attributed the increase in costs to the county's high unemployment rate, and that the district is the county's largest employer. As such, many people have worked for the schools at some point, and when they become unemployed, the district can be on the hook for the insurance if other employers cannot cover the costs.
"They end up coming to us. We are the deep pocket," Fiorentino said. "Because of the way the law is written, we're still being impacted."
She said she would press local lawmakers to deal with the matter when the Legislature reconvenes in the spring.
On the plus side, the board's decision to hold firm against tapping into reserve accounts despite employees' pleas for raises has played well on Wall Street, where bankers this week favorably rated Pasco's effort to secure federally backed Qualified School Construction Bonds.
"Some districts have made poor decisions," said Mike Baldwin of CitiGroup, which will underwrite the bonds, during the board's Tuesday meeting. "It's nice to work with districts like yourselves."
Even as teachers pressed to use the money for raises, board members refused to deplete the reserve accounts below 5 percent of the general fund. They said they wanted to maintain the 5 percent level to avoid upsetting bondholders — a position many other Florida school districts didn't take.
Jerry Ford, bond adviser for Pasco and several other Florida school districts, said Pasco's stance paid off.
Unlike Miami-Dade, which sold its Qualified School Construction Bonds at nearly 9 percent total interest rate, Pasco got in for closer to 6 percent. The money — $22 million over two years — will be used to build a culinary arts academy at Land O'Lakes High and to make major improvements to Richey Elementary.
"The underwriters were very clear about the differences in the quality of Pasco's credit," Ford said. "The differences are pretty stark. … (The board's) willingness to make tough decisions to preserve fund balances has gotten the attention of banks and investors."
Jeffrey S. Solochek can be reached at [email protected] or (813) 909-4614. For more education news, visit the Gradebook at blogs.tampabay.com/schools.