On July 9, 2024, the Castaic Union School District successfully priced and locked in interest rates for the fourth issuance of its 2012 bond authorization, Measure QS, totaling $6 million.

Measure QS, approved under Proposition 39, permits a total bond issuance not exceeding $51 million. Proposition 39 establishes a projected tax rate limit on each bond measure at no more than $30 per $100,000 of Assessed Value for union school districts. However, districts can set a lower projected tax rate limit. Initially in 2012, the District projected a tax rate limit of $19 per $100,000 of Assessed Value, and this projection was met in previous bond issuances from 2012 to 2021.

For general obligation bonds issued by school districts in Los Angeles County, approval by the Los Angeles County Board of Supervisors (BOS) is required after district approval and prior to bond pricing.

During the review of the debt service schedule for the Series 2024 Bonds, County staff indicated they would not recommend the financing structure for BOS approval unless the District restructured future payments to be near the $30 per $100,000 of Assessed Value legal tax limit, rather than the District’s $19 projected limit.

Despite the finance team’s explanation that the same assumptions and restrictions that were used in previous bond sales were being implemented in order to maintain the $19 tax rate projection, the County mandated structuring up to the full $30 tax rate when applicable.

Consequently, the District’s finance team restructured the debt service schedule, which received County approval.  While taxpayers will have a higher annual tax rate, it will allow the District to repay the loan principal at a much faster rate than before, which will significantly reduce the overall interest borne on the taxpayers.

The adjustment enables the District to repay its bonds on an earlier time frame and avoid high-interest financing options such as Capital Appreciation Bonds.  Additionally, the District will be able to sell the rest of Measure QS earlier than anticipated, which will preserve project funds from rising construction costs and allow more projects to be completed.

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