Prospect of School District breakup muddies construction financing

By Ian Whitaker

Friday, June 12, 2015 | 4:12 p.m.

Financing for new schools is on shaky ground after Gov. Brian Sandoval signed a bill into law Thursday to break up the Clark County School District.

The district has started site preparation work for 14 new schools it plans to build in the next two years. But Sandoval’s signature on the controversial bill has sparked uncertainty about who will decide where future bond money is spent if the district is split into five separate precincts.

“The reality is at the end of the day, we don’t know what plan they are going to come up with,” district Chief Financial Officer Jim McIntosh said.

There’s still a chance that plans to break up the district could be killed by a legislative commission next session. But the district is concerned about the impact even the threat of breakup will have on its bond rating and its position in the bond market.

If investors think buying bonds from the School District is risky, the district could end up paying more of its anticipated $4 billion in bond revenue toward interest, McIntosh said.

After the bill was passed, the district got a call from an analyst at Moody’s Investors Service, a credit rating agency, wanting to talk about a potential breakup of the district, McIntosh said.

Superintendent Pat Skorkowsky noted: “Uncertainty in a bond market is never a good thing.”

The process, however, is nowhere close to being settled.

The committee that will be in charge of figuring everything out — including how newly created precincts will share revenue and money for new construction with the Clark County School District — has yet to be appointed and likely won’t be until about September.

After that, the district will have to wait for a feasibility study, a series of public meetings and a final vote before a legislative commission in 2017 before their questions are answered.

The concerns are nothing new to Republican Assemblyman David Gardner, the sponsor of the bill. He has repeatedly said the issues will be worked out by the committee.

For now, the district has been moving forward with about $500 million in bond sales already approved by the board of trustees, while disclosing to investors that things have the potential to change in the future.

Actual bond sales won’t take place until late this year. The same goes for actual construction work on new schools, which takes about nine months to finish.

“We were all ready to move forward,” Skorkowsky said. “It has given us pause as to how we will progress in this point in time.”