Complicated agreement has cost District millions

The Taft Union High School District may finally be getting out of a complicated, decades-old joint powers agreement that is costing millions of dollars a year.

The Golden Empire School Financing Authority, or GESFA, is the result of an agreement dating back to the late 1980s between the TUHSD and kern High School District over students who lived in the Belridge area that were attending TUHS even though they lived in the Kern High School District. That meant Taft High was educating students even through the property tax revenues from the land they lived on went to the KHSD.

So the two Districts came up with a complicated deal that led to a swap of sorts: In effect, a portion of the Belridge area was transferred to the TUHSD, with some property taxes shared between the two, and the TUHSD transferred some "physical properties on campus to the KHSD and then leased them back.

It proved costly to the TUHSD. the original agreement, which was in effect for three decades, resulted in total payments of an estimated $144 million by TUHS.

The payment amount varied considerably, ranging from $1 million to $10 million annually, according to the TUHSD.

Except for salaries, the GSFA payment became the largest single budget item each year.

GESFA hasn't just been costly in recent years, but it also creates uncertainty every year in the TUHSD budget.
The original agreement was renewed in 2016, but earlier this year, the TUHSD and KHSD agreed to an alternative that not only cut the local payment obligation, but gave it a change to settle the issue once for all, but at a price.

The TUHSD has a chance to buy its way out of GESFA through a one-time payment of $34.5 million before the end of 2019 or continue paying through 2053.

The proposed deal is going to be very expensive in the short term, but in the long term it could save the District tens of millions of dollars, Chief Business Officer Josh Bryant said.

The TUHSD Board of Trustees is going to vote next month on a recommendation to make the one-time payment to buy out the remainder of the District's obligations under the GFSA agreement.

Bryant said the funding for the settlement will come out of two reserve funds, Fund 40, the capital expenditures, and Fund 20, the OPEB other post employment benefits) fund and would not affect the district's operating reserves .

The cost is steep, Bryant told the TUHSD Board Monday night, but offers several advantages.

First, it could result in a savings of about $60 million over the next 30 years.

In addition, the money taken from the funds could be repaid back out of the District's annual tax revenue at a rate that is less than the current annual GESFA payment.