LOS ANGELES — California Gov. Jerry Brown signed a bill to increase oversight of school bonds.
Assembly Bill 2116 will help to certify that a tax base can support a bond, said Assemblyman James Gallagher, R-Plumas Lake, who authored the bill.
It requires the governing board of a school district to consider the county assessor's projections for property valuations prior to ordering an election to authorize school facilities construction bonds.
This will help prevent bond advisors from presenting unrealistic projections when advocating for a bond, Gallagher said.
"I am pleased that the governor saw the need to increase oversight of school bonds," Gallagher said in a statement. "Borrowing for bonds had exploded in the last decade, and it is more important than ever that school construction bond funds be fiscally sound and their financing mechanisms transparent."
Taxpayer groups and the public now have more leverage to derail excessively rosy assessed property value projections, said Kevin Dayton, a policy analyst with the California Policy Center.
The bill was prompted by a
"We dedicated tremendous resources to producing this study, and we were naturally pleased to see Rep. Gallagher act on it with such energy," Ed Ring, CPC's president, said in a statement.
The CPC study found that projected growth figures of school district's assessed property valuations, which are used to determine a district's ability to repay bonds, were sometimes overstated, which put some districts in trouble, Dayton said.
Dayton, who is also head of the Salinas Taxpayers board, said Salinas school district had projections that assessed valuations would grow by 2%, then 3% and 4% ever after. In Contra Costa School District, valuations were projected at 4%, when the presentation showed that the district had only experienced 2.5% growth over the prior 10 years.
Overstated valuations are particularly troublesome in areas like the two mentioned where values fluctuate with economic downturns, he said. He said when projections do not take into account economic downturns; they can leave school districts with huge debt loads.
Through the new law, residents and taxpayers' associations can ask that an independent advisor, separate from a bond advisor, can be hired to conduct a study on assessed valuations. Prior to the law, Dayton said this often wasn't an option, even when questions were raised about projections.
"From a taxpayer and school district perspective, conservative projections are wiser than excessively higher projections," Dayton said.
