California's San Juan Unified School District claimed an appellate court win in a case that challenged the Sacramento County district's use of bond proceeds.
The outcome provides what Orrick, Herrington & Sutcliffe Partner Khai LeQuang, who represented the district, calls increased clarity for California school districts.
The case, Creedon et al. v. San Juan Unified School District, centered on a lawsuit filed by two taxpayers who argued that the language of Measure P, a 2016 bond measure, did not permit the demolition of a former elementary school building to build a new middle school.
The plaintiffs contended that a brand-new structure could not be considered part of the "project list" as required by
Proposition 39, approved by voters in 2000, allows school districts to secure general obligation bond approval from voters with 55% of the vote, rather than the prior two-thirds requirement, if, among other things, they outline through a project list an ample description of what they will spend the money on.
On Sept. 2, the appeals court upheld the trial court's summary judgment order, confirming that the school district's use of bond funds was authorized. The appellate court also ruled that the plaintiffs' broader challenges to Measure P were time-barred.
The opinion "provides an important roadmap on how school districts may draft bond measures and approach future challenges to spending Proposition 39 bond funds," LeQuang, who led Orrick's team alongside senior associate Kristopher Wood and associate Kelli Ward, told The Bond Buyer.
"The victory safeguards a critical component of SJUSD's long-term facilities plan, clears any doubt over the validity of the expenditures on the now-completed and highly successful state-of-the-art middle-school campus, and affirms broad voter-approved discretion for California school districts to modernize and replace dated buildings," LeQuang said.
The lawsuit specifically aimed to block SJUSD from allocating $56 million in Measure P proceeds to replace the campus of the former Creekside Elementary School with a newly constructed Katherine Johnson Middle School. The plaintiffs argued that Measure P's constitutionally and statutorily mandated project list did not authorize this new construction and relocation project.
Their core allegation was that the expenditure violated California's constitution and the School Bond Waste Prevention Act because the project list did not explicitly identify Katherine Johnson Middle School as a school eligible for bond-funded projects.
At the time Measure P passed, LeQuang said, Katherine Johnson Middle School was still part of Encina Preparatory High, which was, in fact, identified on the project list. Crucially, Measure P also expressly authorized projects at the Creekside property, he said.
The plaintiffs' attorneys never sought an injunction, which would have halted progress on the middle school project during the litigation, LeQuang said. As a result, Katherine Johnson Middle School has been
A key aspect of the court's decision involved the statute of limitations.
The plaintiffs attempted to contest the vagueness of the original language in the bond measure. However, the
The trial court judge did, however, deem the argument regarding whether the new school building could be considered part of the project list as an acceptable basis to challenge the use of bond proceeds, and this was the argument considered in the appellate ruling.
Orrick first secured a victory in Sacramento County Superior Court, which granted SJUSD's motion for summary judgment in full. The lower court held that the plain language of Measure P explicitly permits new construction, relocations, demolitions, and replacements "at all current and future district-owned properties," including projects involving Encina Preparatory High School (from which the middle-school program was separated) and the Creekside site.
The appellate court unanimously affirmed this decision, and awarded SJUSD its costs of appeal. The three-judge appeal panel concluded that Measure P's text "authorized the use of bond funds for construction of the new Katherine Johnson Middle School" and concurred that challenges to Measure P's validity were untimely under the 60-day limitations period for bond validation actions.
LeQuang noted that in issuing an unpublished opinion, the appeals court judges were essentially stating that they "didn't think the plaintiffs had presented something new, which is good for school districts."
This ruling, he added, recognized that broad language is permissible in bond measures and can be effectively used to authorize projects.
This ruling, he said, aligns with a significant precedent set by the California Supreme Court in the
In that case, the Supreme Court denied a petition for review from plaintiffs challenging the Foothill-De Anza Community College District's plans to issue $490.8 million from its Measure C bond. That decision meant the appeals court's ruling in the community college district's favor stood, establishing a benchmark for how judges should interpret Proposition 39 parameters in bond measure language.
"I think the playing field is very favorable for these kinds of broad language measures," LeQuang said. "I think there is always the risk that people will challenge them if they aren't specific. But I don't think Proposition 39 requires the specificity that plaintiffs were asking for."
With a Proposition 39 measure, "it's okay to be broad, but being vague is a problem when it's not clear what the bond language means."
This outcome is significant for school districts, said Adam Bauer, chief executive officer for Fieldman Rolapp & Co., a financial advisory firm specializing in school districts. Bond measures are often approved a decade or more before construction commences, during which time circumstances can drastically change, Bauer said.
For instance, the widespread impact of artificial intelligence in 2025 could not have been foreseen in 2016 when Measure P passed, much like the future importance of Wi-Fi decades ago.
"School districts are in a difficult situation, because voters want specificity and to understand what the money will be spent on, but many capital programs evolve over a 10-year time frame," Bauer said. "You can have building codes change or expectations of what the school offerings should be change over time."
The Creedon case provides a valuable guide for school districts and their financial advisors as they prepare to draft bond measures for voter approval in November 2026. Bauer anticipates a higher-than-usual number of school districts seeking voter approval then, largely due to a backlog of projects requiring funding to renovate and maintain aging facilities.
Historically, prime times for bond measures align with mid-term congressional and presidential elections. Another requirement of Proposition 39 is that the bond elections must be held in conjunction with other regularly scheduled elections.
"There is a very high level of interest in putting measures on the ballot," Bauer said of his firm's clients.
Aging facilities and suppressed demand from recent election cycles are driving the interest in floating bond measures, he said.
In March 2020, at the onset of COVID-19 closures and economic uncertainty in California, there was a high failure rate for bond measures, which had a "chilling effect," deterring other school districts from moving forward in 2022.
While 2024 saw
LeQuang said the appellate ruling not only validates SJUSD's actions but also provides a robust legal framework that will enable California school districts to more confidently pursue necessary capital improvements for their facilities, ensuring they can adapt to evolving educational needs and maintain modern learning environments for students.
"I would say since it's an unpublished opinion, the court is comfortable with where the world stands," LeQuang said. "This reinforces that districts can use broad language and probably should if they want to have flexibility."
The plaintiffs' attorneys could not be reached for comment.
