California may hit voters with successive school bond measures

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Even as advocates pressure California to speed up allocations from its most recent statewide school bond measure, lawmakers are cuing up the next two.

Assembly Bill 48 would put statewide bond measures on the ballot on March 3, 2020 and Nov. 8, 2022 to pay for K-12 school and community college construction. The legislation also attempts to level the playing field for less-affluent school districts that find themselves at a disadvantage under the state's bond allocation practices.

In April, it cleared the Assembly's education committee chaired by Patrick O’Donnell, D-Long Beach, and the higher education committee.

Amounts in the $10 billion to $13 billion range with a similar amount set for the second bond have been mentioned by others, but O’Donnell, the bill’s co-sponsor, said amounts are not affixed to the legislation and he doesn’t expect a price tag for the two measures to come until the end of June.

That will come through discussions with stakeholders, lawmakers and the governor over the next month, O’Donnell said.

The bill is currently in the Assembly’s appropriations committee. The next stop, if approved by the committee, would be a vote of the full Assembly before heading to the Senate.

California school districts need to spend between $3.1 billion and $4.1 billion annually just to maintain their existing facilities, and $117 billion for additional facility funding on maintenance and new construction over the next 10 years, according to “Financing School Facilities in California: A 10-year Perspective,” a report produced by University of Connecticut Professor Eric Brunner and University of California, Berkeley professor Jeffrey Vincent.

O’Donnell cited similar figures as the impetus for the legislation.

“California has over 10,000 schools,” said O’Donnell, a former teacher. “Many are in subpar condition and need to be upgraded.”

The condition of the schools affects the quality of education received by the students, he said.

In 2016, voters approved Proposition 51, a $9 billion bond measure that dedicated $7 billion to K-12 schools and $2 billion to community colleges.

The reason the new measure is split between two elections “is because the need is so great,” O’Donnell said.

“The 2016 bond was passed 10 years after the previous statewide bond, and money from the 2016 bond has all been committed,” he said.

Many school districts are still waiting for those committed funds.

One way to judge whether the state has been issuing bonds for Proposition 51 too slowly “is the long list of approved, but unfunded projects,” said Adam Bauer, president and chief executive officer of Fieldman, Rolapp & Associates, a financial advisory firm. “The schools have lined up their local portion, and then are waiting a very long time to get matching funds.”

While they are waiting for the money, construction costs rise and the schools often have to find ways to front money while they wait on the state’s process, Bauer said.

Only a quarter of the $2 billion designated for community colleges has been dispersed, said Lizette Navarette, vice president of the Community College League of California.

“At this pace, the state won’t exhaust the bond money from Proposition 51 until 2026,” Navarette said. “The concern is that the purchasing power goes down. Those are flat dollars and the costs have risen by 2% to 3%.”

Local voters have approved specific bonds for specific capital outlay projects, said Larry Galizio, the League’s president.

When it takes so long for the money to reach the school districts, projects need to be downscaled, operational funds have to be used, or districts need to return to voters for more money, Navarette said. If a project’s scope is changed, the school district has to return to the state to seek approval again, Galizio said.

Voters approved the 2016 measure with 55% voting in favor despite then-Gov. Jerry Brown’s opposition.

“In 2016, California voters approved a facilities bond providing a $2 billion infrastructure investment in California’s community colleges,” Galizio and Navarette wrote in a letter to Sen. Holly Mitchell, the Senate Budget Committee chair, and Assemblyman Phil Ting, the Assembly Budget Committee chair. “For the 2019-20 budget, the Administration continues prior practice and only funds a fraction of approved capital projects; dismissing voter support for Proposition 51.”

The League estimates that community colleges have $42 billion in facilities needs over the next 10 years, and that failure to fund these capital projects is a missed opportunity to create jobs and to cultivate a skilled and educated workforce in communities throughout the state, they wrote.

The letter asks that the Legislature put the remaining $1.5 billion for community colleges in this year’s state budget.

California’s Coalition for Adequate School Housing, a lobbying organization supporting K-12 school construction, also wants the state to increase the amount of Proposition 51 money included in the 2019-20 budget.

In a letter that CASH addressed to Gov. Gavin Newsom, the organization thanked the governor for including $1.5 billion from Proposition 51 in his proposed 2019-20 budget, but wanted that figure increased to $2.5 billion and the remaining $2 billion be added to the 2020-21 budget, said Dave Walrath, a CASH lobbyist and president of Murdoch, Walrath & Holmes Inc.

Newsom's initial budget proposal would release $1.5 billion in Proposition 51 bond funds in 2019-20, and $1.2 million to fund ten positions at the Office of Public School Construction to support the increased processing of applications. Together with the $1.2 billion released in fiscal years 2017-18 and 2018-19, this would bring the total in Proposition 51 funds released to $2.7 billion. This proposal leaves $4.3 billion of voter-approved Prop. 51 bond funds unsold.

The DOF stated in oral testimony before a budget subcommittee that it planned to issue bonds for $1.5 billion this year, and the same amount each year for the next two years, Walrath said.

“We are talking to the Legislature to see if we can speed that up,” he said.

Though they receive a great deal of attention, state school bond measures play a smaller role than local school bonds to finance capital projects.

Since 2001, voters have authorized over $158 billion of local GO bond authority for California schools and community colleges, of which $59.8 billion remained unissued at the beginning of 2019, according to the California Debt and Investment Advisory Commission.

Brown, in opposing the 2016 bond measure, said the state allocation process is unfairly weighted to favor larger, wealthier districts that need the money least. AB 48 attempts to make it easier for smaller and less affluent school districts to compete for matching funds, though Vincent said it does not go far enough.

It would give smaller school districts a head start in the application process by allowing them to submit an application before initiating a project.

When an application is submitted, they would receive an estimate of the amount for which they are eligible, and the funds would be “reserved” while they design their projects and seek the normal approvals from various agencies.

“We are currently working on language to flush out the program further,” said Sophia Kwong Kim, O’Donnell’s chief of staff. “We also adjust the eligibility for financial hardship to make more small school districts eligible, this will enable more small school districts to receive up to 100% of funding.”

Typically, the state matches 50% to 60% of local funds on new construction and modernization projects. It has a hardship program that allows less affluent school districts to receive 100% funding, but that typically only helps very poor school districts, Vincent said.

Reformers would like the bill to go further, mirroring what was done for state contributions to district operating revenue through the Local Control Funding Formula. That mechanism steers extra money to districts based on their enrollment of English learners, low income, homeless and foster children. The shift would divert more state bond money to school districts that have comparatively less taxable property to make it easier for them to pay for building upgrades.

The less affluent and smaller school districts “should be able to have their bond funds reserved, because it takes them longer to get through the process,” Walrath said.

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School bonds Public school funding Higher education bonds Gavin Newsom State of California California