As the coronavirus pandemic shakes up the economy and education, school districts in California are more reluctant to ask voters to approve new bonds.
The Coalition for Adequate School Housing compiled a list of 60 proposed K-14 bond measures worth a total of $13.3 billion on the Nov. 3 ballot, said Rebekah Cearley, a legislative advocate with Murdoch Walrath &Holmes.
“The number of bonds and the dollar amount are well below what we typically see for a November ballot during a presidential election year,” Cearley said.
The Los Angeles Unified School District has a $7 billion bond measure on the ballot, which accounts for more than half of the total dollar amount districts are seeking, according to CASH’s data.
Presidential elections are usually considered a fortuitous time to go to voters with bond measures and tax increase proposals, because they draw more voters to the polls.
But not this year.
“I think it’s a variety of reasons,” but primarily because many school districts “just didn’t have the bandwidth to take it on,” said Dale Scott, president of Dale Scott & Co., a California financial advisory firm.
Typically, school districts and community college districts would have been planning for bond measures in July, but Scott said he thinks they just had too much on their plate with online learning and other changes wrought by COVID-19.
The coronavirus pandemic, sympathy to the plight of taxpayers and the failure of the Proposition 13 state school bond measure in March were cited as reasons that school districts have made the decision to back away from floating bond measures to pay for
Adam Bauer, president and chief executive officer of Fieldman, Rolapp & Associates, a California financial advisory firm, said his firm's school district clients are being sensitive to their communities.
“Even if they need to pass a bond measure, they are more reluctant to increase taxes during difficult times for taxpayers,” Bauer said.
The shift to online learning combined with adaptive changes to school campuses to make it safer for students to return to in-person learning has also taken up much of the attention of school officials, Bauer said.
“Within a few weeks, they had to totally change the education program during a time they would have been getting resolutions ready to put before their boards to be ready for an election,” Bauer said.
“We are certainly seeing a decline,” said Blake Boehm, a principal and managing director in the Newport Beach office of KNN Public Finance.
Only a handful of school districts that Boehm advises of a dozen that were planning bond measures in November are still moving ahead.
“For the most part, all of those that dropped, said they were reluctant to come across as being tone deaf to the financial impacts of COVID-19 on individual households and families,” Boehm said.
The failure of the statewide $15 billion Proposition 13 school bond measure March 3 also had a chilling effect. That Super Tuesday primary election came before the spread of COVID-19 resulted in lockdowns later in the month.
In that March election the rate of passage of local school bond measures was the lowest experienced in a decade, Bauer said.
Voters rejected 77 of 121 local school bond measures, defeating requests for $10.475 billion in bond authority out of $17.095 billion requested,
In California, school bond measures have historically had an 85% passage rate, said John Baracy, a managing director in Raymond James' Los Angeles office
“I hope that trend doesn’t continue, because there is a big need for modernization projects,” said Baracy, who also serves on the CASH Board of Directors. “Schools should be brought up to current standards in order to educate California students in a manner they deserve.”
Assembly Bill 195 also may have resulted in the low passage rate for school bonds in March, because its requirements confuse voters, Baracy said.
AB 195, approved by the Legislature in 2017, requires a local ballot measure that imposes a tax or raises the rate of a tax, including a local bond, include on the ballot label the amount of money to be raised annually and the rate and duration of the tax to be levied. CASH has worked to try to modify the requirement through new legislation.
“It’s confusing to voters and has made it more difficult for any bond measure to pass, particularly those that required a two-thirds majority to pass,” Baracy said. “It’s particularly challenging for cities, which have the two-thirds requirement, and for parcel taxes floated by school districts.” Such parcel taxes also require two-thirds supermajorities.
Most school bonds can be passed with 55% majorities; only two of the 121 measures in March required two-thirds supermajorities.
The failure of the Proposition 13 state school bond also means that school districts won’t have state matching funds available to help pay for modernizations or new school building construction.
The bonds authorized in the last state bond measure for school buildings approved by voters in 2016 has been already allocated, and there remained a waiting list of projects from school districts hoping to see funding available from Proposition 13.
Smaller districts have had to cut plans for projects or push them out into the future in the hope more state matching funds will become available, Bauer said.
“That state match can make dollars go further for larger school districts,” Bauer said. “For smaller school districts, it can be the difference between doing a project, or not.”
The failure of Proposition 13 hasn’t been as drastic of an issue for larger school districts.
“I think they are going to utilize their local bond dollars toward priority needs; and if, or when the state match money comes in, they will address latter needs, or lower tier priorities,” Boehm said.
