Wednesday, January 28, 2015

Brown, districts at odds over school construction bonds | EdSource

Brown, districts at odds over school construction bonds | EdSource

Brown, districts at odds over school construction bonds

January 21, 2015 | By John Fensterwald | 58 Comments

Credit: flickr

Gov. Jerry Brown says he wants the state to stop issuing multi-billion dollar school construction bonds; instead, the state's role would be to help only those districts without the financial capacity to build schools on their own.

Determined to shed long-term state debt, Gov. Jerry Brown wants the state to cease issuing K-12 school construction bonds, leaving school districts to pay the tab for building and renovating schools. A coalition of school districts and the building industry has responded with plans to go straight to voters with a $9 billion state school building bond in 2016.

"We are going the initiative route; this is not for negotiation," said Joe Dixon, assistant superintendent of Santa Ana Unified and chairman of California's Coalition for Adequate School Housing, an organization made up of 350 school districts and construction industry partners. "Every child is entitled to quality facilities, and there must be a state role to ensure there is equity."

In the state budget released this month, Brown indicated he wants to make it easier and more efficient for districts to build facilities without state support. Only in "limited circumstances" – yet to be defined – would the state provide help to districts lacking the financial capacity to issue construction bonds. The budget doesn't project the cost but it would likely be hundreds of millions of dollars per year and would be funded through an annual General Fund appropriation, not through Proposition 98, the chief source of K-12 funding, or through long-term state debt, said Nick Schweizer, program budget manager for the Department of Finance.

Since 1998, the state has proposed, and voters approved, $35 billion worth of borrowing to build and renovate schools. But the last bond was passed in 2006, and the state has nearly run out of money to help subsidize districts' projects, although the state continues to pay $2.3 billion per year to pay down past bonds.

Last year, Assemblywoman Joan Buchanan, who chaired the Assembly Education Committee, sponsored Assembly Bill 2235 to put a $4.3 billion construction bond on the November 2014 ballot. Backed by California's Coalition for Adequate School Housing, the California School Boards Association and the California Teachers Association, the bill died in the Senate because Brown opposed it.**

Brown's budget summary proposes several ways to expand the capacity of school districts to pay for school construction on their own – in most cases, it would be funded by local developers and property owners, who'd likely be asked to pay more in fees and taxes. The budget says the ideas are intended "to advance the dialogue on the future of school facilities funding." Brown's proposals include:

  • Raising the cap on a district's allowable bonded indebtedness, relative to a property's assessment. Total school bond debt currently can't exceed $30 per $100,000 of assessed value in a district ($60 per $100,000 for unified and high school districts). Brown proposes raising the cap by the rate of inflation.
  • Allowing districts to use money they put aside for building maintenance for capital projects. Districts formerly had to funnel 3 percent of a district's general fund to building upkeep, but, under the Local Control Funding Formula, they have more flexibility. Now they'd be able to put the money toward capital projects.
  • Increasing fees that primarily housing developers pay and making them uniform. Under state law, developers can be charged fees for school construction, based on the impact that their new homes will have on schools. However, the third and highest fee level can only be imposed if the state declares it has run out of bond money for local districts, which it has never done, Dixon said. Brown proposes setting a new level of uniform fees that's somewhere above the current second level.

Dixon said he supports some ideas, including raising the cap on bond debt, and opposes others, such as raiding maintenance fees. But he said the proposals combined would not come close to replacing the needed state level of funding.

Under the current system, districts and the state evenly split the cost of new construction, and the state pays 60 cents of every dollar for school renovations. In the state budget he released earlier this month, Brown listed his objections to the current setup. They include:

  • The system is bureaucratic and too "fragmented,"with 10 state agencies overseeing approvals of construction projects;
  • Districts aren't compelled to consider funding in the context of other priorities and, using outdated enrollment data, may have incentives to build more than they need;
  • The first-come, first-served basis for funding gives advantages to big districts with large facilities staffs. Brown proposes a needs-based funding formula for districts whose taxpayers can't afford bonds on their own;
  • Funding needs are based on outdated space requirements (960 square feet for every classroom) that drive up costs and don't offer flexibility for changing classroom needs and sizes in an Internet-based environment.

The budget notes that since the passage of Proposition 39 in 2000, which lowered the voter threshold for passing a bond from two-thirds to 55 percent, 80 percent of school bonds have passed. The Local Control Funding Formula provides districts with more funding flexibility, it adds.

Dixon said that the Coalition for Adequate School Housing also favors changes to the current system but the goal should be to fix it, not end it. He said a poll that the organization commissioned last month found that 55 percent of likely voters would definitely or probably support a $9 billion state school bond, with an additional 8 percent leaning in that direction.

Whether a bond would pass if Brown openly opposes it, though, is another question. Assemblyman Chris Holden, D-Pasadena, hopes it won't be necessary to find out. Last week, he introduced an alternative option, Assembly Bill 148. While the details aren't yet in the bill, Holden says he is set to propose a $1.1 billion bond measure for the 2016 ballot to deal with immediate building needs – projects already in line for funding. Then he would like to begin discussions on Brown's plan to fund future construction with revenue sources other than state bonds.

"We hope to settle on a bond at a level that the governor might sign off on and then deal with strategies moving forward," Holden said. "We have deteriorating school facilities that must be dealt with now."

Also last week, State Sen. Carol Liu, D-La CaƱada Flintridge, introduced a bill calling for a state school construction bond, with an unspecified amount, that would enable school districts, charter schools, county education offices and higher education institutions to build and modernize facilities. Senate Bill 114 is identical to Buchanan's bill from last year, which, responding to the governor's criticisms, called for agencies overseeing school projects to streamline approval procedures and give districts more latitude from regulations to design their own facilities.

** Buchanan's bill originally sought a $9 billion bond, the same amount that the Coalition for Adequate School Housing is proposing. She later cut the amount in half, but her bill died anyway.

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