California’s School Bond Measure Conundrum  

School bond measures are listed on local election ballots across California. And, if 2018 is anything like 2017 when only 33% of local bond measures were approved, most of those measures will not pass.

The opposition to school bond measures wasn’t always so overwhelming. In fact, between 2010 and 2016, at least 70% of local bond measures were approved. Sometimes the approval rate was over 90%.  

So what happened? Why are voters refusing to support school bond measures when the economy is supposedly much better than it was seven years ago?

It’s hard to say. There’s been a backlash against school bonds for a variety of reasons: bonds create long-term debt, increase taxes, and require that voters trust school districts to remain transparent. Both proponents and opponents use emotional appeals to generate support. Do you want our kids to be safe and educated? Do you support the exploitation of our schools by criminals who make pay-to-play side deals?  

Regardless of the arguments, one thing is crystal clear. Bonds are not. Crystal clear, that is.

In fact, understanding bond measures requires an understanding of state funding and school financing– far more information than what is typically provided in voter information guides. If there’s a school bond measure on your local ballot, you’ll have a bit of research to do.

Maybe I can help.

FIRST, A LITTLE  HISTORY

To understand school bonds, you need an understanding of the history of school funding in California.

Prior to the 1970s, school boards in California had the authority to raise property taxes to help fund local schools.

Even though this practice was a huge source of school funding, it was deemed inequitable and, through the Serrano vs. Priest Supreme Court ruling and Proposition 13, banned (the rationale being that schools in wealthier areas were able to raise more money through heftier property taxes than lower income schools).  I won’t delve much more into the history or controversy behind this– what’s important to know is that since 1978, the state has assumed more control and responsibility when it comes to funding our schools.

CURRENT SCHOOL FUNDING AND WHERE CALIFORNIA STANDS

Currently, funding for the nearly 1000 California school districts is broken down like this: 57% comes from state funding, 14% from federal funding, and 29% from local funding.

It doesn’t take a financial analyst to see how California’s model can be somewhat problematic: school budget is directly related to California’s economy. And, if the economy suffers (which it is apt to do), so do our schools.

According to US News and World Report, California currently ranks 44th in the nation for K-12 educational performance.

We’re below Tennessee. And Kentucky.

In fact, the performance of California schools has been pretty much in decline for about THIRTY years– about the same time that Prop 13 was passed

Could this be because California ranks 41st in spending per student?

Now, Governor Brown’s 2013 Local Control Funding Formula is projected to increase school funding to pre-recession rates plus interest by 2019-2020, but even Brown’s supporters didn’t think that was enough, so they proposed Assembly Bill 2808 to increase funding even more.

It didn’t make it to the Governor’s desk.

METHODS TO INCREASE SCHOOL FUNDING

So, it’s obvious that California schools need more funding. The state just isn’t cutting it, and, as a result, our kids are suffering.

There are currently four ways a district can raise funding through taxation. Two of these options populate the majority of ballot measures:   

Parcel tax– With this option, residents are taxed a flat-rate or square-footage rate on their property.  Parcel taxes can be used to fund anything the district wants (usually it’s general operating expenses like salaries) and there are few regulations. The district does not need to have a citizen’s oversight committee and is not required to release financial statements. The tax usually lasts five to seven years and requires a two-thirds vote to pass.  

Bonds– With this option, like the parcel tax, only people who own property are taxed. With a bond, however, there are more rules and regulations.  For instance, the MAXIMUM amount that can be taxed is $30 per $100k value of the property. Therefore, if your home is worth $500k, you cannot be taxed more than $150. Bond funds can ONLY be used for repairs, capital outlay, and school facilities and the district is required to provide financials and elect a citizen oversight committee to monitor spending. Bonds are much easier to pass– only 55% vote is required.  An added bonus: Proposition 51 (which passed in 2016) allows districts to apply for a state match against funds spent on capital outlay.  This is why we see such a surge in bond measures across the state– districts are hoping for that free money. 

There are ways a school district can raise funding for schools without taxing the public. They can fundraise through a foundation, ask for donations, or, as someone in my community proposed, hold a bake sale.

As much as we all love a good bake sale, the amount of revenue required to operate a school district makes these options crumble in comparison to good, old-fashioned taxation.

BACK TO BONDS

Bond measures are used to help with buildings and facilities (building upkeep, resources for new tech, HVAC, all that good stuff…). The Center for Cities and Schools, a nonpartisan research group out of Cal Berkeley, reports that school districts should be spending between $525 and $700 per student on average for these expenses (which are generally referred to as “capital outlay” in financial documents).  

For a small school district with 10,000 students, this would mean spending between five and seven million a year on capital outlay expenses alone.

That’s a lot of cookies.

According to that same study, MOST California schools are neglecting capital outlay. The schools that aren’t experiencing neglect are the ones whose communities have voted on some sort of taxation to supplement funding.

Some may wonder why this even matters. Why are facilities even being discussed when some schools are having trouble finding qualified teachers?

Because it ALL matters when it comes to creating an optimal learning environment.  PLENTY of research has revealed a very strong correlation between school facilities/ buildings and student achievement.

Think about it.

Who wants to go to a school with a leaking roof, vandalized desks, and rats (which is what my local school is currently facing)?

The need for capital outlay funding is clear, immediate, and far overdue in many school districts, and bonds are the way we do it in California.

But that doesn’t mean bonds are without fault. In fact, the controversy around bonds grows more heated every year.

CONSIDERATIONS

Here are some of the criticisms against bonds:

DEBT:  Bonds are repaid with interest which places the school district in long-term debt. A lot of debt. According to the California Policy Center, within the last 14 years, $146.1 billion has been borrowed for state and local school funding– amounting to about $200 billion in total principal and interest.

TAXES: Bonds increase our taxes. When it’s one bond, the cost doesn’t seem so bad. However, if you live in a community with multiple bond repayments, you could be paying a lot in taxes.

Further, the school district could opt to use Capital Appreciation Bonds (CABs) after the bond measure passes. CABs are sneaky— allowing school districts to evade the laws that restrict how much a property owner can be taxed. They can also extend the life of the loan, putting a strain on future generations (and long after the district board members have left their positions).   

ACCOUNTABILITY: Many opponents feel as though bonds are used by districts to cut special “off-the-books” side deals (aka “pay-to-play”) with construction companies, architects or underwriters who give money to the district in exchange for a work guarantee.

On the other hand…

HOME VALUES: The bonds will improve schools, and school improvement is good for everyone. Children receive a better education which could lead to an improvement in overall school performance. Higher school performance could lead to higher home values. The bond could be viewed as an investment in the community and an investment in your home.  

I wish I could provide a recommendation for voting on your local school bond, but I can’t.  There’s just no definitive “right answer” when it comes to these slippery things.

What I can recommend is this: if your community does pass a bond measure, it’s important that your elected officials are trustworthy. If you trust the school board you elected, then trust their recommendation. If not, make sure that an oversight committee is hired that is impartial. Better yet, volunteer to be on that committee.

If you can’t depend on your elected officials to offer transparency, you need to demand it.

 

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