Educators, Builders Oppose Brown's Plan to Stop State Bonds to Pay for Schools
BY Timm Herdt from Ventura County Star (CAmarillo) via California Construction.com ENR news wire | http://bit.ly/1AsXvva
Lawmakers skeptical of Brown’s facility funding plan
by Kimberly Beltran:: SI&A Cabinet Report :: The Essential Resource for Superintendents and the Cabinet http://bit.ly/1L1k9u5
Feb. 12 -- SACRAMENTO -- Lawmakers, educators and representatives of the homebuilding industry pushed back Wednesday against Gov. Jerry Brown's proposal to end a long-standing state policy of issuing bonds to help pay for school construction.
Since 1998, California voters have approved three statewide school bonds, most recently in 2006. Those bonds have provided $35 billion in state funds, which have been matched by $89 billion in local funds, to build new schools and modernize old ones across the state.
Now that money is almost exhausted, and Brown says the state should stop borrowing money to pay for school facilities.
His January budget proposal seeks to provide limited state assistance for schools with the most need, but would largely shift the responsibility entirely to local districts, which would have to either get voter approval to borrow money locally or fund their facilities on a pay-as-you-go basis.
A Brown administration spokesman told the Assembly Education Committee on Wednesday that under the new Local Control Funding Formula, districts have the ability to set aside some of their annual funding from the state to rehabilitate aging schools.
"That's not what most schools thought they were buying into with LCFF," said Assemblywoman Shirley Weber , D- San Diego . "There's a kind of bait-and-switch going on."
Education advocates, joined by representatives of the homebuilding industry, are pushing to place a new statewide school bond on the 2016 ballot. Lawmakers are expected to put forward legislation this year to do that.
"We have a program that works," said Education Committee Chairman Patrick O'Donnell , D- Long Beach . "Why would we change it?"
Given Brown's opposition to that idea, however, the California Building Industry Association has taken the first step toward placing a $9 billion bond on the ballot through the initiative process.
"We believe the state has a constitutional obligation to provide schoolchildren with safe and secure facilities," testified Richard Lyon , lobbyist for the association. "That obligation has historically been met by general obligation bonds. This is an appropriate financing mechanism."
Although school enrollment, after decades of growth, has either leveled off or declined in most areas of the state, educators say there is a great need to either rehabilitate or replace schools, a majority of which are now more than 25 years old.
Ventura County Superintendent of Schools Stan Mantooth said in an email to The Star that school districts in the county cannot keep up with their needs without state assistance.
"Virtually every school district in Ventura County -- with or without a local bond authorization -- is dependent upon the passage of state facilities bonds in order to complete necessary and in many cases long overdue projects," Mantooth said.
The state program begun in 1998 has provided a 50 percent state match for new construction and 60 percent of the funds for modernization projects.
That program was part of an agreement that also capped the school fees local governments can levy on new housing projects. But that provision includes an escape clause that allows local governments to require new projects to pay for 100 percent of the cost of new schools if state bond money runs dry.
"We're hanging on by our fingernails," Lyon said. "If that kicks in, homebuyers are required to pick up the entirety of the cost."
If that were to happen, he said, fees of from $20,000 to $30,000 per house could be placed on new developments, driving up housing costs beyond the reach of middle-income buyers.
State Superintendent of Public Instruction Tom Torlakson told the panel the state-local funding program enabled by the state bonds has been "very, very successful." It has funded the construction of 51,000 new classrooms and the rehabilitation of 134,000 more.
Torlakson said significant need remains, given that 1 in 10 schools in the state are more than 75 years old and demand is increasing for career-technical classrooms that require more expensive equipment and design.
"Partnering the public funds has been sensible, logical and good for students," he said.
Speaking for the Brown administration, Thomas Todd of the Department of Finance told lawmakers that the state budget cannot absorb additional annual debt payments from passage of a new school bond.
"One of our foremost concerns is the state's own capacity to carry debt," he said.
Todd noted that payments on existing school bonds amount to about $2.5 billion a year and will remain at that level for another 15 years even if no additional bonds are issued.
That money comes from the state's general fund, he said, and debt payments squeeze out the state's ability to pay for other services, such as school operations, universities, prisons and social service programs.
He added that many school districts would be able to meet their needs by asking local voters to approve bonds that would be repaid through property taxes.
"There is very clearly local capacity in many areas of the state to absorb these costs," he said. "We think there is untapped potential out there that should be tapped into."
February 12, 2015 (Calif.) :: Lawmakers on Wednesday expressed skepticism of Gov. Jerry Brown’s proposal to reduce the state's role in building and maintaining schools by pushing the bulk of the financial burden onto local districts and their communities.
Members of a key legislative committee, many with backgrounds in education, said districts are already struggling to cover day-to-day operations and that withdrawing state support for school construction would likely leave them unable to meet what is already an overwhelming need for new or revitalized facilities.
“My concern is that [the governor’s] proposal leaves a lot of school districts out there. Essentially they’re on their own in providing future school facilities and modernization thereof,” said Long Beach Assemblyman Patrick O’Donnell, a former teacher who now chairs the Assembly’s education committee. “This proposal leaves me scratching my head a bit.”
Brown has repeatedly criticized the state’s current system for supporting school construction as overly complex and cumbersome.
His office convened a meeting of school officials last fall with the intent of proposing some sweeping changes to the School Facilities Program, which uses voter-approved bonds to provide matching funds to districts for a variety of facility needs – from new construction and modernization to seismic upgrades and energy efficient installations.
But funds in the program are nearly depleted and Brown has blocked recent efforts to place a new statewide bond measure before voters, arguing that the system contributes to the state’s wall of debt and saying there are other options to consider.
Among the alternatives offered by the governor’s administration are increasing the borrowing caps on schools based on community property assessments; charging home developers for a portion of the costs by establishing a single statewide fee; and providing districts with more flexibility in their use of currently-restricted maintenance money.
Brown’s Department of Finance also argues that under the new education finance system – the Local Control Funding Formula – school districts are free to prioritize what they spend their money on and could put some of this cash toward facilities.
Members of the education committee agreed that there are some changes that could be made to both streamline and equalize the existing system, but completely abandoning what has been a successful program, they say, is the wrong approach – and expecting schools to use LCFF funds for school construction is unrealistic.
With over 1,000 districts and more than 10,000 schools – many of which are 50 or more years old – maintenance and upkeep alone would require somewhere in the neighborhood of $7 billion if fully funded each year, according to facilities expert Jeffrey Vincent of Berkeley’s Center for Cities and Schools, who testified before the committee Wednesday.
“I don’t think we as a state have fully committed to the cost of ownership of these public buildings,” Vincent told committee members. “We have to spend money on our facilities. It’s not an option not to or we run enormous risks of health and safety.”
Two state legislators have introduced separate bills this session that would place statewide facilities bond measures on the 2016 ballot. A proposal last year sailed through the Assembly with broad bi-partisan support and likely would’ve passed the Senate if not for Brown’s opposition.
Members of his finance team said Wednesday that the governor is open to suggestions coming out of the Legislature unless they add to the $2.5 billion annual debt service the state already pays for prior facilities bond costs.
“There are a lot of folks that are just tapped out, we get that. This is the conundrum we’re facing,” said Brown spokesman Thomas Todd. “But Prop. 98 resources in the form of LCFF have to be considered ultimately in whatever level of state funding we decide is necessary.
“However, when it comes to [funding from the state’s General Fund],” he said, “there’s really not a lot of room there right now but we are absolutely willing to engage in a dialogue with all of you to explore options to fund something that would be sort of a pay-as-you-go program.”
Panel members countered that without a new revenue source, school districts are not in a position to use their own General Fund monies to pay for school construction.
“You’re dumping a lot on LCFF and yet you haven’t taken anything off the LCFF, said Assemblywoman Shirley Weber, D-San Diego. “The only thing we’ve done with the Local Control Funding Formula is taken what probably would’ve come anyway in terms of the same money and just took away the categoricals, put it all in one pot and said do the same stuff you’ve done before.”
Todd noted that the administration does not plan to introduce a policy proposal through legislation but rather is leaving it up to state law makers to come up with a plan based on his suggestions.