California schools have $37 billion in unissued bonds
02/01/2014 12:00 AM
01/31/2014 9:03 PM
California’s pot of school bond money may be empty, but school and community college districts have more than $37 billion in authorized – but unspent – school-construction bonds, according to a report by the state’s debt commission.
Since November 2002, there have been 681 school and community college elections that yielded about $90.1 billion in voter-approved borrowing authority to build and modernize schools. Yet only about $52.6 billion of those bonds have actually been issued, according to the California Debt and Investment Advisory Commission report last week.
The report comes as several rounds of school bonds authorized by state voters – most recently in November 2006 – are nearly exhausted. Assemblywoman Joan Buchanan, D-Alamo, is working on legislation for a new state school bond in November, but no proposal has emerged.
Any plan for a new bond would have to win over Gov. Jerry Brown. In his proposed budget earlier this month, Brown voiced skepticism about local school projects relying on significant help from the state.
“Any future program should be designed to provide districts with the tools and resources to address their core facility gaps, but should also avoid an unsustainable reliance on state debt issuance that characterizes the current school facilities program,” the budget summary reads.
The state board that distributes voter-approved school-construction money also has looked at the issue. A recent report called for major changes to the school facilities program, such as ending bond-funded purchases of portables and requiring districts to commit to spending to maintain new buildings.
In its report, the debt advisory commission said state law requires local school districts to have enough property tax revenue to make payments on the borrowing. But the recession likely upended that math and put a chill on bond sales.
“The data also reveals a marked jump in the percentage of the unissued authority post 2007,” the report reads. “Falling property values, likely, could not support the increasing tax revenue that was required to service additional debt.”
The property-tax outlook seems to be brightening. In its November fiscal outlook, the Legislative Analyst’s Office projected that local property taxes would grow by about 7 percent a year.
In addition to the recession, another possible reason for locals’ reticence to sell bonds was a lack of state matching funds, the report said.
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