Capitol Alert

Stymied in Legislature, school bond backers go their own way

The exterior of the Yuba College Sutter County Center on September 13, 2012 in Yuba City, Calif. Voter-approved borrowing helped pay for the project. Proposition 51 on the Nov. 8, 2016 ballot allocates $2 billion for community college projects.
The exterior of the Yuba College Sutter County Center on September 13, 2012 in Yuba City, Calif. Voter-approved borrowing helped pay for the project. Proposition 51 on the Nov. 8, 2016 ballot allocates $2 billion for community college projects.

California voters last saw a statewide school construction bond on their ballots a decade ago, but that’s not for lack of interest by bond supporters.

The recession took bonds off the table as a viable electoral option. Bond backers then stood down in 2012 and joined Gov. Jerry Brown and others in the campaign to pass tax hikes to raise money for schools. Two years later, a bill to place a school bond on the November 2014 ballot fizzled after Brown’s office signaled its opposition.

This election cycle, school bond advocates didn’t wait for permission.

Home builders, school construction companies and others, bypassing the Capitol, spent millions to gather signatures to qualify a $9 billion school bond for the ballot. Eleventh-hour Capitol negotiations to craft a smaller substitute bond in June went nowhere, securing Proposition 51’s fall placement.

“It felt like the time for talk and debate was over,” said Rob Pierce, Elk Grove Unified School District’s associate superintendent for facilities and planning.

Proposition 51 would kickstart a largely dormant state school construction and modernization program and maintain the state’s major role in paying for it. It would prevent sharp increases in new-home construction fees as well as preserve a local development planning process favored by home builders.

The billions secured by Proposition 51 would be allocated under a framework nearly 20 years old, when California school enrollment was increasing and local school bonds needed to pass by a two-thirds vote, instead of the current 55 percent.

The Brown administration has been among the biggest skeptics of more school borrowing, slamming the current program as expensive, inefficient and one that should be retooled to help only the neediest districts.

H.D. Palmer, a spokesman for Brown’s Department of Finance, said Proposition 51 “perpetuates the status quo” while saddling the state with an additional $500 million a year in general fund debt service, on top of more than $2 billion in debt service from earlier school borrowing.

Brown, though, has said little publicly about the measure in recent months and did not sign the ballot arguments against it. He instead has focused his November energies on passing Proposition 57, which would change parole rules, and defeating Proposition 53, which could undermine his administration’s Delta tunnels project.


Proposition 51, supporters, meanwhile, have raised almost $9 million and locked up support from lawmakers and other elected officials from around the state. An April public poll found that nearly two-thirds of likely voters backed the idea.

Delaine Eastin, California’s state schools superintendent from 1995 until 2003, said the quality of school buildings reflects a society’s values.

“Kids are young, but they’re not saps. They’ve been to the mall and they know what it’s like when grown-ups think something is important,” Eastin said.

The number of school-age kids, though, has slipped since the last statewide bond in 2006, from about 6.3 million to 6.2 million, and state officials project a continued slide over the next decade. Yet Proposition 51 allocates the same amount of money to building new K-12 classrooms – $3 billion – as to modernizing existing ones.

“Proposition 51 wastes money favoring construction of new schools over remodeling existing schools,” critics of the measure wrote in a voters ballot guide.

Supporters of Proposition 51, though, say there is still plenty of need for new-construction money. While statewide enrollment is down, almost one-half of counties had enrollment increases during the past decade.

“There’s still a significant amount of growth,” longtime education lobbyist Dave Walrath said.

8 percent Change in K-12 student enrollment from 1998 to 2006

-1 percent Change in K-12 student enrollment from 2006 to 2016

The bond also locks in place the school building program crafted in 1998 by Walrath and others. Known as Senate Bill 50, the legislation ended years of argument about who paid for new school buildings. Under the law, the costs generally are covered by a mix of local borrowing, new-home fees and state bonds.

A trio of Republican and Democratic governors – Pete Wilson, Gray Davis and Arnold Schwarzenegger – embraced the approach, signing legislation putting school bonds on the 1998, 2002, 2004 and 2006 ballots totaling almost $45 billion.

But in his January budget proposal, Brown scolded the program as allocating money on a “first-come, first-served basis, giving districts with dedicated facilities personnel a substantial advantage.”

A review of State Allocation Board data shows that the state’s largest districts, representing about 30 percent of total 2015-16 enrollment, received almost one-quarter of the new-construction money from the last three school bonds. Those districts received about 36 percent of the modernization money, with the largest share going to mammoth Los Angeles Unified, where many schools are decades old.

Motivating the unsuccessful talks on a substitute June bond was the goal by teachers unions and others to keep the November ballot free of anything that could undermine a proposal to extend the 2012 tax hikes, which became Proposition 55.

Both sides were far apart. “We never got past whether the state has a role or not,” said Richard Lyon, senior vice president of the California Building Industry Association.

Real estate and development companies have contributed at least one-half of the money raised by the Proposition 51 campaign, state filings show, with construction companies and other building-related donors also giving heavily. The industry’s involvement has been singled out by Brown, who derided it as “the developers’ $9 billion bond” earlier this year.

Lyon rejected that description, saying the bond simply helps pay for a school facilities program created by the Legislature itself in 1998.

Yet real estate interests have a clear financial stake in Proposition 51’s success. The measure would prevent districts from raising new-home fees to help pay for school construction – a prospect that lately has moved much closer to reality

The state board that distributes school building money declared in May that the state bond pot was empty, triggering a fee-hike provision in SB 50. The California Building Industry Association immediately sued, but a judge last month ruled in favor of the state, and districts around California reportedly are weighing fee increases.

Also, Proposition 51’s failure would activate a far-reaching provision of the 2006 bill that put the last school bond on the ballot. If any future school bond failed after 2012, the measure read, then the state would return to a pre-SB 50 world that home developers view as a particularly bad time for business.

“We had projects being held up. We had developers fighting with school districts, and local governments were caught in the middle,” Lyon said.

The current facilities program could always be improved but it has worked well when the state puts money into it, Walrath said. If Proposition 51 passes, another school bond may be proposed as soon as 2020, he said.

“If you believe there is a state role and an equity responsibility, then you look at that and go, ‘we need to have the state program continue,’ ” he said.