California’s Proposition 51: School Bonds. Funding for K-12 School and Community College Facilities.

Commentary

California’s Proposition 51: School Bonds. Funding for K-12 School and Community College Facilities.

The bond would ultimately cost $17.6 billion to the state, accruing $8.6 billion in interest over the life of the bond.

Voter Guide: 2016 California Ballot Initiatives

Prop 51 allows the state to issue up to $9 billion in bonds to fund local K-12 and community college improvement, rebuilding and new building projects.

Fiscal Impact:

The bond would ultimately cost $17.6 billion to the state, accruing $8.6 billion in interest over the life of the bond. It would cost the state about $500 million per year.

Proponents’ Arguments For:

Proponents argue that there are massive backlogs of projects to improve California schools and community colleges or build new ones. The partnership between state government and bond funds and locally approved projects has worked well for decades, and it has been ten years since the last statewide school bond. Without a new school bond, educational facilities will continue to deteriorate and become less safe. Local government may then have to raise local taxes or fees in order to fund needed improvements.

While the state provides the funding via the bond, local school boards will plan and approve all projects and control how the money is spent. California’s future depends upon an improved education system and this bond is vital to providing that.

Opponents’ Arguments Against:

Opponents argue that state bonds are not the best way to fund local school and community college projects. Too much of the money goes to well-off districts with lots of new development. Governor Jerry Brown called Prop 51, “the developers’ $9 billion bond,” noting that it “promotes sprawl and squanders money that would be far better spent in low-income communities.”

California has run up an absurd amount of school bond debt already. Right now the state pays about $2 billion per year in payments on the existing $45 billion in school bonds outstanding. This measure would tack on another $500 million per year. It is long past time for some scrutiny on the use of past school bonds and why that money hasn’t been enough to keep up.

If there are legitimate local needs for school or community college construction funds, local governments can, and do, issue their own bonds to fund it. Voters approve three out of four local school bonds on the ballot, so school districts have access to capital if they need it.

Local funding along with local project development and oversight is more accountable to taxpayers and less likely to fund boondoggles or tax people in one county for projects built in another.

Discussion:

The first thing to consider when thinking about Prop 51 is to remember 2012 when voters approved Prop 30, a “temporary” tax increase to fund schools and community colleges. But here we are four years later, and look at Prop 55 on the ballot—a 12-year extension of that “temporary” tax hike for schools and community colleges. So both want another big tax hike and another huge pile of debt.

At the same time, total school enrollment in California has fallen steadily since 2004. Since the last time voters approved a statewide school bond 10 years ago, and certainly since the last big tax increase for education four years ago, the number of kids in California schools has declined! Yet the “need” for more funding keeps growing.

“But that “need’ is very suspect when you consider that Sacramento pulled a nifty bait and switch with the Prop 30 tax hike funds. The $6 billion raised by that “temporary” hike went into the school budget, but then the legislature and governor took $6 billion in other funds out of the education budget and used it for other parts of the budget. No net new money went to schools.

Why would Californians approve adding more debt to such an absurd, politically motivated system?

Californians have clearly signaled that education is important to them and they should demand a system than makes effective and efficient uses of resources without burying them in debt.Citizens should not continually bail out a system that constantly needs more money to serve fewer kids. A much better idea would be to push school districts and community colleges to better manage the funds and facilities they have based on the following:

· Local funding, and if need be, debt, along with transparency and local oversight, is more accountable and efficient in providing construction funds.

· The need for facility improvement and new facilities should be based on objective local analysis of enrollment trends, existing facilities, and all available options, not obscured in a statewide, politically driven allocation of funds.

· There are many creative ways to provide new facilities or even upgrade existing ones, including turnkey facilities provided as part of major new developments or public-private partnerships for renovations.

Everywhere in the economy we see things getting cheaper to produce. Technological improvements and more competitive materials markets mean schools should also see efficiencies in construction costs. Districts need to use the construction market to contain the costs of new school projects or major improvements, not have the costs go up every time.

Voter Guide: 2016 California Ballot Initiatives

Adrian Moore

Adrian Moore, Ph.D., is vice president of policy at Reason Foundation, a non-profit think tank advancing free minds and free markets.

Spence Purnell is a policy analyst at the Reason Foundation, where he works on pension reform, Florida policy issues and economic development.