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The only state measure on the March 2020 ballot would send $15 billion to California public schools and higher education institutions for construction and renovation projects. It would come with an estimated 35-year price tag of $26 billion, when interest on the new bond debt is factored in.
Some $9 billion would pay for public pre-K-12 school projects and $6 billion would pay for projects at public community colleges and universities.
In some ways, the new Proposition 13 of 2020 is a lot like past school construction bonds backed by the state’s general fund.
Supporters say the new bond will help schools deal with urgent safety needs like mold, asbestos and lead in drinking water, among other things.
That’s exactly how Gov. Gavin Newsom pitched the bond in his state of the state address Wednesday: “If the voters approve it, we may soon see more school buildings newly free of lead and toxic mold,” he said.
Safety projects are often prominently featured in state and local school bonds, though money is also regularly spent on flashier projects like new technology and athletic facilities.
But despite messaging that centers on present and future school facility needs, nothing in Prop. 13 stops state funds from going to school projects that have already been completed. The same phenomenon exists with the funds approved by voters in a 2016 school construction bond measure, Prop. 51.
For example, state records showed Poway Unified received nearly $28 million Prop. 51 bond dollars for a newly constructed school that opened in 2014 – two years before voters approved the bond. Chula Vista Elementary district received nearly $13 million for a new school that opened in 2013, while more than $11 million went to Solana Beach Elementary district for a new school that opened in 2014. And more than $31 million went to San Marcos Unified for a new school that opened a few months before Prop. 51 was approved, just to name a few.
A backlog of state funding applications is largely to blame, and a backlog still exists. A long list of projects approved for Prop. 51 funding are still awaiting money, while another long list of projects seek funding beyond what Prop. 51 can provide.
Old projects left in the queue may ultimately get funds from the new Prop. 13 bond. There are no prohibitions against reimbursing for old school projects in the new bond, state officials with the Office of Public School Construction confirmed. And the legislation authorizing Prop. 13 specifically cites a need for more state money to address old project applications still waiting for money.
What is not completely clear, however, is whether projects already in the pipeline would be subject to the old funding system or the new one Prop. 13 would create, an issue that “may need to be clarified through clean-up legislation” afterward, said Amy Li, an analyst with the nonpartisan Legislative Analyst’s Office.
What is clear, though, is that this time around, a lot would change if Prop. 13 passes, including certain aspects of local school facility funding.
No More First-Come, First-Serve
If approved, Prop. 13 would do away with the state’s first-come, first-serve school facility funding application process, long criticized for favoring larger, wealthier districts or those “with the most lobbyists” and not those with the most need, as described by San Diego County Superintendent of Schools Paul Gothold in an op-ed supporting the new state bond.
In its place would be a system that earmarks some money for small districts and favors districts with less capacity to raise local money that serve more vulnerable youth, like foster children, English-learners and those from low-income families, by giving them more state money.
Typically, under the current system, the state may pay for 50 percent of new school construction projects and 60 percent of school renovation projects, but the new rules would give needier districts up to 55 percent for new construction and up to 65 percent for renovation projects.
Application priority would also go to projects addressing health or life safety hazards, as well as testing and fixing lead in school water.
“Schools grappling with safety concerns like seismic risks, toxic mold or lead removal, would receive first consideration, followed by smaller districts and those with low property values that inhibit their ability to finance larger bonds,” an endorsement by the California School Boards Association reads.
School districts that have a project labor agreement, mandating that construction workers pass through union halls, will also receive favor under the new system.
Higher Local Debt Caps and Fewer Developer Fees
The new Prop. 13 would also open the door for school districts to issue more local bond debt by increasing existing local debt limits.
Specifically, Prop. 13 would increase the current local bond debt limits for K-12 districts from 2.5 percent to 4 percent of local assessed property values, and elementary and high school district limits would rise from 1.25 to 2 percent.
The change could spur districts to put new local bond measures before voters to reach the new limit. It may also allow districts with existing bond measures to more quickly sell any remaining bond debt not fully tapped yet, according to officials with the state Office of Public School Construction, which manages the state’s school facility grant program.
In that scenario, though, districts would still be subject to the original tax rate limits approved by voters, which must fall under the tax limits put in place by Prop. 39 in 2000, when voters also made it easier to pass local bond measures, said Li.
But officials with the California School Boards Association urged caution for districts going down that path.
“Any district that thinks they can apply the Prop. 13 local debt caps to past or existing local bond measures – as opposed to new ones – should consult their bond counsel, but it’s not recommended and not within the parameters of the measure as we see it,” wrote California School Boards Association spokesman Troy Flint in an email.
Both scenarios – seeking voter approval for new local bond measures or selling more bonds under prior measures – could put Prop. 13 money in reach for districts that currently don’t have the local matching funds needed to be eligible.
Jon Coupal, head of the Howard Jarvis Taxpayer Association, argued in a recent op-ed against Prop. 13 that allowing for more local bonds “will likely also increase property taxes on all homes and businesses” making California home ownership more expensive. Coupal also blasted Prop. 13’s prioritization of projects that include project labor agreements, saying it will limit bid competition.
Separately, Prop. 13 would also reduce some of the developer fees districts can collect from apartment complexes and ban certain developer fees from multifamily developments located within a half-mile of a major transit stop until 2026, according to the measure.
The fees at issue are separate from Mello Roos fees, often collected from homeowners in new developments to pay for new schools or roads.
If approved, Prop. 13 would be the fifth state school facility bond measure passed since 2002. Previous measures funded $45 billion in projects. Most recently, Prop. 51 in 2016 gave $9 billion for schools and community colleges facilities.
According to the state’s Legislative Analyst’s Office, more than $37 billion of those bonds have already been sold to date, and the remaining bond funds are mostly spoken for.
Existing debt from the past measures costs California $2.9 billion annually.
The new Prop. 13 would add an estimated $740 million in debt annually for 35 years, an amount totaling 0.5 percent of the state’s annual general fund budget, per the LAO.
Newsom supports the bond and pushed to add priorities to reform the state’s school facility funding system. Millions of dollars have poured in to support Prop. 13, while little has been spent opposing it, secretary of state filings show.