Economy, Other Factors Bring School Bond Glut To Ballots
October 17, 2012 1:20 p.m.
Ron Bennett, president and CEO at School Services of California, Inc.
Kyla Calvert, KPBS education reporter.
Related Story: Economy, Other Factors Bring School Bond Glut To Ballots
ST. JOHN: The two biggest state propositions on the ballot are competing school funding measures. But here in San Diego, we'll also vote on a record number of school bond measures. What exactly will all this mean for us voters? Money for education has to come from somewhere. What choices do we have about how to pay for schools? Our guests, KPBS education reporter Kyla Calvert. Thanks for being here.
CALVERT: My pleasure.
ST. JOHN: And Ron Bennett, president and CEO of school services of California. Thank you for joining us.
BENNETT: Good afternoon. Thank you.
ST. JOHN: The school services of California is a private organization that helps school districts sort out their budget. Let's listen to a story put together by Kyla that explains a bit of what's going on.
(AUDIO FILE)CALVERT: When San Diego County voters look at their November ballots, most will see at least one school bond measure. Some will see as many as three. That's because 11 county school districts and community colleges have bonds on the ballot. The most in any one election since at least 1990. And the largest bond in the county and the state is San Diego unified's proposition Z. They are asking for property taxes in $2.8 billion in education costs. There is at least one simple reason for the school bond glut.
NEW SPEAKER: There is no money available at the state or very, very little. So any kind of renovations, anything they need to do in their facility, they have to go to the people. They don't have any operation dollars to do this.
CALVERT: In 2005, the state did away with funding set aside for maintenance costs. San Diego unified got voters to approve another bond, proposition S, just four years ago. But Scott Barnett says the recession undermines the housing values it relied on.
NEW SPEAKER: If the house was worth $400,000 when prop S was passed and maybe generated $240 a year in tax revenue, that house might be worth $300,000 now and is only generating $180 a year. So there's less revenue available to pay off the prop as bonds.
CALVERT: Barnett says without a new bond, projects under the old bond would stop or the district would have to use riskier forms of debt that count on housing values skyrocketing in the future. That doesn't satisfy Chris cade of the taxpayers association who says replace maintenance was -- maintenance was supposed to happen under the first bond. At least three other bonds in November are efforts to raise more revenue where property values have fallen and brought previous bond projects to a halt. Even when they have the money to fund repairs, bonds for facility upgrades are inevitable.
NEW SPEAKER: Facilities continue to wear over time. And they have to constantly be modernized, upgraded, and there's infrastructure issues.
CALVERT: Upgrading school technology was part of San Diego's last bond, and it'll be part of the new bond too. Those are costs the district didn't even know would exist when it drew up a long-term facilities plan almost 20 years ago.
NEW SPEAKER: Out of 380 medicine that we spent on prop S to date, $100 million has been spent on computer technology, wireless, wiring, and all that, and $50 million has been spent on actual computer technology.
CALVERT: Spending on things like computers and iPad should raise a red flag.
NEW SPEAKER: Should you be funding iPods and laptops with 40 year bonds?
CALVERT: All 11 of the bonds voters will vote on include technology, some cover infrastructure and wiring, while others fund computers and devices. Ducic says this isn't a bad time to borrow. She says they can benefit from lower construction costs.
NEW SPEAKER: It's an opportunity for them to borrow at a lower cost and also get the building done that they need at a cheaper cost.
CALVERT: With two duelling statewide tax increases on the ballot, school districts are still betting voters will see value in voting for school construction and repair now.
ST. JOHN: That put us in the picture about a lot of the issues on this. And Ron Bennett of school services of California, I'd like to ask you right off the bat, we've got 11 school bond measures as we just heard in Kyla's piece. Is this a growing trend statewide?
BENNETT: This will be remembered, I think, as one of the times when communities have said the state isn't doing the job for us and we're going to step up and do it ourselves. We have more bonds on the ballot for November statewide than we have ever had since the '80s when school districts were allowed to have bonds. And we've been be tracking them ever since then. And this one election will indeed be the highest number we've ever had.
ST. JOHN: And it used to be that we would vote for state bonds, and the local bond measures would supplement that money, right?
BENNETT: That's correct. In the past, the state has passed bonds that put up about half of the money. But the state can only do that in even-numbered year, and because of its own borrowing problems, it did not have a state bond in 2010, the state also did not put a bond on the ballot in 2012. And so as Laura ducic related in the foundation for the story, the state simply is out of money. So school districts that need to advance their facilities are basically on their own. And we're seeing a lot of communities step up. More than 75% of these bonds I predict will pass. And maybe a lot more than that.
ST. JOHN: Now Kyle Awhat about proposition Z? That's the largest one in the whole state. What are voters being asked to approve?
CALVERT: Well, a lot of, as we heard Scott Barnett say, a lot of it will continue projects that were approved that voters approved under the previous bond, proposition S. So that includes rolling out I21 classrooms which are smart boards and each classroom a one to one student to device ratio that includes the infrastructure to support all that technology, then it includes things like repairing roofs and improving kitchen and athletic facilities. So it continues those projects and adds a lot of similar projects across the district. And Barnett said that this would complete that 20-year plan that the district drew up in the mid-'90s and leave them without deferred maintenance costs. Who know fist that's ever true?
ST. JOHN: You reported in the story that the money from the first bond that was passed in 2008 hasn't even yet been raised because of falling property values. How is a voter to know that this measure is going to be any better?
CALVERT: I don't know!
[ LAUGHTER ]
ST. JOHN: Is this a better time period-wise to be passing bonds as a voter?
ST. JOHN: Explain why.
BENNETT: Absolutely this is a better time to be passing bonds. We have low interest rate, low construction costs, and for every billion dollars of that bond, the coalition for adequate school housing estimates that 13,000 jobs will be created in the local community. So California has a jobs problem, a school facility problem, the issue about using the money for technology, I'd like to address that.
ST. JOHN: That's a really important issue. Buying a computer that might be updated in it a couple of years, and you're still paying for it 40 years down the line, voters wonder about that.
BENNETT: They do. When you buy a new home, there are things in that new home that are going to last 50 years, there are things that are going to last five years. The appliances, things like that, that might come, the heating and air conditioning systems, even down it a thermostat or something. Not everything in the facility, whether it's a home or a business facility or a school is going to last 30 or 40 years. Some of it will not. But the point I'd like to make about technology is that truly our facilities are competing for the dollars in our classrooms right now. Because the state is not providing separate money for facilities. So we have district, that will, if prop 30 fail, shorten the school year by a month. We have diminished the number of teachers in California from about 300,000 to about 250,000 now. We have the largest class sizes in the nation. And if we're going to leverage our schools to provide a world-class education in a big urban district like San Diego, we're going to do it with technology. And a very small percentage of the money in most of the bonds statewide goes to this technology, just like a very small percentage goes to the paint on the building that isn't going to last 30 years either. But it's a very important part of keeping this program going over time. And the state does provide money from time to time to replenish that technology.
ST. JOHN: Okay.
BENNETT: So I think you have to look at it in the long-term.
ST. JOHN: But there's some speculation that the districts might be using these bonds to hedge against the possibility that the governor's tax initiative, prop 30, doesn't pass. Can they use this money to backfill that?
CALVERT: Well, they are separate pots of money. But there are certain things that could in certain circumstances come out of your operation budget. Something like maintenance costs or the cost of devices, iPad, laptops, that sort of thing. Under the state constitution, districts are allowed to spend bond money on those things, as long as it's included in the rundown. If they can take those things that are allowed to be funded under bonds out of there --
ST. JOHN: A little bit of cross fertilization there.
CALVERT: Exactly. But I just wanted to say, I think Scott Barnett said 4% of the bond money is slated for spending on devices. So it is a relatively small amount.
ST. JOHN: Okay.
CALVERT: And the point that the taxpayers association was making was that those should be operational funds.
ST. JOHN: One more question is the Poway bond which turned out to be not a good deal for the ratepayers. You're paying for this out of your property taxes to pay back these bonds. So is there something that a voter should look at in this initiative to find out that this is a good deal for me?
BENNETT: Well, I think what scares voters is the time value of money. When you finance a new home, you know it's going to cost about three times the amount of the loan when you finance it over 30 years. If you go 40 years, it's even more than that. And that time value of money builds up very quickly. Of course you have the use of the money for that time as well. And I think that the key is full disclosure. I think San Diego unified's done a good job of full disclosure. I think the comments you've heard from the taxpayers association, all of those indicate that there's been a lot of disclosure.
ST. JOHN: Okay. And Kyla you're saying that there's one exception to what the taxpayers association is supporting?
CALVERT: Well, the taxpayers association hasn't -- has said they don't support proposition Z, but they're not necessarily against the long-term bonds where we're waiting to pay back.
ST. JOHN: Good. Sorry we ran out of time.