Quick Guide: What California voters need to know about proposed $15 billion school construction bond

Credit: Henry & Co. on Unsplash

Credit: Henry & Co. on Unsplash

John Fensterwald

January 31, 2020

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The March 3 California ballot includes a $15 billion state bond issue to help schools, community colleges and universities with construction costs for their facilities. Last fall, the Legislature and Gov. Gavin Newsom placed the measure on the ballot by approving Assembly Bill 48.  It will appear on the ballot as Proposition 13.

Does it have anything to do with the Prop. 13 property tax initiative that voters passed in 1978?

No. They just happen to have the same number. Every 10 years, the state repeats the cycle for numbering measures on the state ballot in the order they come in. Passing the school bond will not alter the previous Prop. 13.

Why is it needed?

The state has traditionally shared the cost of construction with school districts, community colleges and universities. Since 2002, voters have approved four bond measures totaling $45 billion, with 80 percent allocated to K-12. The last bond, in 2016, was for $7 billion strictly for K-12. All the money from that bond has been allocated or committed to districts that have applied.

School districts and community colleges also pass bonds for school construction and repairs not covered by state aid. Local bonds require 55 percent of voter approval to pass. State bonds like Prop. 13 require a simple majority of voters statewide.

How will the money be spent?

• $6 billion for higher education, with $2 billion each for community colleges, California State University and the University of California.
• $9 billion for K-12:
  • $5.2 billion for renovations, with $150 million earmarked for testing and reducing lead in school water.
  • $2.8 billion for new construction.
  • $500 million for charter school facilities.
  • $500 million for career technical program facilities.

EdSource has updated, with information on the proposed school construction bond on the March 3 ballot, a video we produced last fall on Fresno Unified’s struggles to fund school renovations. The video highlights the need for some of the reforms that are included in the bond measure before voters.

What will be the total cost?

The Legislative Analyst’s Office estimates the full repayment to be $26 billion over 35 years, paid out of the General Fund of the state budget. This includes the $15 billion principal plus $11 billion in estimated interest based on selling bonds over 5 years at a 4 percent interest rate. The annual repayment of $740 million would equal 0.5 percent of the General Fund.

How will the K-12 portion be distributed to districts?

Because of Newsom’s insistence, Prop. 13 will distribute money based on new priorities, with additional help for districts struggling to raise money. Schools with the biggest health and safety needs, schools needing to remove lead in school water and those districts with tiny tax bases will get top priority. Ten percent of state money will be reserved for districts with 2,500 or fewer students. And low-income, low-wealth districts will get up to 5 percent more of state matching money.

Small districts with too small a tax base to fund school projects, and districts with predominately low-income families combined with insufficient taxable property have argued they’ve been disadvantaged under the existing first-come, first-served system of distributing state funding. That system didn’t consider districts’ capability to fund construction. A study from the 2018 Getting Down to Facts research project, led by Stanford University and the nonprofit PACE, documents these problems.

How would passage of the state facilities bond affect my property taxes?

In three ways for districts that choose to renovate or build new facilities:

1. Districts that apply and deemed eligible could receive matching state funding on a sliding scale for individual school projects: between 50 and 55 percent of the cost for new construction and between 60 and 65 percent for the cost of renovation. As a result, passage of the state bond could lower the cost of a local school project and reduce the increase in property taxes for a potential future local school bond.
2.  State law limits how much school and community college districts may issue in local bonds, based on the total assessed value of property in the district. The current ceiling of 1.25 percent of assessed value for elementary and high school districts would rise to 2 percent if Prop. 13 passes. The ceiling of 2.5 percent of assessed value for unified and community college districts would rise to 4 percent. Districts bumping up against the ceiling already have the ability to see a waiver from the State Board of Education to raise go above it. The new limits would particularly help areas in the state, like the Central Valley and the Inland Empire, east of Los Angeles, where property values still have not recovered from the Great Recession.
3. School districts can charge fees to residential developers to defray the cost of new students the development would bring. Prop. 13 would reduce the fees on multi-residential developments by 20 percent for the next five years. It also would eliminate developer fees for apartment complexes and other multifamily residential developments built within a half-mile of a major transit stop.  A reduction in developer fees of this magnitude could raise taxes, to a small degree, of homeowners who would have to make up the difference in districts with new multi-residential buildings. Negotiators for Gov. Gavin Newsom insisted on the cut in  fees in order to encourage more high-density housing; it was not part of the original bond legislation that the Legislature considered.

How will the higher-ed portion work?

The UC and CSU systems administer their own construction projects. The CSU trustees and the UC regents would have to adopt 5-year plans to expand affordable housing on campus and give top priority to buildings with the most pressing safety concerns to qualify for state bond revenue.

Who are key supporters and financial contributors?

Support is coming from Newsom, dozens of legislators, the California Teachers Association and the California Federation of Teachers, the California Charter Schools Association, numerous school groups, including the California State PTA, associations representing school boards, administrators and business officers, the UC regents, UC trustees, and the community colleges’ board of governors. It also has key business backers: the California Building Industry Association, California Business Roundtable and California Chamber of Commerce.

The largest donors, as of Feb. 14, include the California Coalition for Public Higher Education Issues Committee, $1,750,000; Californians for Quality Schools, sponsored by the California Building Industry Association, $1,250,000; Coalition for Adequate School Housing, an industry-based lobby, $1,050,000; CTA, $500,000; California Charter Schools Association, $400,000; and United Brotherhood of Carpenters and Joiners of America, $334,000.  The “yes for Prop. 13” coalition had raised $9 million.

Who are the key opponents of Prop. 13?

No money has yet been raised to oppose the measure. The only opponents listed on the nonpartisan, popular election website Ballotpedia are the Howard Jarvis Taxpayers Association and Sen. Brian Jones, R-Santee.

Where can I learn more about Prop. 13?

• Full text of Proposition 13
• Analysis from the Legislative Analyst’s Office
• EdSource video: Achieving fair funding for school modernization: a case study
• Secretary of State’s Quick Guide to Proposition 13
• Financing School Facilities in California: A 10-Year Perspective

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