Credit: flickr
In November 2016, voters approved a $9 billion school facilities bond measure that uses a funding system Gov. Jerry Brown wants to change.

Gov. Jerry Brown hasn’t given up his quest to reform how the state allocates money for school construction, even though state voters last month approved a $9 billion school facilities bond that left the current funding system in place.

Brown opposed Proposition 51. He said the bond measure, which will add about $500 million to the $2.4 billion the state is already paying annually in interest and principal payments on past school bonds, was too large, and the process for divvying the money is too convoluted and stacked against small school districts and low-income communities.

Now that what he called a “blunderbuss effort” has passed, Brown wants to revise the funding distribution system to make Prop. 51 more efficient and fairer to districts that wouldn’t get a share of the money under the current first-come, first-served basis. That prospect is worrying the coalition of school districts and the construction industry behind Prop. 51; they believe Brown might use his influence to sit on the money or not release bonding for Prop. 51 at all.

The spokesman for the state Department of Finance, which represents Brown on budget and fiscal matters, denies this will happen but confirmed that the Brown administration is exploring ways to carry out reforms.

The administration “will honor the commitment of voters and won’t sit on Prop. 51 by not issuing bonds,” said H.D. Palmer. “But the outcome of Prop. 51 did not change longstanding concerns for school financing in the state. The administration will engage with stakeholders to move forward on issues Gov. Brown has identified.”

But others predict that Brown will find that, for now, he’ll be able to change the system only at the margins. Prop. 51’s sponsor, California’s Coalition for Adequate School Housing, or CASH, crafted the initiative’s language explicitly to tie the distribution formula to existing law (the sections of the Leroy F. Greene School Facilities Act of 1998, starting here). The statute can be amended only by going back to voters or by the Legislature after 2020.

CASH wrote it that way so that voters would know what they were voting for, and school districts would know the rules, said Jenny Hannah, CASH’s chair and the chief facilities officer for the Kern County Superintendent of Schools Office.

What the State Allocations Board, which authorizes funding for school districts’ proposed building projects, can change are the regulations that flesh out the particular statute. The director of the Department of Finance chairs the board, whose members include the director of the Department of General Services, the superintendent of public instruction, three members of the Senate, three members of the Assembly, and another appointee of the governor.

But the scope of the revisions may be narrow, said Eric Bakke, interim co-director of Los Angeles Unified’s Office of Government Relations and the district’s expert on facilities. Any changes in regulations must be consistent with the applicable statute.

Of Prop. 51’s total, $2 billion in bonds will be reserved for community colleges and $500 million each for charter schools and career and technical education facilities. That will leave $6 billion for K-12 districts, split between new construction, which districts must match on a 50-50 basis, and modernization projects, for which the state will pay 60 percent of the cost.

In November, K-12 districts passed $16.5 billion worth of construction bond initiatives. That’s nearly three times what could be eligible for matching funding from Prop. 51. Many districts needing building renovations have waited years for an economic recovery and rising property values to fund larger bonds. Others, like Fremont and Dublin in the Bay Area, are dealing with increasing enrollments and a pressing need to build new schools.

In addition, districts have submitted about $2 billion worth of unfunded proposals since the last state bond initiative – $7 billion in 2006 – ran out of money. The State Allocations Board has reviewed and approved projects valued at about $300 million of the $2 billion. It has received but not reviewed the remaining $1.7 billion worth of projects.

Brown’s dislike of the state construction program is nothing new. He outlined his objections in the past several budget messages and reiterated them this year in the five-year state infrastructure plan (see pages 50-53). Criticisms include:

  • “Cumbersome” bureaucracy adds expense; more that 10 state agencies provide “fragmented oversight.”
  • The first-come, first-served process gives “substantial competitive advantage for large school districts with dedicated personnel to manage facilities.”
  • Funding eligibility is based on standardized building standards that discourage innovation.
  • Current rules were put in place when the state was expecting substantial enrollment increases; now, statewide forecasts project a slight decline in enrollment over the next decade.

Brown said the system should be changed to target districts most in need, giving priority to those with severe overcrowding. Funding should be on a sliding scale to help districts whose small tax bases can’t support their projects, he said.

Last spring, representatives of CASH and the governor began discussions, with the goal of agreeing on an alternative bond proposal that Brown could support for the November ballot. Talks broke down, and both sides walked away frustrated.

Palmer said the administration has not yet presented a specific proposal. Bakke said that he’ll be looking to Brown’s state budget message on Jan. 10, when the governor will comment on the state’s debt limit and bonding priorities, for a sign of what he intends to do.

“The perception in school district land is that the governor has leverage” on the State Allocations Board and might be “passive-aggressive” in issuing Prop. 51 bonds to get what he wants, Bakke said.

The Legislative Analyst’s Office, which issued its own ideas for reforming the system in 2015, is also examining the statute covered by Prop. 51 and regulations to determine what, if anything, can be revised, said LAO fiscal analyst Dan Kaplan. Its report likely will be issued in February.

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