Authorizes $9 billion in general obligation bonds for new construction and modernization of K-12 public school facilities, charter schools and vocational education facilities; and also California Community Colleges facilities.

Key Points:

BACKGROUND

There are currently about 6.4 million students enrolled in California’s 10,000 public K-12 schools and 113 community college campuses. The California Constitution declares that public education is a state responsibility.  Today many public school facilities do not meet basic health and safety standards.  Some are technologically outdated, contain hazardous materials, are overcrowded, and/or require earthquake retrofitting.

Funds for remediation of these issues have traditionally come in part from the sale of state general obligation bonds. The funds thus generated are used as matching grants for local district projects. To acquire state funds, districts must generally provide 40% or 50% of the cost of any eligible project, although there are hardship exemptions for low-income districts. Local money is most often raised through local school bond measures. 

In 2014 some state legislators wanted to put a $10.4 billion school bond measure on the November ballot.  However, Governor Brown wanted emphasis in that election to be focused on two other state fiscal measures – a water bond and a Rainy Day Fund (Props. 1 and 2).  The school bond measure passed the Assembly unanimously, but died in the Senate and never reached the Governor’s desk.

In his 2015 budget proposal, Governor Brown raised the question of whether the funding of school projects through statewide bonds should even be continued.  He suggested that there should be a “dialogue on the future of school facilities funding.” In response, the signature-gathering drive that ultimately resulted in Prop. 51 was initiated, and one of the biggest contributors to the signature drive was the construction industry.  This is the first time that a general obligation bond initiative was put on the ballot by someone other than the legislature.

PRIOR LEGISLATION

In 1998 the California Legislature enacted SB 50 – the School Facilities Act.  That measure created a State School Facilities Fund, changed the process by which school building plans are approved, and raised the fees developers must pay to mitigate effects on school districts. SB 50 only went into effect, however, upon passage of Prop. 1A on the November 1998 ballot.  Prop. 1A provided for the sale of $9.2 billion in general obligation bonds for eligible school construction projects, and it passed by over 60%. 

Subsequent to 1998, California voters passed three additional state bond measures for renovation and construction of kindergarten through university facilities:

• In November 2002, voters approved Prop. 47, which authorized the sale of $13 billion in bonds.
• In March 2004, voters approved Prop. 55, which authorized the sale of $12.3 billion in bonds.
• In November 2006, voters approved Prop. 1D, which authorized the sale of $10.2 billion in bonds.

Funds from all of the 1998-2006 measures have been exhausted. No new state public school facility bonds have been approved by voters since November 2006.

In November 2000, California voters passed Prop. 39, which allowed local school bond measures to be approved by only 55%, rather than the previously required 67%.

THE FINE  PRINT

The amount designated for K-12 school facilities is for four types of projects: new construction ($3 billion), modernization ($3 billion), career technical education facilities ($500 million), and charter school facilities ($500 million). The rules of the state’s existing school facility program would apply to these funds.

The $2 billion community college funding is for any facility project, including buying land, constructing new buildings, modernizing existing buildings, and purchasing equipment. Consistent with existing practice, the Legislature and Governor would approve specific community college facility projects to be funded with the bond monies in the annual budget act.

In addition to the sale of bonds, Prop. 51 has provisions that would: 

• Prohibit any amendment to the fees developers must pay to fund school facilities until Dec. 31, 2020 or until all bond proceeds are spent, whichever comes first. School districts, but not community colleges, can raise funds for school facilities by charging fees on new development. Since 1998, school districts have raised $10 billion from developer fees.
• Prohibit any amendment to the process the State Allocation Board uses for allocating school construction funding with regard to these bonds.

Some foes of the measure allege that these items, particularly the first one, were added to Prop. 51 to benefit the construction industry in return for their support of the measure.

FISCAL EFFECTS

As is the case with all general obligation bonds, the cost to the taxpayers over the 35-year life span of the bonds is approximately double the original bond sale amount, due to interest payments (debt service). The state is currently paying more than $2.7 billion annually to service debt from previously issued K-14 school facilities bonds. Passage of Prop. 51 would add another $500 million annually.

Prop. 51 would freeze for up to four years the fees developers must pay for school construction that serves their residential tracts.  The fees could not be raised until all bond funds had been spent, or until December 31, 2020, whichever comes first.  The result might be that home prices would not rise as quickly, since the developer fees are generally passed along to home buyers.

Arguments In Opposition:

• Prop. 51 funding would likely go to large wealthy districts which would receive the lion’s share of funding.              
• Prop. 51 would block reforms to make developers pay their fair share of school funding.  It was created by the construction industry for their benefit.
• Prop. 51 could fund projects with a lot shorter useful life than the 35 years needed to pay off the bonds.

Arguments In Support:

• Prop. 51 would make protecting students a top priority by addressing the backlog of local school projects designed to ensure facilities meet basic health and safety standards.
• Prop. 51 would help veterans to better transition back to the workplace through upgrades to vocational education classrooms facilities.
• Prop. 51 would protect local taxpayer control over every project as prior school bond projects have done.

More about Supporters:

Yes on Californians For Quality Schools – www.californiansforqualityschools.com

Supporters of Prop. 51 include:  (Signers of the official arguments are in bold.)

• Justine Fischer, President, California State PTA
• Ken Hewitt, President, California Retired Teachers Association
• Larry Galizio, CEO, Community College League of California
• Tom Torlakson, State Superintendent of Public Instruction
• California School Boards Association
• California School Nurses Association
• California Taxpayers Association
• Faculty Association of California Community Colleges
• California Democratic Party
• California Republican Party
• California Building Industry Association
• Northern California Carpenters Regional Council
• League of Women Voters of California

Major Financial Contributions as of August 17, 2016 include:

• Californians for Quality Schools, Sponsored and Funded by Coalition for Adequate School Housing Issues Committee and California Building Industry Association Issues Committee ($8,344,478)
• Community College Facility Coalition Issues Committee ($121,850)        
• Torlakson’s Invest in California a Ballot Measure Committee to Support Proposition 51 ($41,050)

Financial data from: Cal Access:  http://powersearch.sos.ca.gov/advanced.php

More about Opponents:

California Taxpayers Action Network – www.caltan.org

Opponents of Prop. 51 include: (Signers of the official arguments are in bold.)

• G. Rick Marshall, CFO, California Taxpayers Action Network
• Wendy M. Lack, Director, California Taxpayers Action Network
• Governor Jerry Brown
• California Taxpayers and Educators Opposed to Sprawl and Developer Abuse

No financial contributions have been made as of August 17, 2016.

Financial data from: Cal Access:  http://powersearch.sos.ca.gov/advanced.php