California School Districts head down familiar path on debt and taxes

grant_high_school1I have always believed that if voters are going to be allowed to selectively choose to tax a specific segment of our community, that vote should require a supermajority. In the case of school bonds, that used to be the case. Not any longer.

In a recent Sacramento Bee commentary, Ed Ring points out how a change in the voter thresh-hold has opened the door to the potential abuse of taxpayers:

Every few years in November, moviegoers are treated to another James Bond film filled with deception, mystery and mayhem. Judging by the previews, the upcoming installment, “Spectre,” will be no exception. But as more voters are learning, Agent 007 isn’t the only Bond to wreak havoc during election season. In California, education bonds have buried taxpayers in $200 billion of debt to bondholders through 2055.

Now, a report from the California Policy Center explains the consequences of this bond debt and reveals the playbook used to pass these dangerous schemes. Like a rigged game of high-stakes poker, taxpayers may have a seat at the table, but for years haven’t stood a chance against the politicians, construction companies and investors colluding for political and financial gain. By shining a light on this vested interest problem, citing cautionary tales and outlining recommendations for reform, this report offers Californians the tools to fight back.

If your district has proven to your voters to be fiscally responsible and present a solid plan as to how the bond money will be spent, voters will approve the bond. In Robla, we passed our first bond in over 23 years with over 72% voter support. So, it can be done.

In fact, prior to Prop. 39 more than half of all school bond measures passed. As pointed out in this article, today 80 percent of all school bonds are approved. And I think we can all agree that not all of those bond proposals were worthy of passage.

In 2000, passage of Proposition 39 ushered in a new era of borrowing. The measure lowered the required threshold for passage of local education bonds from two-thirds to 55 percent. Since then, 80 percent of these bonds – 911 out of 1,147 proposed – have passed, totaling $110.4 billion in debt. Previously, these bonds had just a 50-50 chance of winning approval.

Let us not forget why the 2/3 vote thresh-hold was passed in the first place: because voters believed that state and local politicians abused their taxing authority. Unfortunately, the old  adage is true, “Those who do not learn from history  are doomed to repeat it.”

With this lower threshold, school districts have become more aggressive in pursuing construction projects. Combined with vague language and suppressed information (for example, projections of assessed property valuation and school enrollment are not easily accessible), voters are served a poisonous bond-measure cocktail, resulting in $200 billion of bond debt for California.

The case of Poway Unified School District is instructive. In 2008, the district asked voters to authorize borrowing $179 million to finance capital improvements, and the measure passed with 63.9 percent support. Today, thanks to controversial debt-financing practices that resulted in ballooning interest, property owners face $1.27 billion in debt service through 2051 – all thanks to a $179 million bond measure that garnered less than two-thirds support. Although district voters held school board members accountable for their actions, the burden on taxpayers cannot be undone.

Elsewhere, districts have claimed that Proposition 39’s ambiguous language gives them free rein to spend construction bond dollars. The Los Angeles Unified School District’s failed technology program provides a recent example. The LAUSD purchased iPads with proceeds from several construction bonds approved before the gadgets were even invented, leaving future generations on the hook for technology that may not even be around for them.

So, note to my fellow school board members: Let us not go down that path again. Voters have proven once that they are more than willing to take our authority away as we prove to be untrustworthy. And sadly, the true losers will be our kids.