Nov082016

Proposition 51: How should California pay for its schools?

Since California can’t properly fund its schools with property tax revenues, school districts must look to other sources. Is there a better way?

California-BankruptWhat is the appropriate way to pay for schools? Most jurisdictions pay for schools with local property tax dollars, and since Proposition 13 was passed, California public schools, which during the 1960s had been ranked nationally as among the best, decreased to 48th in many surveys of student achievement. California’s spending per pupil was the same as the national average until about 1985, when it began decreasing.

With property taxes greatly reduced as a source of school funding, California schools increasingly depend on money from the general fund. With the many competing ends for general fund tax dollars, schools often face budget shortfalls and limited funds for improvements. California passed Proposition 98 to address problems with obtaining sufficient funds from the general fund for operation, but schools still face ongoing shortages of funding for capital improvements.

To apply another band-aid to the wound inflicted by Proposition 13, California voters must consider another measure, Proposition 51, which 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 California Community Colleges facilities. Fiscal Impact: State costs of about $17.6 billion to pay off both the principal ($9 billion) and interest ($8.6 billion) on the bonds. Payments of about $500 million per year for 35 years.

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The official pros and cons are as follows:

PRO: Our children deserve safe schools where they can learn, but many schools and community colleges need repairs to meet health and safety standards. Prop. 51 will fix deteriorating schools, upgrade classrooms, and provide job-training facilities for veterans and vocational education. All projects are accountable to local taxpayers.

CON Prop. 51 was created for greedy developers to exploit taxpayers for profit. Prop. 51 stops legislators from providing fair school funding. Disadvantaged schools are left behind. There’s no improvement in taxpayer accountability. It does nothing to fight waste, fraud and abuse. Governor Brown opposes Prop. 51. Vote NO on 51.just_say_no

The fact is that many schools and community colleges need improvements. If this bond measure isn’t passed, many schools in poorer districts won’t make the needed improvements, further deteriorating an already poor quality of education. The districts with growth will soak the developers and homebuilders with increased impact fees to make improvements, and the other districts will simply go without.

California Developers and School Districts Fight Governor Over School Bond

Gov. Jerry Brown says initiative would increase state debt, proponents say it is crucial for school facilities

By CHRIS KIRKHAM, Nov. 5, 2016

A battle over who should pay for public school construction in California pits developers, home builders and school administrators against Gov. Jerry Brown over a $9 billion state bond referendum on November’s ballot.

At issue is how much the state, local school districts and residential developers should pay toward school facilities across California. Developers and home builders across the country typically pay one-time fees for additional infrastructure such as schools, roads and parks for new residents.

The issue is more complex than that. While builders and developers will pay more in areas of growth, in areas with little or no growth, this is not a potentials source of revenue.taxman

In California, those fees are among the highest in the nation—an average of $72,000 a home in the Bay Area, compared with a low of $2,600 in Houston, according to housing research firm Zelman & Associates. The nationwide average is about $21,000, according to the group.

Home builders in California argue that if voters don’t approve the statewide bond—as they have four times since 1998—more of the cost burden will be shifted to developers, increasing the price tags of new homes in a state with some of the nation’s highest housing costs.

This reporter is not a supporter of Proposition 51. Did you notice how he portrays developers a needy and greedy because they always have their hand out?

“People get priced out of the market because of things like this,” said Don Hofer, a vice president for northern California at Shea Homes, a large builder in the state. “It’s the continual incremental creep in the cost of supplying new housing that just continues to sideline families and individuals throughout the state.”

Unfortunately, this defense is mostly bullshit. As costs to complete go up, land residual goes down. This hurts landowners, investors, and developers who own land, but unless this decrease in land value causes sellers to keep properties off the market, it won’t impact the housing market. The resale price of a finished house has no bearing on the cost of production. If costs go up, builders lack the pricing power to pass this cost on to consumers.

Gov. Brown has dubbed it “the developers’ $9 billion bond,” calling it a “blunderbuss effort” that would increase state debt

That’s an accurate assessment.

and give an advantage to wealthy school districts that have more resources to apply for state bond money.

That’s not accurate. Does anyone think schools won’t find the staff to fill out some paperwork to obtain billions of dollars in free State money?

If anything the referendum is an advantage to poor school districts who will likely be awarded the largest share of this grant money.

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Aside from the governor, there has been little organized opposition to the bond. A survey by the Public Policy Institute of California, a nonpartisan research group, found last month that 46% of voters would support the proposition and 41% would oppose.

This measure will probably pass because no big money interests are on the NO. Retirees will vote NO, and families will vote YES, each in their own self-interest.

Without the state money, many school districts across the state would have the ability to double the fees on builders and developers for new construction, based on provisions in the law when state bond money is exhausted.

Which is why developers and landowners strongly support Proposition 51. If this measure fails, land values will crater in many areas subject to higher impact fees.

How will you vote?

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