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HomeMy WebLinkAboutMINUTES - 12071999 - C50 C.-.66 Board of Supervisors of Contra Costa County, State of California IN THE MATTER OF ENDORSING ) RESOLUTION NO.99/609 PROPOSITION 26 ON THE MARCH 7, 2000 ) BALLOT, THE "LET'S FIX OUR SCHOOLS" ) INITIATIVE ) WHEREAS, Proposition 26, also known as the "Let's Fix Our Schools" initiative, amends the California Constitution and Education Code to allow passage of local school bond issues with a simple majority (50 percent plus one vote), rather than the two-thirds vote (66.7 per cent) currently required; WHEREAS, the initiative includes new accountability measures that require school districts to give voters a detailed list of specific projects to be built with bond money; WHEREAS, if voters approve bond measures, the initiative will require that districts have to undergo two audits every year; WHEREAS, Proposition 26 affects bonds issued by school districts, county education offices, and community college districts; WHEREAS, Proposition 26 has won the endorsement of a diverse coalition of groups, including, California Sate PTA, League of Women Voters, California Teachers Association, Congress of California Seniors, California Organization of Police and Sheriffs, the California Chamber of Commerce, and the California State Association of Counties; WHEREAS, California is one of only seven states that require a"supermajority"to approve local school bonds and the two-thirds requirement makes every"no"vote count twice as much as every "yes"vote; WHEREAS, repairs of aging or dilapidated school facilities often involve student safety; and WHEREAS, statewide bonds for schools,prisons, and other construction require a majority vote and only local construction bonds currently require the much higher two- thirds vote; NOW, THEREFORE, BE IT RESOLVED that the Board of Supervisors of Contra Costa County endorses Proposition 26 on the March 7, 2000 ballot, the "Let's Fix Our Schools" initiative which would reduce the vote requirement for local school bonds to a simple majority. Introduced by: I hereby certify that the foregoing CXAP,-1 �. . tea., is a true and correct copy of an order DONNA GERBER entered on the Minutes of the Board Supervisor, District III of Supervisors. Witness my hand and the Seal of the Passed and adopted on Dec. 7 , Board of Supervisors affixed this 71" 1999 by a unanimous vote of day of December, 1999. Board members present. PHIL BATCHELOR, Clerk of the Board of Supervisors and County Administrator. By De ty Clerk Proposition 26: School Facilities. Bonds. Local Majority Vote Page 1 of 4 Proposition 26 School Facilities. Bonds.Local Majority Vote. Initiative Constitutional Amendment and Statute. Background Property Taxes The California Constitution limits property taxes to 1 percent of the value of property. Property taxes may only exceed this limit to pay for(1) any local government debts approved by the voters prior to July 1, 1978 or(2)bonds to buy or improve real property that receive two-thirds voter approval after July 1, 1978. School Facilities Kindergarten Through Twelfth Grade(K-12). California public school facilities are the responsibility of over 1,000 school districts and county offices of education. Over the years,the state has provided a significant portion of the funding for these facilities through the state schools facilities program. Most recently,this program was funded with$6.7 billion in state general obligation bonds approved by the voters in November 1998. Under this program,the state generally pays: . 50 percent of the cost of new school facilities. . 80 percent of the cost of modernizing existing facilities. . 100 percent of the cost of either new facilities or modernization in "hardship cases." In addition to state bonds, funding for school facilities has been provided from a variety of other sources, including: . School district general obligation bonds. . Special local bonds (known as "Mello-Roos" bonds). . Fees that school districts charge builders on new residential, commercial, and industrial construction. Community Colleges. Community colleges are part of the state's higher education system and include 107 campuses operated by 72 local districts. Their facilities are funded differently than K-12 schools. In recent years, most facilities for community colleges have been funded 100 percent by the state generally using state bonds. The state funds are available only if appropriated by the Legislature for http://www.lao.ca.gov/initiatives/2000/26_03_2000.html 12/1/99 Proposition 26: School Facilities. Bonds. Local Majority Vote Page 2 of 4 the specific facility. There is no requirement that local community college districts provide a portion of the funding in order to obtain state funds. Community college districts also may fund construction of facilities with local general obligation bonds or other nonstate funds if they so choose. Charter Schools Charter schools are independent public schools formed by teachers,parents, and other individuals and/or groups. The schools function under contracts or "charters" with local school districts, county boards of education, or the State Board of Education. They are exempt from most state laws and regulations affecting public schools. As of October 1999,there were 252 charter schools in California, serving about 88,000 students (less than 2 percent of all K-12 students). The law permits an additional 100 charter schools each year until 2003, at which time the charter school program will be reviewed by the Legislature. Under current law, school districts must allow charter schools to use, at no charge, facilities not currently used by the district for instructional or administrative purposes. Proposal This proposition(1) changes the State Constitution to lower the voting requirement for passage of local school bonds and(2) changes existing statutory law regarding charter schools facilities. The local school jurisdictions affected by this proposition are K-12 school districts, community college districts, and county boards of education. Voting Requirement for Passage of Local School Bonds This proposition allows (1) school facilities bond measures to be approved by a majority(rather than two-thirds) of the voters in local elections and(2)property taxes to exceed the current 1 percent limit in order to repay the bonds. This majority vote requirement would apply only if the local bond measure presented to the voters includes: . A requirement that the bond funds can be used only for construction,rehabilitation, equipping of school facilities, or the acquisition or lease of real property for school facilities. . A specific list of school projects to be funded and the school board certifies it has evaluated safety, class size reduction, and information technology needs in developing the list. . A requirement that the school board conduct annual, independent financial and performance audits until all bond funds have been spent to ensure that the bond funds have been used only for the projects listed in the measure. Charter Schools Facilities http://www.lao.ca.gov/initiatives/2000/26_03_2000.html 12/1/99 Proposition 26: School Facilities. Bonds. Local Majority Vote Page 3 of 4 This proposition requires each local K-12 school district to provide charter schools facilities sufficient to accommodate the charter school's students. The district,however,would not be required to spend its general discretionary revenues to provide these facilities for charter schools. The district,however, could choose to use these or other revenues--including state and local bonds. The proposition also provides that: • The facilities must be reasonably equivalent to the district schools that these students would otherwise attend. • The district may charge the charter school for its facilities. • A district may decline to provide facilities for a charter school with a current or projected enrollment of fewer than 80 students. Fiscal Effect Local School Impact This proposition would make it easier for school bonds to be approved by local voters. For example between 1986 and June 1999: • K-12 Schools. K-12 bond measures totaling over$17 billion received the necessary two-thirds voter approval. During the same period, however, almost $11 billion of bonds received over 50 percent--but less than two-thirds--voter approval and therefore were defeated. • Community Colleges. Local community college bond measures totaling almost$330 million received the necessary two-thirds voter approval. During the same period,though, almost $390 million of bonds received over 50 percent--but less than two-thirds--voter approval and therefore were defeated. Districts approving bond measures that otherwise would not have been approved would have increased debt costs to pay off the bonds. The magnitude of these local costs is unknown, but on a statewide basis could be in the hundreds of millions of dollars annually within a decade. State Impact The proposition's impact on state costs is less certain. In the near term, it could have varied effects on demand for state bond funds. For instance, if more local bonds are approved, fewer local jurisdictions would qualify for hardship funding by the state. In this case, state funding would be reduced from 100 percent to 50 percent of the cost for a new local school. On the other hand,there are over 500 school jurisdictions that do not currently participate in the state school facilities program. To the extent the reduced voter-approval requirement encourages some of these districts to participate in the state program, demand for state bond funds would increase. In the longer run,the proposition could have a more significant impact on state costs. For instance, its approval could result in local districts assuming greater funding responsibility for school facilities. If this occurred,the state's debt service costs would decline over time. The actual impact on state costs ultimately would depend on the level of state bonds placed on the ballot in future years by the Legislature and Governor, and voters' decisions on those bond measures. http://www.lao.ca.gov/initiatives/2000/26_03_2000.html 12/1/99 Proposition 26: School Facilities. Bonds. Local Majority Vote Page 4 of 4 Charter Schools 1 The requirement that K-12 school districts provide charter schools with comparable facilities could increase state and local costs. As discussed above, districts are currently required to provide facilities for charter schools only if unused district facilities are available. The proposition might lead many districts to increase the size of their bond issues somewhat to cover the cost of facilities for charter schools. This could also increase state costs to the extent districts apply for and receive state matching funds. The amount of this increase is unknown, as it would depend on the availability of existing facilities and the number and types of charter schools. Return to Initiatives and Propositions Return to Legislative Analyst's Office Home Page http://www.lao.ca.gov/initiatives/2000/26_03_2000.html 12/1/99 CHAIR VICE CHAIR STEVE PEACE DENISE MORENO DUCHENY SENATE ASSEMBLY MAURICE K.JOHANNESSEN ROY ASHBURN PATRICK JOHNSTON TONY CARDENAS TIM LESLIE JIM CUNNEEN JACK O'CONNELL FRED KEELEY RICHARD G.POLANCO CAROLE MIGDEN JOHN VASCONCELLOS GEORGE RUNNER CATHIE WRIGHT RODERICK WRIGHT April 15, 1999 Hon. Bill Lockyer Attorney General 1300 I Street, 17thFloor Sacramento, California 95814 Attention: Ms. Connie Lemus Initiative Coordinator Dear Attorney General Lockyer: Pursuant to Election Code Section 9005,we have reviewed the proposed constitu- tional and statutory initiative measure entitled "The Majority Rule Act for Smaller Classes, Safer Schools and Financial Accountability" (File No. SA 1999 RF 0005). BACKGROUND The Constitution currently limits the amount of any ad valorem tax on real property to 1 percent of the full cash value of the property. The amount can be higher to pay for any indebtedness approved by the voters in the local jurisdiction prior to July 1, 1978, and certain bonded indebtedness approved by two-thirds of the voters voting on a local proposition on or after July 1, 1978. An exception to this provision is provided for in- debtedness to repair or replace public school buildings that are structurally unsafe for school purposes, in which case a majority vote of the voters in the school district is needed. Recent Local School District Bond Elections. Since 1986,voters in local K-12 school jurisdictions have approved over$14 billion of bonded indebtedness to repair, reno- vate, expand, and construct new school facilities. During the same period, a majority, but less than two-thirds, of voters voted in favor of over$13 billion of proposed bond Hon. Bill Lockyer 2 April 15, 1999 issues for similar facilities. Thus, these bond issues were not approved. We do not have similar data at this time for community college districts. State Funding Practice. For K-12 public education facilities, the current state funding program assumes that, for state-approved projects, the state will fund 50 percent of the cost of new schools and 80 percent of the cost to rehabilitate existing schools. In certain hardship cases, the state will pay 100 percent of the cost of these projects. For commu- nity colleges, the state funds 100 percent of the cost of state-approved projects. State funding has primarily been contingent on the availability of state general obligation bonds to finance these K-14 projects. Since 1986, the statewide voters have approved over$17 billion in state general obligation bonds for K-14 school facilities. Charter School Facilities. Current statutory law requires a school district in which a charter school operates to permit the charter school to use any unutilized facilities,pro- vided the charter school assumes responsibility for facility maintenance. MAJOR PROVISIONS The constitutional amendments in the measure provide that K-14 jurisdictions could incur bonded indebtedness for the construction, reconstruction, rehabilitation, or re- placement of K-14 school facilities if approved by a majority of the local jurisdiction voters. Under the measure, any such proposal submitted to the voters for approval must include: (1) a provision that the bond proceeds will be used only for school facili- ties purposes listed in the proposition and not for teacher and administrator salaries, school operating expenses, or any other purpose; (2) a list of specific school facilities projects to be funded and a requirement of an annual, independent performance audit to ensure the proceeds have been spent only for the specific projects listed; and (3) a requirement of an annual, independent financial audit until all of the proceeds have been expended for the school facilities projects. The Education Code amendments require each district with a charter school to provide the school with facilities that are reasonably equivalent to those provided at other schools in the district, and near where the charter school wishes to locate. The district may charge the charter school a pro rata share of the district's facilities costs, and the district is not required to use unrestricted General Fund revenues to rent,buy, or lease facilities for charter school students. FISCAL EFFECT Impacts on K-14 Jurisdictions By making it easier to approve local school bonds, the measure would increase local debt service costs. The extent of these costs would depend primarily on the number of bond measures approved that otherwise would not have been approved. The magni- F Hon. Bill Lockyer 3 April 15, 1999 tude of these costs on a statewide basis is unknown,but could easily be in the hundreds of millions of dollars annually after several years. There also would be an increase in local district costs to provide charter schools with appropriate facilities. The magnitude of these costs,which would be for both renovation and new facilities,is unknown. Impacts on State Costs To the extent the reduced local voter-approval requirement authorized by the mea- sure results in an approval of more bond measures by voters in K-14 jurisdictions,there would be a reduction in the need for the state to provide funding for local school facili- ties. Thus,the state could experience similar savings in its debt service costs for school facilities. However, several hundred of the school districts in California do not currently par- ticipate in the state school facilities program. To the extent the reduced local voter-ap- proval requirement encourages those districts to participate in the state matching pro- gram, state funding pressures could increase, offsetting some of the savings in state debt service. Also, the need for districts to provide facilities for charter schools may increase district participation in the state matching program. SUMMARY OF FISCAL EFFECTS The measure would result in the following major fiscal impacts: • Major annual increases in local debt service costs for K-14 facilities and annual savings of potentially a similar amount in state debt service costs. • Unknown annual state and K-14 school costs for renovation and construction of facilities for charter schools. Sincerely, Elizabeth G. Hill Legislative Analyst B. Timothy Gage Director of Finance