School Facilities. Local Majority Vote. Bonds, Taxes. Initiative Constitutional Amendment and Statute.
	Analysis by the Legislative Analyst

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 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

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.

Charter Schools

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.

Proposition 26 | Vote 2000 Home | Next - Prop 27 | Secretary of State Home |