Proposition 51 and School Facilities Funding

Whether or Not Voters Approve Proposition 51, Inequities in California’s K-12 School Facilities Funding System Are Likely to Continue

California Budget and Policy Center

Ballot Propositions · Education · October 7, 2016 · By Jonathan Kaplan

Earlier this week we released our analysis of Proposition 51, the $9 billion state general obligation (GO) bond for K-12 school and community college facilities on the November ballot. Our analysis shows the difficult choice faced by California voters who want to help students from low-income families. State bond dollars for K-14 education facilities effectively have been exhausted for several years, leaving local school districts without a key source of state support. So, there is obvious appeal in approving the new bond funds that Prop. 51 would provide. Yet, whether or not voters pass Prop. 51, inequities in the funding of California’s K-12 school facilities are likely to continue for at least the near future.

Prop. 51 would provide $7 billion in new state funds for K-12 school facilities. However, Prop. 51 would require that these funds be distributed according to current rules for allocating K-12 facilities dollars, unless voters approve changes to these rules in the future. In other words, the measure would essentially lock in place the existing facilities funding system, which disadvantages certain K-12 school districts. For example, under the current system state dollars are allocated to districts primarily on a first-come, first-served basis. This tends to reward school districts that are able to apply for funding more quickly and/or have more resources, such as larger districts with more staff.

On the other hand, if voters reject Prop. 51 and state bond funds remain unavailable, the main source for K-12 school districts to obtain facilities dollars would be local GO bonds. But here, too, districts that are less well-off face a disadvantage. This is because local property wealth determines the amount of money K-12 school districts can raise through local bonds, and districts with large shares of students from low-income families have significantly less property wealth per student, on average, than districts with large shares of students from families with higher incomes. As a result, K-12 districts in low-income communities generally can’t raise as much money for school facilities as districts in communities with higher-incomes.

An op-ed this week from Michael Cohen, Governor Brown’s Director of Finance, noted that earlier this year the Governor had negotiated with interested parties and proposed a multi-billion dollar school facilities bond that would have changed the current rules for allocating facilities dollars to weight them “in favor of poorer districts.” However, Cohen claims that real estate developers placed Prop. 51 on the ballot after the developers, and other groups representing home builders and architects, “refused to agree to a single change” in the existing system for funding K-12 school facilities.

Academics and other state policymakers have offered several proposals to make state funding for K-12 school facilities more equitable. For example, a recent study from the University of California, Berkeley’s Center for Cities + Schools suggested two alternative scenarios to Prop. 51 designed to improve funding equity for K-12 facilities. One of these scenarios would reduce the size of a potential state bond to $3 billion, but target this smaller pool of resources to the districts with greatest need. The second scenario follows a recommendation made by the Legislative Analyst’s Office (LAO) to provide K-12 districts with an annual grant per student for school facilities. The LAO’s proposed grant would pay for a minimum share of a K-12 school district’s expected facilities costs and would be adjusted based on differences in property wealth and on the level of facilities funding already provided to school districts from state dollars.

Despite the available options for making California’s system of funding K-12 facilities more equitable, policymakers and other stakeholders have not been able to arrive at a compromise. As a result, voters now must choose whether to approve Prop. 51. The measure does not provide a solution for those who wish to improve facilities for K-12 schools serving students from low-income families. With it unclear as to whether state policymakers would be able to achieve a more equitable system anytime soon, should voters approve Prop. 51 in order to provide some bond funding for school facilities under the current system? Or, would rejecting Prop. 51 push the measure’s sponsors and other interested parties to negotiate a more equitable system for funding school facilities with state leaders?

— Jonathan Kaplan