Financing New Schools Lacks Textbook Solutions : Education: Districts and developers battle over who should pay for new classrooms to accommodate the student population boom. The burden may fall on the districts.

For Clyde Smyth, superintendent of the Santa Clarita Valley’s lone high school district, the problem is simple and vexing: “How the hell are we going to provide for the kids?”

Unable to count on the state for funds to build a much-needed high school, Smyth’s district recently asked a developer planning a 491-unit housing tract in Castaic to bear a large part of the cost.

Newhall Land and Farming Co. offered to pay the district about $600,000 more than state law requires, but the district turned the offer down, saying it had too many strings attached and didn’t promise enough money. It is now suing the Los Angeles County Board of Supervisors to block the project.

The conflict is emblematic of rifts in rapidly growing regions all over the state, where educators and builders are squaring off over who should pay for new schools.

Educators in the Santa Clarita Valley of Los Angeles County and in suburban boom towns in Riverside and Orange counties are filing lawsuits and pressuring developers, as well as the state, to provide more money for school construction. In some cases, the developers are firing back--in the courts and in public--with charges that the tactics amount to extortion.

A suit filed by the Building Industry Assn. of Southern California against an Orange County school district in December charged that demands for additional fees are “illegal, unreasonable, arbitrary and unconstitutional.”

These skirmishes--as well as the state’s inability to give school districts enough money to cope with a statewide enrollment growing by 160,000 students annually--signal what legislators, lobbyists and educators say is the breakdown of the system for financing new schools.

California school districts have built 230 schools since 1986, but an added $6 billion in construction projects await state funding. Over the next decade, state officials estimate, it will cost $17 billion to build schools.

Those needs far exceed the capacity of a school-financing system assembled in 1986 that was to be supported by developer fees, state bonds and tidelands oil revenue. The developer fees provide the district’s share of construction costs; bonds and other funds make up the state’s share, providing most of the balance.

“We thought at the time that we had put together a formula that would have met the needs,” said Assemblyman Jack O’Connell (D-Carpinteria), who worked on the 1986 legislation that created the current financing system. “It turns out we haven’t.”

“We’ve got a mechanism that doesn’t work,” said Smyth, superintendent of the William S. Hart Union High School District.

Gary Cusumano, president of Newhall Land and Farming, the largest home builder in the Santa Clarita Valley, agreed. “It’s clearly a disappointment,” he said.

State and regional officials have acknowledged the problem and are under increasing pressure to take sides or revamp the system.

Both sides in the Newhall-Hart dispute sought the support of Los Angeles County Supervisor Mike Antonovich, who in the end persuaded his fellow supervisors to approve the proposed Castaic housing tract.

But the conflict also prompted Antonovich to schedule an “education summit” for Thursday at which educators, state legislators and builders are to discuss ways to repair the system.

Solutions under discussion in Sacramento include raising the state sales tax, purchasing thousands of temporary classrooms or making it easier for school districts to raise property taxes.

Whatever the solution, legislators and lobbyists said, school districts will likely be asked once again to bear much of the responsibility for paying for schools. When school districts built thousands of schools in the 1960s to absorb the postwar baby boom, they could raise money with local bond issues. But the tax-cutting fervor of the 1970s severely limited that tool. Local school bond measures now require approval by a two-thirds majority of voters.

“There’s got to be some mechanism that will give local school districts greater flexibility in generating revenues,” said Duwayne Brooks, assistant superintendent for school facilities planning with the state Department of Education. “Obviously the state is not going to be able to meet those demands.”

Without enough money for schools, rapidly growing districts have squeezed hundreds of portable classrooms onto their campuses and assembled entire “instant schools” of temporary structures. The resulting crowding affects everything from supplies and storage to curriculum and school morale.

Among the examples statewide:

* The problem is so acute in the Los Angeles Unified School District that Supt. Leonard Britton has proposed putting all the district’s 610,000 students on year-round schedules to make more efficient use of available classrooms. Much of the crowding in Los Angeles results from immigration and population growth rather than an explosion of housing. But the district is also pressuring the builder of the massive Porter Ranch project in the northwest San Fernando Valley to set aside 22 acres for two schools.

* In Riverside County two years ago, an “instant school” in the Murrieta Valley Union School District near Lake Elsinore opened without telephones, and students had to drink bottled water until the plumbing was finished. Another hastily erected school relied on a generator for power until the electricity was hooked up.

* At the crowded campus of Sierra Vista Junior High School in Santa Clarita, “there’s just not room enough for 12- and 13-year-olds to be 12- and 13-year-olds,” bemoaned Principal Mike Allmandinger. His campus, designed for 1,100 students, will have at least 1,365 next year. “We get fights on campus, behavior we don’t get when there are fewer kids,” he said.

Similar tales of campuses in flux were commonplace in the early 1980s and prompted the 1986 legislation meant to raise $5 billion over five years--estimated at the time to be enough to build all the schools the state needed.

“It’s probably the largest, most important educational bill to be passed in the history of California,” Assemblyman Robert J. Campbell (D-Richmond) said at the time. But it didn’t work.

The confidence of Campbell and other legislators was based on projections that statewide student enrollment would grow by between 75,000 and 100,000 students per year. In fact, enrollment has risen at least 140,000 annually in recent years and is projected to grow by 1.6 million in the next decade.

Moreover, $150 million promised annually from taxes on oil pumped from the state’s tidelands has not materialized, a result of lower energy prices. Also, $600 million in construction needs was to be offset by school districts switching to a year-round calendar. But only 30 of 1,018 districts did so, often in defiance of strong parent opposition, state officials said.

Another part of the financing package was fees levied on each square foot of new construction. Those fees provided a local source of revenue to pay a portion of school construction costs.

Although developer fees have raised more than $900 million since 1986, school districts have spent only $200 million on permanent facilities. Much of the remaining money paid for quick fixes, such as portable classrooms in districts unable to wait until the state supplied its share--at least 75% of the total cost--to build permanent schools.

School districts sought to augment the fees by various means, some judged legal, some not.

In five Santa Clarita Valley school districts, voters approved a tax in 1987 that added about $6,300 to the price of a new home. The powerful California Building Industry Assn. sued, and a state appellate court declared the tax unconstitutional.

Undeterred, the trustees of the Hart district continue to pressure developers, and in recent months it and other Santa Clarita Valley school districts have won $6 million in fees from developers not required by state law.

Similar efforts were attacked in Orange County in December, when the Building Industry Assn. of Southern California sued the Saddleback Valley Unified School District. The association wants the Baldwin Building Co. to be allowed to continue with its Portola Hills project without paying the $1 million in extra fees sought by the school district.

In January, the Murrieta trustees sued the Riverside County Board of Supervisors to slow development or make developers there pay for the suburban boom town’s schools.

Other districts, taking a different approach, are trying to persuade voters to pick up part of the tab.

In April, the Lancaster School District in Antelope Valley will ask voters to approve a $47-million bond issue to build and renovate campuses, but almost all such measures attempted in recent years have failed. In the Westside Union School District, also in the Antelope Valley, voters passed an $8.5-million bond in June by only 25 votes out of 2,331 cast.

School construction bonds are also being discussed in the Los Angeles Unified School District, but educators say winning passage in that sprawling, heterogeneous district would be even more difficult than in small districts.

Two new bills may make it easier to win approval, educators and legislators say.

A measure by Sen. Bill Leonard (R-Big Bear) would amend the state Constitution to allow local governments, including school districts, to raise property tax bills to pay for new buildings by a simple majority vote.

O’Connell has introduced a similar constitutional amendment, but his proposal would ban development fees. However, if approved by the Legislature, the Leonard and O’Connell bills would still have to go before the state’s voters.

Other possible solutions include a bill by Sen. Ed Davis (R-Valencia) to hike the sales tax by a quarter-cent to build schools, a proposal sure to meet stiff opposition. Also, Gov. George Deukmejian said recently that he would support placing $800-million bond measures on the ballot in June and November--about half the amount sought by state schools Supt. Bill Honig.

Other proposals circulating in Sacramento would provide incentives for developers to build schools and lease them back to school districts, encourage local districts to increase the share of construction costs they pay and make additional portable classrooms available.

The California School Boards Assn. wants a bill that would allow school districts to block development projects that do not provide for the construction of schools.

The likely solution to the school construction shortfall will be a combination of these proposals, most agree. The school boards association, for example, supports state bonds but also supports O’Connell’s bill making it easier to pass local bond issues. Some educators want developer fees raised but acknowledge that builders cannot be expected to pay for everything.

Lobbyists and legislators also say the revamping of the state’s school construction program will shift the responsibility and fund-raising ability to local jurisdictions, as it was before Proposition 13. The reason, they say, is that the state cannot issue bonds to pay for all the new schools and still raise money for other needs, such as prisons and roads.

Maureen DiMarco, president of the California School Boards Assn., said that making it easier for local school districts to raise money for schools is inevitable.

“It makes utter, perfect sense,” she said. “It is very difficult to argue with what worked well, would continue to work well and is fair.”

STUDENT POPULATION GROWTH Growth in Los Angeles County compared to the state’s five fastest-growing counties:

1988 School 1998 School Percentage County Population Population* Increase Riverside 181,300 341,500 88.3% San Bernardino 248,700 443,500 78.4% San Joaquin 87,500 130,500 49.1% San Diego 362,300 529,600 46.2% Fresno 130,700 185,100 41.6% Los Angeles 1,303,400 1,598,000 22.6%

* Projected

Source: 1989 California Department of Finance estimates