Senate Blocks $9-Billion School Bond Proposal

The California Assembly’s massive $9-billion school bond proposal was stopped cold in the state Senate on Thursday, but the upper house kept the measure alive by ordering a committee to go to work making changes.

The Senate voted unanimously to send the bill to a two-house conference committee to recommend revisions, addressing mainly the concerns of Senate leader John Burton (D-San Francisco). Burton has called the plan a giveaway to residential developers.

The benefits to some and disadvantages to others that the bond deal presents are shaping one of the Capitol’s major debates this year, and the Senate action guarantees that negotiations will be prolonged, probably into late summer.

The Legislature must pass a bond bill by Aug. 27 or miss the chance to place the school construction package on the November ballot.

Besides the proposed bond’s record amount--three times larger than any single bond measure in state history--the measure as passed by the Assembly on Monday comes with a cluster of conditions that substantially change the way school construction would be funded.

Those changes are opposed by many in the education community as a “sellout” to developers. Others say the proposed bond holds the promise of controlling runaway school construction costs borne by developers.

Still other vested interests, including teacher unions and the Los Angeles Unified School District, support the controversial plan because of special benefits it directs toward inner-city schools.

For schools in general, the state would match, from the new bond fund pool, amounts pledged by local districts to build schools, but only according to a strict and uniform formula.

The state would cap its half of any deal at $5,200 to $7,200 per “unhoused” student; that is, the state would apply a uniform cost-control formula based on the number of students in the district that need new classroom space, and dole out the money accordingly.

The new restrictions would have the effect of lowering the cost to developers. As it is, the industry complains, home builders are forced to underwrite school construction costs that are unregulated.

Many school districts use so-called developer fees as the main way of paying for new classrooms, mostly in growing suburban and rural areas. The fees are obtained from developers in return for permission from local city and county authorities to build new subdivisions.

Court cases have made it possible for developer fees to range far above earlier state-imposed limits, the industry maintains. Developers tell horror stories of being socked for school-building fees that add tens of thousands of dollars to the price of a modest new home.

Developer Fees Would Be Capped

Because the districts can “charge [developers] anything they want,” said California Building Industry Assn. lobbyist Tim Coyle, the cost of school construction also has gone up, far in excess of the square-foot cost of building homes.

That’s why developers like much of the proposed new bond deal--developer fees, in effect, would be capped.

On this and other cost-saving features alone, the bond in its current form won major support from Assembly Republicans, without whom majority Democrats could not have mustered the two-thirds vote required for passage.

With the proposed building cost limits in place, said Assemblyman Keith Olberg of Victorville, a GOP leader on the issue, “we would finally have a situation where we could build more schools at the highest standards for less money.”

Just as adamantly, powerful school groups and Democrats who side with Burton oppose the proposed bond’s conditions, calling them the “developer welfare act of 1998.” They have promised to make their criticism well-known to lawmakers over the next several weeks.

Of the bond total, $6.5 billion would go to kindergarten through 12th grade campuses; the other $2.5 billion would go to higher education building projects.

“We’re excited by the $6.5 billion,” said Dennis Meyers, a lobbyist for the Assn. of California School Administrators, representing 14,000 principals, vice principals and other school office employees. “But beyond that, everything else is a take-away.”

Under the plan, Meyers and other critics say, developers would control the process of school construction finance, removing that prerogative from schools and local governments.

Schools have limited means of raising funds for new construction, this argument contends.

Local bond elections require a hard-to-achieve two-thirds majority for passage. Facing Assembly Republican opposition, Assembly Democrats failed this year in their attempts to lower the voter threshold, leaving developer fees as a sole cash source for many districts needing funds for expansion.

Beyond that, under terms of the bond proposal, when the state bond is exhausted, districts still in need could negotiate with developers for the entire amount of a new construction project.

Later, when the state passes another school bond measure replenishing its building funds, developers would have a good chance of recouping half their costs.

Opponents See ‘Double-Dipping’

But, critics say, that opens the door to allowing developers not only to pass on their fee expenses to home buyers but also to “double-dip” by being repaid from future pools of state money.

Assemblywoman Valerie Brown (D-Kenwood), an opponent of the bond proposal, said builders could “reap whatever they want” by working the system “from both ends.”

Burton and other critics charge that developers could actually “triple dip” because of a feature in the proposal that--pending follow-up legislation-- would allow them access to a $160-million fund to build low-income housing. In fact, the opponents say, developers could build luxury housing and still qualify for the special grants.

Those whose interests are urban school districts focus on other parts of the Assembly’s bond proposal, and like what they see.

That includes the Los Angeles Unified School District and the union that represents 40,000 of its teachers, United Teachers-Los Angeles. Also in support is the 280,000-member California Teachers Assn.

Most important for L.A. Unified, said Deputy Supt. Ronald Prescott, are features that lower the barriers for overcrowded urban schools to qualify for state funds to build, repair and buy land for more classrooms.

Schools presently denied some state funds because they are year-round campuses could qualify for new construction money, and those that are “landlocked” in congested areas would be in line for new money to buy land.

Another bonus for urban schools: The state would pay 80% toward the cost of building schools that are more than one story high in areas where outward expansion is not possible.

Despite the battle among competing interests in the school funding debate, said Burton, “I would hope that a school bond is passed” in coming weeks.