Proposition 51: School Bonds. Funding for K-12 School and Community College Facilities. Initiative Statute
Anytime we look at a bond measure we must necessarily consider the State’s ability to repay the debt. While it is true that our super-governor Jerry Brown has done what none of this three predecessors would and balanced the budget through a mix of tax increases and spending cuts, and concurrently raised California’s debt rating to the best rating it has had in 14 years that hardly gets us out of the woods. The reality is that decades of Republican (yes we have to call it as we see it) governors’ refusal to either cut spending/benefits or raise taxes has left us with a huge amount of state debt, while our pension and other future obligations create a mountain of what are called “unfunded liabilities” well described in the footnoted reference below. While that doesn’t mean we should never borrow money again, it does mean we should take any further steps down the debt hole with great trepidation.
This initiative, which was not put on the ballot by the legislature, authorizes 9 Billion in bonds that will cost $17.6 billion dollars to repay. The monies will be allocated to various school projects on a first-come-first served basis:
- $3 billion for the construction of new school facilities;
- $500 million for providing school facilities for charter schools;
- $3 billion for the modernization of school facilities;
- $500 million for providing facilities for career technical education programs; and
- $2 billion for acquiring, constructing, renovating, and equipping community college facilities
Long-time readers know that we generally eschew bond financing for on-going operations but occasionally support them for long-term investments that can’t realistically be funded out of tax revenues. This measure includes a mix of some facility construction (that might require bond funding) and some “upkeep” that we don’t think should logically be funded through debt. Additionally, the funds are allocated not on a “needs” basis but rather on a “first come first served” basis – in a resources strapped system we think that is unwise. Thus, we join our State’s governor as well as several reputable newspapers that urge voters to vote against incurring this additional debt.
Recommendation: Strong NO