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Whether school districts like San Diego Unified can legally use bond money on hand to address COVID-19 safety concerns will hinge on the language in the bonds, school consultants and others say.
Among the many frustrating, complex dilemmas schools are dealing with amid the coronavirus pandemic is this: School districts like San Diego Unified have hundreds of millions of dollars available for the express purpose of making school buildings safer for students – yet there’s uncertainty about whether that money can be used to keep them safe from the virus.
The money is from tax-backed school bonds approved by voters in 2008, 2012 and 2018. Voters approved a total of $8.4 billion in projects, and about $3.3 billion of that money has already been spent. School district officials said they expect to have $551 million left in the bank by the end of the month. The remaining billions in bonds will be sold in the coming years.
Whether school districts like San Diego Unified can legally use any of the bond money on hand to address COVID-19 safety concerns will hinge on the language in the bonds, school consultants and others say. It will also depend on the types of projects they want to pay for, though there is some disagreement about what could be passable.
“There is a place for funding from the bond measure in the reconstitution of our schools physically,” said school board member Richard Barrera, during a June 9 appearance on KPBS. “Thank God that the voters in San Diego have said three times, ‘Yes, we will make some sacrifice to invest in our school facilities and our school technology,’ because without that, this crisis would have been much, much more severe for the majority of our students.”
San Diego Unified spokeswoman Maureen Magee said in an email that the district is reviewing its options and potential structural changes to schools. But personal protective equipment – like masks or gloves – cannot be paid for with bond money, she said.
Neither can sanitizing efforts to stop the coronavirus from spreading, or new employees to lower class sizes and allow for more distancing between students.
But more portable classrooms to separate students, or added wall partitions might be OK, said Christy White, an external auditor frequently used by local districts.
“In general, if the construction is attached to the building and not movable, it would be allowable, such as wall partitions or portable classrooms,” White wrote in an email. “But desks and movable plexiglass furniture would not likely be an appropriate use, a gray area for sure. As an auditor, we would look at district legal opinions for any area that seems gray.”
Tom Duffy, legislative director for the Coalition for Adequate School Housing, encouraged districts to talk to their bond legal counsel, as well as the school board and citizen’s bond oversight committees before using bond funds for COVID-19 projects.
Duffy also advised, “If it’s something that’s less expensive and you don’t think it’s going to be used for a very long period of time, you want to be careful about spending bond money on it… If you think something is not going to be lasting 30 years, like a building, use short-term bonds.”
Duffy’s organization CASH has heard from school districts across the state that plan to use empty classrooms or portables to better spread students out. Schools are also considering having students attend different days of the week to limit crowds, he said.
Michael Turnipseed, president of the California League of Bond Oversight Committees, said using bond funds for COVID-19 needs may end in legal battles in some cases.
“We usually like to see concrete spending plans that are easily identified and followed, with expenditures clearly defined,” when measures are approved, Turnipseed wrote in an email. “But, there are more than we like that are very open-ended. What is repairing or updating? The question is determined by taxpayers that want to challenge district spending and the judges who decide the lawsuits.”
The key to using bonds for COVID-19 projects will go back to the ballot language.
“Read what you wrote,” Duffy said. “When you put a bond before the public, your citizens, that’s a contract and you abide by the contract.”
If broad language was used for modernizations and repairs, “You probably have flexibility in the wording there to get at what you’re trying to get to,” Duffy said. Though some projects will be harder to get done quickly if they need approval from the state architect.
San Diego Unified’s bond measures contain some broad language that may come in handy.
Proposition Z in 2012 and Measure YY in 2018 said money could be spent at all campuses to “Remove or replace old or inadequate buildings with new facilities.” Measure YY also listed projects at all campuses that “renovate or replace existing inadequate classrooms and support facilities,” while Z similarly said money could be spent to “renovate existing inadequate classrooms and support facilities.”
Prop. Z also said funds could be spent to “improve or construct school buildings, facilities, parking lots, and structures to meet the needs at neighborhood schools.”
New needs, new projects, the thinking goes.
“They do write them pretty broadly,” said San Diego attorney Craig Sherman, who successfully challenged San Diego Unified in court over field lights paid for with Prop. S bond funds. Bond measures are often billed as “health and safety” or “security” measures, but there are limits. “The devil is in the details and it needs to fit. It needs to have been contemplated. Trying to shoehorn an after-the-fact project, I don’t necessarily think is proper,” he said.
Sherman said he thinks spending bonds on sanitation or portables are a no-go. Same with converting a gym to a classroom.
“I just don’t see that as a capital project that could have been contemplated or realized or envisioned. … I think that’s getting too far afield of what was contemplated or planned for,” he said. But spending bonds on capital projects that reconfigure classrooms with safety measures in mind might work if already contemplated in the bond broadly, if they “have a long shelf-life.”
Matt Phillips, director of management consulting services for School Services of California, a popular school finance consulting firm, noted that funds spent on COVID-19-related facility modifications might result in other things not getting built, so some parents may be disappointed long-term.
Both Phillips and Duffy, with CASH, recommended districts that consider using bond money for COVID-19 projects make sure the project life matches the repayment timeline of the bonds, which typically vary from 10 to 30 years, though they can sometimes be shorter.
“If the district is looking at a short-term solution, that’s probably not the best way to use long-term debt,” Phillips said.
So far in the pandemic, school districts have been more concerned about short-term needs, like getting students connected on computer devices at home and meals to those who need them.
“No districts have concluded, ‘Let’s use bonds,’” Phillips said. “I think all options need to be considered … Jumping to that quickly I don’t think is a prudent action.”
San Diego Unified may be in a somewhat unique position with so much cash sitting around and so much more to come in the bond program.
The district anticipated spending $531 million in bond funds in the 2019-20 school year alone, with $551 million left over by June 30, district records show. By comparison, the district’s annual general fund operating budget topped $1.4 billion in 2019-20.
Even if San Diego Unified is more inclined to use general fund dollars for COVID-19 projects that go beyond any state or federal coronavirus aid given, options there may be limited.
The district’s general fund was already tight and is even more precarious now, as the trickle-down impacts of the current recession and job losses decrease state revenues and prompt Gov. Gavin Newsom to propose cuts to education.
At the moment, the fate of California’s public school funding remains in limbo.
Newsom’s revised budget proposal sent schools into a panic last month, with some leaders of San Diego Unified threatening to not reopen unless they get more cash to make schools safer in a post-COVID-19 environment. A friendlier version of the budget from the Legislature that took away Newsom’s cuts – and replaced them with possible state funding deferrals – was received better. The state budget – including K-12 funding – will be finalized later this month.
“I would say it’s very dire if the governor’s proposal becomes the enacted budget. Districts were already struggling to maintain the status quo,” Phillips, with School Services, said.
While it remains to be seen whether San Diego Unified’s bonds will be put toward COVID-19 projects, the bond program has already helped the district pivot more easily to distance learning when schools closed.
“It would have been impossible for us to quickly distribute 50,000 Chromebooks to students across the district without our i21 initiative funded by the bond program,” said Magee, the San Diego Unified spokeswoman.