Where Prop. Z Money Has Gone So Far
Out of the $530 million the district received in its first round of bond sales, only $16 million has actually been spent.
One year ago this week, San Diegans voted on what would become the largest public works project in the city’s history: Proposition Z.
The construction bond promised to pump $2.8 billion into the San Diego Unified School District by rehabilitating buildings, upgrading technology in classrooms and making “the lives of 130,000 children safer” by removing asbestos and fixing structural weaknesses.
It came with a price tag — one that tacks on an additional $60 for every $100,000 of assessed property value. In other words, if you own a home within the district that’s worth $500,000, your property taxes climb by $300.
Not everyone welcomed Prop. Z. Opponents, including the San Diego County Taxpayers Association, argued that there were no real protections in the measure against costly and controversial capital appreciation bonds, which punt payments decades down the line while still accruing interest.
Furthermore, the taxpayer group asked, what happened to the last construction bond, Proposition S — the one approved in 2008 that promised $2.1 billion for similar projects?
By June 2012, only $490 million of that money had been spent. Passing another proposition was like asking for more money as a pile of it sat on the table, opponents said.
There was one pesky roadblock to spending more Prop. S money: It was all gone. At least the part we could get our hands on.
Part of the pitch for Prop. S was that it would fund desperately needed repairs without increasing property taxes.
But after the housing market imploded, there was much less revenue funneled into the district.
Instead of funding projects, Prop. S funds went to repaying bond money spent in years prior.
Basically, the district couldn’t sell more bonds until it had more capital.
Prop. Z was billed as the only viable alternative, a way to bring in enough revenue to sell bonds and repair deteriorating schools. Those who championed the measure, including school board member Scott Barnett, vowed the proposition would prohibit the additional use of exotic bonds.
In fact, Barnett told Voice of San Diego, it was the only way to avoid them.
It’s been a year since Prop. Z. passed. So far, only $16 million has been spent.
In honor of the proposition’s anniversary, we decided to check up on the cash and see how plans are coming together. But before we get into the details, let’s recap why the measure was passed.
We Go Together
On paper, Prop. S and Prop. Z look strikingly similar. They were both pitched as critical steps toward repairing deteriorating schools, repairing leaking roofs, ensuring safety.
If the project lists seem to overlap, it’s because they do.
“And that’s by design,” said Andy Berg, chairman of the Independent Citizens Oversight Committee, a group of school board appointees who make sure funds are being spent on projects listed on the Prop S and Z ballots.
Hopefully, the propositions complement each other over a 15- to 20-year period, Berg said. The district is required to track expenditures, but in Berg’s opinion, sorting out which funds pay for which project is less important than whether the work gets completed.
“Eventually, it will all get spent. (Five billion dollars) sounds like a lot of money, but we’re talking about the second biggest school district in the state. That money doesn’t go as far as you’d think,” he said.
In the ’90s, an extensive assessment of school district facilities found that classrooms were outdated and overcrowded. In 1998, San Diego voters approved Prop. MM, a construction bond measure that promised to — wait for it — fix leaking roofs, repair buildings and modernize classrooms.
Not all the repairs had been tackled by the time the money ran out. That’s understandable, Berg said, considering the huge repair backlog when construction began on Prop MM projects and that classroom modernization is an ongoing process.
Most projects on the Prop MM ballot were completed on time, said Barnett, who was also a consultant on the team that advocated for Prop. S.
But, here’s the rub: There’s no guarantee every project listed on the Prop. S and Z ballots will be completed on time – or at all.
“Maybe we haven’t done a good enough job communicating that to the public,” Berg said.
“In years ahead as society and technology and how kids are educated changes, we may want to significantly shift some portions of future bond spending,” Barnett said.
How many items on the list can we expect to see completed?
Berg can’t say precisely, but estimated: “The bulk of it. Certainly the bulk of it.”
Where Prop. S Money’s Gone
To date, roughly $524 million has been spent out of the $2.1 billion that Prop. S could collect.
The school board prioritizes projects based on a “Facilities Condition Index,” a zero-to-100 scale that rates a school’s need for repair. In short, the higher the score, the more pressing the priority.
A 2012 San Diego Unified report identified the average age for district buildings was 43 years, and that the problem had grown worse after “state budget cuts forced the district to defer all but the most critical, immediate repairs.”
Over half of the Prop S money that’s been spent — $285 million — has gone to “student learning and instruction,” which includes technology upgrades for classrooms.
This investment is certainly in line with the proposition’s original promise to upgrade classrooms and prepare students for 21st century jobs.
Yet, part of the pressure to pass Prop. S – or so it seemed on the original ballot – came from the urgent need to make the lives of “130,000 school children and 8,000 classroom teachers” safer.
Barnett says the spending priorities are a reflection of the school board – he wasn’t a member at the time – that was in office when the bond was passed. They chose to prioritize technology upgrades, he said, and after the recession struck, the district didn’t have the revenue to support major construction and repairs.
There is currently no publicly available master list that itemizes completed projects alongside their cost. But from breakdowns the school district publishes, we can take away several broad points:
• $285.8 million, the biggest chunk of money, has gone toward Student Learning and Instruction (largely technology upgrades).
• The smallest share of the pie – $3.9 million – has gone to Major Building System Repair and Replacement (Leaky roofs! Plumbing repairs, electrical system improvements).
• $21.8 million has gone to Student Health, Safety & Security (asbestos removal, fire alarm installation, structural renovations).
• $7.9 million has gone to Site Discretionary Funds (Schools receive $200 per pupil, which they can use on equipment and can’t put toward teachers’ or administrators’ salaries).
Where Prop. Z Money’s Gone
The short answer on Prop. Z expenditures: Out of the $530 million the district received in its first round of bond sales, only $16 million has actually been spent.
Most of those funds have been funneled into technology upgrades – like Wi-Fi installation and audiovisual teaching tools – a priority that Props. S and Z share.
The long answer: The $16 million – a relative drop in the $2.8 billion bucket – is a misleading figure for understanding Prop Z plans, Berg said.
A much larger share of those dollars has been allocated for projects listed on the Prop. Z ballot.
“You can’t start a project until there’s money in the bank,” Berg said, and the district didn’t have the cash until late last spring.
From concept to construction, a project can take about 18 months to get under way, Barnett said.
The district plans to spend about $250 million a year until Prop. Z funds are used up, and then spend the remainder of Prop. S, he said.
This December, the school board will vote to approve a specific, two-year spending plan for Prop. Z funds. Moving forward, here are a few areas we’ll be watching:
• Charter Schools: Prop. Z pledges an equitable share of funding for charter schools. Miles Durfee, regional director for the California Charter Schools Association, said that right now about 12.5 percent of the students in the district attend charter schools.
Because student numbers determine funding, charter schools will get 12.5 percent of the $530 million for which Prop. Z bonds were sold – that’s $ 66.2 million.
But the number of charter school students is expected to rise by the time the next bonds are sold. It will be interesting to see whether charter schools’ slice of the pie changes, too.
• Site Discretionary Funds: Prop. S and Prop. Z allow for every school to collect $200 per pupil to be used on projects approved by the board. The idea behind the discretionary funds is simple: The people closest to the schools know what they need, and have the best ideas for how to spend it.
The funds cannot be spent on teachers or administrators’ salaries, but if money gets moved around in a way that skirts the rules, it wouldn’t be the first time.
• Swimming Pools: While it wasn’t a major talking point of the campaign to pass Prop Z, joint-use facilities have been a priority since its planning stage.
The attraction behind them makes sense. The district invests capital in athletic fields or facilities that schools can use, and another agency helps operate or maintain the project. Theoretically, the district saves on the facility’s operating costs, and both parties win.
In practice, however, joint-use facilities have raised questions about whether the district is spending on projects that weren’t detailed in the original ballot, and whether swimming pools should be a priority over school improvements.
Berg called the public’s initial reaction to the swimming pool projects “misplaced outrage” and said “(pools are) the kind of joint-venture that most intelligent people have been pushing for since the beginning.”
Either way, we’ll be watching the joint ventures to make sure everybody plays nice.