Archive for February, 2013

School Funds to Come and Go

Tuesday, February 26th, 2013

California’s Governor Brown has released the Local Control Funding Formula for each school in the state beginning in fall 2013. The projections were devised after the passage of Proposition 30 in the November 2012 general elections. Criticism has already made the news, but no district will receive less funding from the state than it has received in 2012-13. Those keeping an eye on education issues see huge change from the constant cuts that made California budgets balance in the past ten years.

At the same time, school personnel over the entire country hold their breath until Friday, March 1. On that date the sequestration (literally, setting apart) of all federal funds will be teetering on the fence until Congress brings itself to compromise on a plan to raise revenue and cut spending over the following ten years.

The ominous state by state prognosis on sequestration for school funding comes from a graph laid out in Monday’s Washington Post. California, bigger than many countries, can expect a reduction of $87.6 million for elementary and secondary public education. To be sure the reader holds his throbbing temples, those millions mean a reduction of 1216 teachers’ jobs, reduction in services for 187,000 kids, and most important reduction in services to children with disabilities to 62.9 million.

Cross your fingers and wish that Congress finds a solution by March 1, even if the up or down vote comes at 11:59 February 28.

To understand the consequences, recall that a decade of dramatic decline in revenue led to California’s disinvestment in education. Public schools have been ill-equipped to cope with the challenge of a growing population and five years of recession. The American Recovery and Reinvestment Act resources didn’t make up for the squeeze on schools. The assembly’s 2009 relaxation of spending restrictions on forty categorized programs until the 2014-15 school year didn’t make up the difference to programs needed to improve student success.

However, California passed Proposition 30, and a number of reports have identified the benefits for public schools. Most critics agree that the plan put out by the governor simplifies the funding stream by taking it away from the state’s dominance and giving local control. As the governor said in the February State of the State speech more money is directed to districts with larger numbers of low-income families and English Language Learners. The sunset date for mandated programs should be eliminated.

A major question remains. The state’s Local Control Funding Formula was based on all income received for schools. What will happen if federal monies are withdrawn?

Teachers will continue to teach, and the long term outcome for the state and the country depends on student achievement. Money has a role, but political battles over money do not lead to victory.

Teachers and Voters: Pay Attention

Tuesday, February 12th, 2013

Unless your school district makes it very clear once the board resorts to a bond election to get money for capital investment, the parent, teacher, and other community voters must pay attention.

A type of bond called “capital appreciation bond” has become the norm in many school districts in many states. California and Texas are two big users. This kind of funding tool takes the place of asking voters straight up for more taxes. Instead, with voter approval the bond is designed to borrow a large sum for new construction with the proviso of putting off the start of payback for ten or more years.

In this way the district could get money right away, for instance, to build an entire new school to cut down on overcrowding (which sounds terrific) and to put off repayment until many years down the road. Interest rates accrue, however, causing the bond to be repaid at more than ten times what was borrowed instead of two-three times what a normal bond measure asks for.

During the recession as schools crumbled, it seemed reasonable to build and rebuild right away in spite of the economy’s downturn because those buildings would be used for 50-60 years, far after the high repayments were complete. But, who makes the huge repayments? Future taxpayers, not the current voters. Who really benefits? Financial advisers to the school district, according to Bill Lockyear, California state treasurer.

Although school districts country-wide have promoted and are building with “capital appreciation bonds,” California has heard from its voters. Like the Michigan legislature that has banned such bond measures, Joan Buchanan (D-Alamo) and Ben Hueso (D-San Diego) have sponsored Assembly Bill 182. The proposed bill is before the current assembly education committee for hearings and votes, ready to be passed by the legislature to regulate any future “capital appreciation bonds.”

A brief summary states Assembly Bill 182 would subject repayments to a maximum 25 year limit and total debt no more than four times the amount borrowed. Even so the problem is that many voters do not pay close attention to the costs until they open their exorbitant repayment notice. Most do not know what “capital appreciation bonds” are.

Even though the voter has always selected “yes” for a bond that addresses children’s school facilities that are falling apart, anger at the financial turmoil resulting in the state boils over.