While Retired City Manager Golfs, New Americans in El Monte Struggle to Make Ends Meet

This is one in a series of CPC profiles of members of California’s $100k Pension Club.  Learn about the elite members of this club in our new video. Vigilant as always, Lady Liberty keeps a keen watch over the republic, representing the opportunity and freedom that is America. She stands tall, with her eternal […]

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California Politicians Keep Raising the Cost-of-Living

Ever since the surprise victory of Donald Trump on November 8th, California’s Democratic leadership have asserted their determination to thwart the Trump agenda. Expect unity and resolve from California’s legislature, where democrats now hold a super-majority in both chambers. Even before Nov. 8th, California’s legislature was a trend-setting force, enacting laws intended to set an […]

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Fat Pensions and Dubious Results at California Community Colleges

Among progressive politicians, community colleges have recently taken on an iconic status. These are the scrappy institutions battling income inequality one mind at a time – helping lift underprivileged young strivers into the middle class. The result has been a drive to subsidize these schools, often without regard to their cost-effectiveness. Among the beneficiaries are retired community […]

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Obama Ignores Destructive Influence of Prison Unions in HBO Appearance

Comedian Bill Maher landed an interview with President Barack Obama last week, and the interaction felt like something out of a movie about hobbits – two grown men basking in the warm glow of a be-flagged White House office with a Frederick Remington buffalo sculpture in the background. But if we were mesmerized […]

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Testing Pension Club with TablePress

NameTitlePension SystemLast EmployerTotal Amount ReceivedPension AmountBenefits AmountDisability AmountYears of ServiceYear of RetirementReporting Yearnotes
Charles MehringerLos Angeles County PensionCOASTAL CLUSTER-HARBOR/UCLA MC419665.92395466.624199.32041.6220152015
Michael D JohnsonCalPERSCOUNTY OF SOLANO388407.56388407.5642.920112015
William HabermehlCalSTRSORANGE COUNTY OFFICE OF EDUCATION354643.38354643.3847.1520122015
Fawzy I FawzyTeaching FacultyUniversity of CaliforniaLos Angeles354469.44354469.4440.4420142014
Robert MorinLos Angeles County PensionCOASTAL CLUSTER-HARBOR/UCLA MC344079.72319880.424199.32052.6720152015
Leroy BacaLos Angeles County PensionSHERIFF342849.36328410.2414439.12048.0820142015
Dennis L MatthewsNon-Teaching FacultyUniversity of CaliforniaDavis342635.88342635.8839.0820122014
Stephen R MaguinCalPERSLOS ANGELES COUNTY SANITATION DISTRICT NO. 2340810.7340810.74120122015
Joaquin M FusterCalPERSUNIVERSITY OF CALIFORNIA AT LOS ANGELES33841233841245.220022015
Marvin MarcusTeaching FacultyUniversity of CaliforniaLos Angeles337346.16337346.1640.5720112014
Thomas TidemansonLos Angeles County PensionPUBLIC WORKS336988.56312789.2424199.32038.7519942015
Larry WaldieLos Angeles County PensionSHERIFF336838.08319170.1217667.96044.0820112015
Thomas OrloffDistrict AttorneyAlameda County Pension335865.84335865.842015
Carol MeyerLos Angeles County PensionHEALTH SERVICES ADMINISTRATION329218.8300886.5628332.24041.3720112015
Ruth E StringerCounty CounselSan Bernardino County Employees Retirement Association (SBCERA)County of San Bernardino328945.95328945.9533.4420112015
Michael JudgeLos Angeles County PensionPUBLIC DEFENDER328867.2311199.2417667.9604120102015
John S GreenspanTeaching FacultyUniversity of CaliforniaSan Francisco326070.12326070.1238.1720142014
Harry StoneLos Angeles County PensionPUBLIC WORKS324113.04312666.2411446.8040.5820012015
Rinaldo CanalisLos Angeles County PensionCOASTAL CLUSTER-HARBOR/UCLA MC320766.6296567.2824199.32036.6720102015
Stephen CooleyLos Angeles County PensionDISTRICT ATTORNEY318530.88304091.7614439.12040.0420122015
Donald R GerthPRESIDENTCalPERSCALIFORNIA STATE UNIVERSITY AT SACRAMENTO317324.12317324.1247.320032015
Hye Kyung KimEXEMPT MED STF PHYSIContra Costa County PensionCONTRA COSTA COUNTY316886.42316886.42032.6920112015
George W BreslauerNon-Teaching FacultyUniversity of CaliforniaBerkeley315720.48315720.4843.2320142014
David GoldsteinLos Angeles County PensionNORTHEAST CLUSTER (LAC+USC)314553.48292811.1621742.3203520122015
Albert NidenLos Angeles County PensionNORTHEAST CLUSTER (LAC+USC)314364.36302917.5611446.8039.9220132015
Heinrich R SchelbertTeaching FacultyUniversity of CaliforniaLos Angeles314026.56314026.5640.5420132014
Raymond Fortner JrLos Angeles County PensionCOUNTY COUNSEL313884.6289685.2824199.32039.3320092015
Richard BrayCalSTRSTUSTIN UNIFIED SCHOOL DISTRICT312921.24312921.2443.8320112015
Michael PetersonCaptainAlameda County Pension311967.96311967.962015
William GarrettCalPERSCITY OF EL CAJON311364.84311364.8438.520042015
Edward Hernandez JrCalSTRSRANCHO SANTIAGO COMMUNITY COLLEGE DISTRICT310269.3310269.340.3120102015
Allan D SiefkinNon-Teaching FacultyUniversity of CaliforniaDavis309593.04309593.0436.1720142014
Ramesh VermaLos Angeles County PensionSFV CLUSTER-OLIVE VIEW/UCLA MC308935.08291267.1217667.96036.6220112015
Nosratola D VaziriTeaching FacultyUniversity of CaliforniaIrvine308320.08308320.0836.7520112014
Virginia ShattuckCalSTRSNORWALK-LA MIRADA UNIFIED SCHOOL DISTRICT306346.86306346.8647.9420092015
Daniel IkemotoLos Angeles County PensionAUDITOR - CONTROLLER306270294823.211446.8038.5819932015
Albert YellinLos Angeles County PensionNORTHEAST CLUSTER (LAC+USC)305836.3228163724199.32039.6720022015
Vena RickettsLos Angeles County PensionSFV CLUSTER-OLIVE VIEW/UCLA MC304440.24298736.525703.72035.6720132015
Sharon HarperLos Angeles County PensionSHERIFF303913.44290600.6413312.8040.520102015
Joe W GrayNon-Teaching FacultyUniversity of CaliforniaLawrence Berkeley303855.96303855.9638.5620112014
Alfred ZuckerCalSTRSLOS ANGELES COMMUNITY COLLEGE DISTRICT303624.99303624.9935.8220152015
Richard W RollNon-Teaching FacultyUniversity of CaliforniaLos Angeles303170.28303170.2834.820142014
Richard A BeemerUndersheriffSan Bernardino County Employees Retirement Association (SBCERA)County of San Bernardino302917.17302917.1738.8220102015
Dewitt ClintonLos Angeles County PensionCOUNTY COUNSEL301882.8280815.8421066.96036.9219982015
James F StahlCalPERSLOS ANGELES COUNTY SANITATION DISTRICT NO. 2301801.96301801.9637.720072015
Robert MannLos Angeles County PensionSHERIFF301174.3227697524199.32033.4219992015

Election Integrity and the Power of Unions

During the 2004 Presidential election there were allegations of voter fraud; the 2000 Presidential election was alleged to have been “stolen” by the Republicans. If you go further back in history, you can point to evidence the Democratic machine in Chicago manipulated election results to throw the 1960 Presidential election victory to Kennedy. A close […]

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“Unsustainable” Pension Costs Are The Driving Force Behind Local Tax Increases

It is no secret that there are a record number of local tax increases on the November 2016 ballot, but the dirty little secret is that the strongest driving force behind these measures is “unsustainable” skyrocketing pension costs. The specifics of each case need to be evaluated on a case by case basis, which I […]

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For Nov. 8th: $32B in Local Borrowing, $2.9B in Local Tax Increases

New local taxes and new local borrowing are a regular phenomenon in California elections, but this year our government union controlled politicians have outdone themselves. Let’s compare: November 2014 – $11 billion in new borrowing proposed via 118 local bond measures, 81% passed. Of the 117 local proposals for new taxes, 68% passed.

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CTA’s New Gambit to Cheat Taxpayers Annually

A bill, near passage, would require you and me to pay for union indoctrination sessions in California.  California is a fabulous place. Fantastic weather, fertile fields, glorious mountains and a thousand mile coastline have long beckoned many to the Golden State. And then there is the state legislature. This law-making body is very far from […]

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Unaffordable California – It Doesn’t Have To Be This Way

July 2016 Update:  Here’s a documented comparison of California taxes and economic climate with the rest of the states. The news is bad, and getting worse. But it doesn’t have to be this way! The state and local government policies that created an unaffordable California can be reversed.

PERSONAL INCOME TAX: Prior to Prop 30 passing in Nov. 2012, CA already had the 3rd worst state income tax rate in the nation. Our 9.3% tax bracket started at under $50,000 for people filing as individuals. 10.3% started at $1 million. Now our “millionaires’ tax” rate is 13.3% – including capital gains (CA total CG rate now the 2nd highest in the world!). 10+% taxes now start at $250K. CA now has by far the nation’s highest state income tax rate. We are 34% higher than 2nd place Oregon, and a heck of a lot higher than all the rest – including 7 states with zero state income tax – and 2 more that tax only dividends and interest income. CA is so bad, we also have the 2nd highest state income tax bracket. AND the 3rd. AND the 4th! http://taxfoundation.org/sites/taxfoundation.org/files/docs/ff2013.pdf  Ref. Table #12 http://tinyurl.com/CA-income-tax-graph and http://tinyurl.com/CA-2nd-CG

IncomeTaxGraph

SALES TAX:  CA has the highest state sales tax rate in the nation.  7.5% (does not include local sales taxes). Two 2015 bills sought a combined $10 billion++ CA state and local sales tax increase (failed to pass that year).
http://taxfoundation.org/article/state-and-local-sales-tax-rates-2011-2013

GAS TAX:  CA has the nation’s 4th highest “gas pump” tax at 58.0 cents/gallon (June, 2016). But add in the unique 10-12 cent CA “cap and trade” cost per gallon, and CA is #1 (about the same as Pennsylvania). National average is 48.0 cents. Yet CA has the 6th worst highways.
http://www.api.org/oil-and-natural-gas/consumer-information/motor-fuel-taxes/gasoline-tax  (CA has nation’s 3rd highest total diesel tax)  http://reason.org/news/show/21st-annual-highway-report

PROPERTY TAX:  California in 2015 ranked 14th highest in per capita property taxes (including commercial) – the only major tax where we are not in the worst ten states.  But the 2014 average CA single-family residence (SFR) property tax is the 8th highest state in the nation. Indeed, the median CA homeowner property tax bill is 93% higher than the average for the other 49 states.
http://tinyurl.com/go89o6u
http://tinyurl.com/hf6phjz
http://linkis.com/blogspot.com/Yq6cx

“IMPACT FEES” ON HOME SALES:  Average 2012 CA impact fee for single-family residence was $31,100, 90% higher than next worst state. 265% higher than jurisdictions that levy such fees (many governments east of the Sierras do not). For apartments, fee averaged $18,800, 290% above average outside state. The fee is part of the purchase price, so buyer pays an annual property tax on the fee!
http://www.newgeography.com/content/003882-california-homes-require-real-reach

“CAP AND TRADE” TAX:  CA has now instituted the highest “cap and trade” tax in the nation – indeed, the ONLY such U.S. tax. Even proponents concede that it will have zero impact on global warming.
http://tinyurl.com/WSJ-CA-cap-and-trade

SMALL BUSINESS TAX:  California has a nasty anti-small business $800 minimum corporate income tax, even if no profit is earned, and even for many nonprofits. Next highest state is Rhode Island at $500 (only for “C” corporations). 3rd is Delaware at $175. Most states are at zero.
http://tinyurl.com/CA-800-tax

Based just on GDP, CA ranks as the 6th largest economy in the world. But adjusted for population and cost of living, CA ranks lower than all but 13 U.S. States.
http://riderrants.blogspot.com/2016/07/updated-2015-figures-ca-per-capita-gdp.html

CORPORATE INCOME TAX:  CA 2016 corporate income tax rate (8.84%) is the highest west of Iowa (our economic competitors) except for Alaska.
http://www.taxfoundation.org/sites/taxfoundation.org/files/docs/CITmap.png  Ref. Table #15   – we have the 8th highest rate in the nation.

BUSINESS TAX CLIMATE:  California’s 2015 “business tax climate” ranks 3rd worst in the nation – behind New York and anchor-clanker New Jersey. In addition, CA has a lock on the worst rank in the Small Business Tax Index – a whopping 8.3% worse than 2nd worst state.
http://taxfoundation.org/article/2015-state-business-tax-climate-index
http://www.sbecouncil.org/wp-content/uploads/2014/04/BTI2014Final.pdf

LEGAL ENVIRONMENT:  The American Tort Reform Foundation in 2015 again ranks CA the “worst state judicial hellhole” in U.S. – the most anti-business. The U.S. Chamber of Commerce ranks CA a bit better – “only” the 4th worst state in 2015 (unfortunately, sliding from 7th worst in 2008).
http://www.judicialhellholes.org/2015-2016/california/
http://www.instituteforlegalreform.com/states/california

FINES AND FEES:  CA driving tickets are incredibly high. Red-light camera ticket $490. Next highest state is $250. Most are around $100.
http://reason.org/blog/show/red-light-cameras-and-the-enigmatic

CA needlessly licenses more occupations than any state – 177. Second worst state is Connecticut at 155.  The average state is 92. But CA is “only” the 2nd worst licensing state for low income occupations.
http://cssrc.us/publications.aspx?id=7707  
http://bit.ly/1ff0OGu

CA has the highest/worst state workers’ compensation rates in 2014, up from 3rd in 2012. CA rates 21.3% higher than 2nd highest state, 88% higher than median state. Yet we pay low benefits — much goes to lawyers.
http://riderrants.blogspot.com/2014/10/california-has-worst-workers.html

OVERALL TAXES:  Tax Foundation study ranks CA as tied for the 7th worst taxed state in 2016. But the CA taxes are the most progressive of all states, hammering the upper third of the populace. The top 1% pay 50% of all CA state income taxes.
http://taxfoundation.org/article/tax-freedom-day-2016-april-24

UNEMPLOYMENT:  CA unemployment rate is improving, but we are still ranked 34th (May, 2016) – 5.2%. National unemployment rate 4.7%.  Nat’l rate not including CA is 4.6%, making the CA unemployment rate 13.0% higher than the average of the other 49 states. NOTE: We were at 4.8% in Nov, 2006 – vs. national 4.6%.
http://www.bls.gov/web/laus/laumstrk.htm

Using the lagging but arguably more accurate U-6 measure of unemployment (includes involuntary part-time workers), CA is tied for 3rd worst – 12.0% vs. national 10.1%. National U-6 not including CA is 9.9%, making CA’s U-6 21.2% higher than the average of the other 49 states.
http://www.bls.gov/lau/stalt.htm

EDUCATION:  CA public school teachers the 3rd highest paid in the nation.  CA students rank 48th in math achievement, 49th in reading.
http://www.lao.ca.gov/reports/2011/calfacts/calfacts_010511.aspx  (page 36) http://www.nea.org/assets/docs/NEA_Rankings_And_Estimates-2015-03-11a.pdf

California, a destitute state, still gives away community college education at fire sale prices. Our CC tuition and fees are the lowest in the nation.  How low?  Nationwide, the average community college tuition and fees are more than double our California CC’s.
http://trends.collegeboard.org/college-pricing/figures-tables/tuition-and-fees-sector-and-state-over-time

This ridiculously low tuition devalues education to students – often resulting in a 25+% drop rate for class completion.  In addition, because of grants and tax credits, up to 2/3 of California CC students pay no net tuition at all!
http://tinyurl.com/ygqz9ls

Complaints about increased UC student fees too often ignore key point — all poor and many middle class CA students don’t pay the UC “fees” (our state’s euphemism for tuition).  There are no fees for most California families with under $80K income. 55% of all undergraduate CA UC students pay zero tuition, and another 14% pay only partial tuition.
http://www.universityofcalifornia.edu/blueandgold/
http://tinyurl.com/UC-zero

WELFARE AND POVERTY:  1 in 5 in Los Angeles County receiving public aid.   http://www.latimes.com/news/local/la-me-welfare22-2009feb22,0,4377048.story

California’s real poverty rate (the new census bureau standard adjusted for COL) is easily the worst in the nation at 23.4%. We are 57.3% higher than the average for the other 49 states (up from 48.8% higher last year). Indeed, the CA poverty rate is 17.0% higher than 2nd place Nevada.
http://www.census.gov/content/dam/Census/library/publications/2014/demo/p60-251.pdf (page 9)

California has 12% of the nation’s population, but 33% of the country’s TANF (“Temporary” Assistance for Needy Families) welfare recipients – more than the next 7 states combined.  Unlike other states, this “temporary” assistance becomes much more permanent in CA.
http://www.utsandiego.com/news/2012/jul/28/welfare-capital-of-the-us/?print&page=all

California ranks 48th worst for credit card debt and 49th worst for percentage of home ownership.
http://riderrants.blogspot.com/2013/02/more-dismal-california-economic-rankings.html

GOVERNMENT INSOLVENCY: California has the 2nd lowest bond rating of any state – Basket case Illinois beat us out for the lowest spot. We didn’t improve our rating – Illinois just got worse.
http://www.pewtrusts.org/en/research-and-analysis/blogs/stateline/2014/06/09/sp-ratings-2014

Average California firefighter paid 60% more than paid firefighters in other 49 states. CA cops paid 56% more. CA 2011 median household income (including gov’t workers) is 13.4% above nat’l avg.
www.tinyurl.com/CA-ff-and-cop-pay
www.en.wikipedia.org/wiki/List_of_U.S._states_by_income

HOUSING COSTS:  Of 100 U.S. real estate markets, in 2013 CA contained by far the least affordable middle class housing market (San Francisco). PLUS the 2nd, 3rd, 5th, 6th and 7th. San Diego is #5 (with “middle class” affordable homes averaging 1,056 sq. ft.)
http://riderrants.blogspot.com/2013/10/the-us-least-affordable-housing-market

TRANSPORTATION COSTS:  CA has 2nd highest annual cost for owning a car – $3,966. $765 higher than the national average.
http://tinyurl.com/lmxnucs

WATER & ELECTRICITY COSTS:  CA residential electricity costs an average of 40.7% more per kWh than the national average. CA commercial rates are 66.5% higher.  For industrial use, CA electricity is an astonishing 94.4% higher than the national average (Sept, 2015). The difference is growing between CA and the national average. NOTE: SDG&E is considerably higher.
http://www.eia.gov/electricity/monthly/epm_table_grapher.cfm?t=epmt_5_06_a

A 2015 U-T survey of home water bills for the 30 largest U.S. cities found that for 200 gallons a day usage, San Diego has the 3rd highest cost – 73.7% higher than the median city surveyed. At 600 gal/day, San Diego was again 3rd highest – 81.7% higher than the median city.
http://www.sandiegouniontribune.com/news/2015/jul/27/drought-water-prices-rise/

BUSINESS FLIGHT:  In 2012, our supply of California businesses shrunk 5.2%. In ONE year. NOTE: That’s a NET figure – 5.2% fewer businesses in CA in 2012 than were here in 2011. Indeed, in 2012, CA lost businesses at a 67.7% higher rate than the 2nd worst state!
http://riderrants.blogspot.com/2013/07/in-2012-ca-lost-businesses-at-677.html

The top U.S. CEO’s surveyed rank California “the worst state in which to do business” for the 12th straight year (May, 2016)
http://chiefexecutive.net/california/

From 2007 through 2010, 10,763 manufacturing facilities were built or expanded across the country — but only 176 of those were in CA. So with roughly 12% of the nation’s population, CA got 1.6% of the built or expanded manufacturing facilities. Stated differently, adjusted for population, the other 49 states averaged 8.4 times more manufacturing growth than did California.
http://www.cmta.net/20110303mfgFacilities07to10.pdf — prepared by California Manufacturers and Technology Association

OUT-MIGRATION:  California is now ranked as the worst state to retire in. Easily the lowest percentage of people over age 65. We “beat” ’em all – NY, NJ, etc.
https://www.fidelity.com/insights/retirement/10-worst-states-to-retire-2014
http://riderrants.blogspot.com/2015/12/kiplinger-ranks-california-as-worst.html

The median Texas household income is 10.9% less than CA. But adjusted for COL, TX median household income is 31.6% more than CA.
https://www.census.gov/hhes/www/income/data/historical/household/2014/h08.xls
https://www.missourieconomy.org/indicators/cost_of_living/index.stm

Consider California’s net domestic migration (migration between states).  From 1992 through mid-2015, California lost a NET 3.9 million people to other states.  Net departures slowed in 2008 only because people couldn’t sell their homes.  But more people still leave each year — in 2015 we lost 77,219. Again, note that these are NET losses. Sadly, our policies have split up many California families.
https://twitter.com/SenTedCruz/status/464827967747526656/photo/1
http://riderrants.blogspot.com/2015/04/were-california-real-estate-prices.html

It’s likely that it’s not the welfare kings and queens departing.  They are primarily the young, the educated, the productive, the ambitious, the wealthy (such as Tiger Woods) – and retirees seeking to make their nest-eggs provide more bang for the buck.

*   *   *

Richard Rider is the chairman of San Diego Tax Fighters, a grassroots pro-taxpayer group. Rider successfully sued the county of San Diego (Rider vs. County of San Diego) to force a rollback of an illegal 1/2-cent jails sales tax, a precedent that saved California taxpayers over 14 billion dollars, including $3.5 billion for San Diego taxpayers. He has written ballot arguments against dozens of county and state tax increase initiatives and in 2009 was named the Howard Jarvis Taxpayers Association’s “California Tax Fighter of the Year.” Rider updates this compilation of statistics on California every month; they are updated here quarterly.

 

Table A-3 Details of Bond Indebtedness Waiver Requests from California School Districts to State Board of Education 2002 through March 2015

See the complete California Policy Center report For the Kids: California Voters Must Become Wary of Borrowing Billions More from Wealthy Investors for Educational Construction (complete, printable PDF Version, 4 MB, 361 pages)

Links to all sections of this study readable online:
Executive Summary: “For the Kids” – Comprehensive Review of California School Bonds (1 of 9)
More Borrowing for California Educational Construction in 2016 (2 of 9)
Quantifying and Explaining California’s Educational Construction Debt (3 of 9)
How California School and College Districts Acquire and Manage Debt (4 of 9)
Capital Appreciation Bonds: Disturbing Repayment Terms (5 of 9)
Tricks of the Trade: Questionable Behavior with Bonds (6 of 9)
The System Is Skewed to Pass Bond Measures (7 of 9)
More Trouble with Bond Finance for Educational Construction (8 of 9)
Improving Oversight, Accountability, and Fiscal Responsibility (9 of 9)
You are in this section: Guide to all Tables and Appendices – Comprehensive Reference for Researchers


 School DistrictLegal LimitRequestRate Recommended by Department of EducationConditions Recommended by Department of EducationFinal ActionDate ApprovedAgenda Item with Links to Staff ReportsWaiver ID
-Stockton Unified School District2.50%Board approved unanimously March 24, 2015 for General Obligation Bonds. Submitted March 2015.PendingN/A
-Stockton Unified School District2.50%Board approved unanimously March 24, 2015 for E-Tech Bonds. Submitted March 2015.PendingN/A
-Robla School District1.25%Board hearing February 26, 2015.Not yet submittedN/A
-Oak Grove School District1.25%Discussion item on February 12, 2015 board agenda: “State of California Bonding Capacity Waiver - Debt Waiver Process.”No action yet taken by boardN/A
-Greenfield Union School District1.25%Submitted February 2015.PendingN/A
-El Monte City School District1.25%Submitted January 2015.PendingN/A
-Wiseburn Unified School District2.50%Submitted January 2015.WithdrawnN/A
1Planada Elementary School District1.25%2.25%1.96% then 2.01%That the bonded indebtedness limits be waived with the following conditions: (1) the period of request does not exceed the recommended period on Attachment 1, (2) the total bonded indebtedness limit does not exceed the recommended new maximum shown on Attachment 1, (3) the district does not exceed the statutory tax rate, (4) the waiver is limited to the sale of bonds approved by the voters on the measure, (5) the citizens’ oversight committee is established and supports the waiver and intended expenditures prior to the sale of the bonds, and (6) the district complies with the statutory requirements of Assembly Bill 182 related to school bonds which became effective January 1, 2014.Approved by Consent2014-11-13Item W-14
and
Item W-14 Addendum
5-9-2014
2Larkspur-Corte Madera School District1.25%1.50%1.50%That the bonded indebtedness limits be waived with the following conditions: (1) the period of request does not exceed the recommended period on Attachment 1, (2) the total bonded indebtedness limit does not exceed the recommended new maximum shown on Attachment 1, (3) the district does not exceed the statutory tax rate, (4) the waiver is limited to the sale of bonds approved by the voters on the measure, and (5) the district complies with the statutory requirements of Assembly Bill 182 related to school bonds which became effective January 1, 2014.Approved by Consent2014-09-03Item W-0925-6-2014
3Dehesa School District1.25%1.58%1.58%That the bonded indebtedness limits be waived with the following conditions: (1) the period of request does not exceed the recommended period on Attachment 1, (2) the total bonded indebtedness limit does not exceed the recommended new maximum shown on Attachment 1, (3) the district does not exceed the statutory tax rate, (4) the waiver is limited to the sale of bonds approved by the voters on the measure, and (5) the district complies with the statutory requirements of Assembly Bill 182 related to school bonds which became effective January 1, 2014.Approved by Consent2014-05-07Item W-0984-2-2014
4Alvord Unified School District2.50%3.67%3.67%That the bonded indebtedness limits be waived with the following conditions: (1) the period of request does not exceed the recommended period on Attachment 1, (2) the total bonded indebtedness limit does not exceed the recommended new maximum shown on Attachment 1, (3) the district does not exceed the statutory tax rate, and (4) the waiver is limited to the sale of bonds approved by the voters on the measure noted on Attachment 1.Approved by Consent2013-11-06Item W-082-8-2013
5Weaver Union School District1.25%2.26%2.26%That the bonded indebtedness limits be waived with the following conditions: (1) the period of request does not exceed the recommended period on Attachment 1, (2) the total bonded indebtedness limit does not exceed the recommended new maximum shown on Attachment 1, (3) the district does not exceed the statutory tax rate, (4) the waiver is limited to the sale of bonds approved by the voters on the measure noted on Attachment 1, (5) the district obtain approval from the Citizens’ Oversight Committee before issuing any bonds, and (6) Capital Appreciation Bonds (CABs) are not issued subsequent to approval of the waiver if the debt ratio goes above the statutory tax rate limit.Approved by 9-0 vote2013-09-04Item W-0923-5-2013
6Centinela Valley Union High School District1.25%1.65%1.55%That the total bonded indebtedness limits be waived for each district with the following conditions: (1) the period of request does not exceed the recommended period shown on Attachment 1, (2) the total bonded indebtedness limit does not exceed the recommended new maximum shown on Attachment 1, (3) the district does not exceed the statutory tax rate limits, (4) the waiver is limited to the sale of bonds approved by the voters on the measure shown on Attachment 1, and (5) Capital Appreciation Bonds (CABs) are not issued subsequent to approval of these waivers if the debt ratio goes above the statutory tax rate limit.Approved by 9-0 vote after amendment to strike condition (5) of staff recommendation2013-05-08Item W-2927-1-2013
7Jefferson Elementary School District1.25%2.25%1.92%That the bonded indebtedness limits be waived with the following conditions: (1) the period of request does not exceed the recommended period on Attachment 1, (2) the total bonded indebtedness limit does not exceed the recommended new maximum shown on Attachment 1, (3) the district does not exceed the statutory tax rate, (4) the waiver is limited to the sale of bonds approved by the voters on the measure noted on Attachment 1, and (5) Capital Appreciation Bonds (CABs) are not issued subsequent to approval of this waiver if the debt ratio goes above 1.25 percent.Approved by 9-0 vote after amendment to strike condition (5) of staff recommendation2013-05-08 (Held over from 2013-03-13)Item W-3056-10-2012
8Lindsay Unified School District2.50%3.50%3.50%That the total bonded indebtedness limits be waived for each district with the following conditions: (1) the period of request does not exceed the recommended period shown on Attachment 1, (2) the total bonded indebtedness limit does not exceed the recommended new maximum shown on Attachment 1, (3) the district does not exceed the statutory tax rate limits, (4) the waiver is limited to the sale of bonds approved by the voters on the measure shown on Attachment 1, and (5) Capital Appreciation Bonds (CABs) are not issued subsequent to approval of these waivers if the debt ratio goes above the statutory tax rate limit.Approved by 9-0 vote after amendment to strike condition (5) of staff recommendation2013-05-08Item W-2938-2-2013
9Oxnard School District1.25%1.50%1.50%That the total bonded indebtedness limits be waived for each district with the following conditions: (1) the period of request does not exceed the recommended period shown on Attachment 1, (2) the total bonded indebtedness limit does not exceed the recommended new maximum shown on Attachment 1, (3) the district does not exceed the statutory tax rate limits, (4) the waiver is limited to the sale of bonds approved by the voters on the measure shown on Attachment 1, and (5) Capital Appreciation Bonds (CABs) are not issued subsequent to approval of these waivers if the debt ratio goes above the statutory tax rate limit.Approved by 9-0 vote after amendment to strike condition (5) of staff recommendation2013-05-08Item W-2951-1-2013
10Stockton Unified School District2.50%4.23%4.23%That the total bonded indebtedness limits be waived for each district with the following conditions: (1) the period of request does not exceed the recommended period shown on Attachment 1, (2) the total bonded indebtedness limit does not exceed the recommended new maximum shown on Attachment 1, (3) the district does not exceed the statutory tax rate limits, (4) the waiver is limited to the sale of bonds approved by the voters on the measure shown on Attachment 1, and (5) Capital Appreciation Bonds (CABs) are not issued subsequent to approval of these waivers if the debt ratio goes above the statutory tax rate limit.Approved by 9-0 vote after amendment to strike condition (5) of staff recommendation2013-05-08Item W-292-3-13
11West Contra Costa Unified School District2.50%5.00%5.00%That the total bonded indebtedness limits be waived for each district with the following conditions: (1) the period of request does not exceed the recommended period shown on Attachment 1, (2) the total bonded indebtedness limit does not exceed the recommended new maximum shown on Attachment 1, (3) the district does not exceed the statutory tax rate limits, (4) the waiver is limited to the sale of bonds approved by the voters on the measure shown on Attachment 1, and (5) Capital Appreciation Bonds (CABs) are not issued subsequent to approval of these waivers if the debt ratio goes above the statutory tax rate limit.Approved by 9-0 vote after amendment to strike condition (5) of staff recommendation2013-05-08Item W-2957-1-2013
12Westside Union School District1.25%1.33%1.33%The California Department of Education (CDE) recommends that the total bonded indebtedness limits be waived for each district with the following conditions: (1) the period of request does not exceed the recommended period shown on Attachment 1, (2) the total bonded indebtedness limit does not exceed the recommended new maximum shown on Attachment 1, (3) the district does not exceed the statutory tax rate limits, (4) the waiver is limited to the sale of bonds approved by the voters on the measure shown on Attachment 1, and (5) Capital Appreciation Bonds (CABs) are not issued subsequent to approval of these waivers if the debt ratio goes above the statutory tax rate limit.Approved by 9-0 vote after amendment to strike condition (5) of staff recommendation2013-05-08Item W-2935-2-2013
13Alum Rock Union Elementary School District1.25%1.95%1.75%That the bonded indebtedness limits be waived with the following conditions:1) the district’s total bonded indebtedness, as a percent of assessed valuation, does not exceed 1.75 percent, 2) the waiver is limited to the sale of bonds approved by the voters in the November 2012 election, 3) the tax rate levied at the time of bond issuance does not exceed the amount authorized by the voters to secure the bonds, 4) the waiver is limited to two years less one day, and 5) Capital Appreciation Bonds (CABs) are not issued subsequent to approval of this waiver if the debt ratio goes above 1.25 percent. Approved by 9-0 vote after amendment to strike condition (5) of staff recommendation2013-03-13Item W-0763-10-2012
14Pittsburg Unified School District3.58% (based on previous waiver)5.00%5.00%The bonded indebtedness limits be waived with the condition that each district’s total bonded indebtedness as a percent of assessed valuation, does not exceed the percent shown on Attachment 1 and that the tax rate levied at the time of bond issuance does not exceed the amount shown on Attachment 1. Approved by Consent2012-07-18Item W-14168-2-2012
15Savanna Elementary School District1.25%2.50%2.50%That the bonded indebtedness limits be waived with the condition that each district’s total bonded indebtedness as a percent of assessed valuation, does not exceed the percent shown on Attachment 1 and that the tax rate levied at the time of bond issuance does not exceed the amount shown on Attachment 1. Approved by Consent2012-07-18Item W-14132-2-2012
-Folsom-Cordova Unified School District (Measure M)2.50%10.20%10.20%That the bonded indebtedness limits be waived with the condition that each district’s total bonded indebtedness as a percent of assessed valuation, does not exceed the percent shown on Attachment 1 and that the tax rate levied at the time of bond issuance does not exceed the amount shown on Attachment 1.Withdrawn2012-03-07Item W-14 and
Item W-14 Attachment 1 and
Item W-14 Attachment 3
79-12-2011
16Folsom-Cordova Unified School District (Measure N)2.50%3.40%3.40%That the bonded indebtedness limits be waived with the condition that each district’s total bonded indebtedness as a percent of assessed valuation, does not exceed the percent shown on Attachment 1 and that the tax rate levied at the time of bond issuance does not exceed the amount shown on Attachment 1. Approved by Consent2012-03-07Item W-14 and
Item W-14 Attachment 1 and Item W-14 Attachment 4
80-12-2011
17Hawthorne Elementary School District1.25%1.55%1.55%The California Department of Education recommends that the bonded indebtedness limits be waived with the condition that each district’s total bonded indebtedness as a percent of assessed valuation, does not exceed the percent shown on Attachment 1 and that the tax rate levied at the time of bond issuance does not exceed the amount shown on Attachment 1. Approved by Consent2012-03-07Item W-14 and
Item W-14 Attachment 1
and Item W-14 Attachment 2
29-10-2011
18San Ysidro School District1.25%3.00%3.00%That the bonded indebtedness limits be waived with the condition that each district’s total bonded indebtedness as a percent of assessed valuation, does not exceed the percent shown on Attachment 1 and that the tax rate levied at the time of bond issuance does not exceed the amount shown on Attachment 1. Approved by Consent2012-03-07Item W-14 and
Item W-14 Attachment 1 and Item W-14 Attachment 5
62-12-2012
19Twin Rivers Unified School District1.25%2.50%2.50%That the board approve the district’s request with the following conditions: The waiver is limited to the sale of bonds approved by the voters in the June 2006 election and the bonded indebtedness will not exceed 2.5 percent of assessed valuation. In addition, at no time before issuance of any additional authorized bonds will the tax levy exceed $30 per $100,000 of taxable property. Approved by Consent2011-11-09Item W-11 and
Item W-11 Attachment 1
14-5-2011
20Moreland School District1.25%1.57%1.57%That the board approve the district’s request with the following conditions: The waiver is limited to the sale of bonds approved by the voters in the November 2010 election and the bonded indebtedness will not exceed 1.57 percent of assessed valuation. In addition, at no time before issuance of any additional authorized bonds will the tax levy exceed the $30 per $100,000 of taxable property authorized by the voters to secure the bonds.Approved by Consent2011-07-13Item WC-8 General and
Item WC-8 Attachment 1
5-4-2011
21El Monte Union High School District1.25%2.00%2.00%That the bonded indebtedness limit of El Monte Union High School District (UHSD) be waived provided it does not exceed 2.0 percent of the assessed valuation of taxable property of the district and that the waiver is limited to the sale of bonds approved by the voters in the November 2008 election. In addition, at no time is the tax levy to exceed the $30 per $100,000 of taxable property estimated by the voters to secure the bonds.Approved by Consent2011-03-09Item W-5 General and
Item W-5 Attachment 1
174-12-2012
22West Contra Costa Unified School District2.50%5.00%5.00%That the bonded indebtedness limit of West Contra Costa Unified School District be waived provided it does not exceed 5.0 percent of the assessed valuation of taxable property of the district and that the waiver is limited to the sale of bonds approved by the voters in the June 2010 election. In addition, at no time is the tax levy to exceed the $60 per $100,000 of taxable property authorized by the voters to secure the bonds. Approved by Consent2011-03-09Item W-6 General and
Item W-6 Attachment 1
200-12-2010
23Wiseburn Unified School District1.25%2.20%2.20%That the bonded indebtedness limit of Wiseburn Elementary School District be waived provided it does not exceed 2.20 percent of the assessed valuation of taxable property of the district and that the waiver is limited to the sale of bonds approved by the voters in the November 2010 election. In addition, at no time is the tax levy to exceed the amount authorized by the voters to secure the bonds.Approved by Consent2011-03-09Item WC-4 General and
Item WC-4 Attachment 1
46-12-2010
24Alvord Unified School District2.50%2.60%2.60%That the bonded indebtedness limit of Alvord Unified School District be waived provided it does not exceed 2.6 percent of the assessed valuation of taxable property of the district, and that the waiver is limited to the sale of bonds approved by the voters in the November 2007 election. In addition, at no time is the tax levy to exceed the amount authorized by the voters to secure the bonds.Approved by Consent2011-01-12Item W-12 General and
Item W-12 Attachment 1
67-10-2010
25Pittsburg Unified School District2.50%3.58%3.58%That the bonded indebtedness limit of Pittsburg Unified School District be waived provided it does not exceed 3.58 percent of the assessed valuation of taxable property of the district, and that the waiver is limited to the sale of bonds approved by the voters in the November 2006 and November 2010 elections. In addition, at no time is the tax levy to exceed the amount authorized by the voters to secure the bonds.Approved by Consent2011-01-12Item W-13 General and
Item W-13 Attachment 1
48-10-2010
26Stockton Unified School District2.50%3.28%3.28%That the bonded indebtedness limit of Stockton Unified School District be waived provided it does not exceed 3.28 percent of the assessed valuation of taxable property of the district, and that the waiver is limited to the sale of bonds approved by the voters in the February 2008 election. In addition, at no time is the tax levy to exceed the amount authorized by the voters to secure the bonds.Approved by Consent2011-01-12Item W-14 General and
Item W-14 Attachment 1
69-10-2010
27Piedmont Unified School District2.50%2.80%2.79%That the bonded indebtedness limit of Piedmont Unified School District be waived provided it does not exceed 2.79 percent of the assessed valuation of taxable property of the district and that the waiver is limited to the sale of bonds approved by the voters in the March 2006 election. In addition, at no time is the tax levy to exceed the amount authorized by the voters to secure the bonds.Approved by Consent2010-05-05Item WC-17 and
Item WC-17 Attachment 1
21-3-2010
28Delano Joint Union High School District1.25%2.91%2.25%That the bonded indebtedness of Delano Joint Union High School District not exceed 2.25 percent of the assessed valuation of taxable property of the district and that the waiver is limited to the sale of bonds approved by the voters in the November 2005 election. In addition, at no time is the tax levy to exceed the amount authorized by the voters to secure the bonds.Approved by Consent2009-09-16Item W-6 and
W-6 Attachment 1
1-9-2009
29Richland School District1.25%1.90%1.90%That the bonded indebtedness of Richland Union Elementary School District (UESD) not exceed 1.90 percent of the assessed valuation of taxable property of the district and that the waiver is limited to the sale of bonds approved by the voters in the November 2008 election. In addition, at no time is the tax levy to exceed the amount authorized by the voters to secure the bonds.Approved by Consent2009-07-08Item W-9
and Item W-9 Attachment 1
39-5-2009
30El Monte City School District1.25%1.72%1.73%That the bonded indebtedness of El Monte City Elementary School District not exceed 1.73 percent of the assessed valuation of taxable property of the district and that the waiver is limited to the sale of bonds approved by the voters in the November 2008 election. In addition, at no time is the tax levy to exceed the amount authorized by the voters to secure the bonds. Approved by Consent2009-05-06Item W-38 and
Item W-38 Attachment 1
9-5-2009
31Ross School District1.25%1.43%1.43%That the district’s bonded indebtedness does not exceed 1.43 percent of the assessed value of the district’s taxable property, the waiver is limited to the sale of bonds approved by the voters in the June 2008 election, and the tax levy does not exceed the amount authorized by the voters.Approved by Consent2009-05-06Item WC-78-3-2009
32West Contra Costa Unified School District2.50%3.50%3.13%That the district’s bonded indebtedness does not exceed 3.13 percent of the assessed valuation of taxable property of the district, the waiver is limited to the sale of bonds approved by the voters in the November 2005 election, and the tax levy does not exceed the amount authorized by the voters. Approved by 8-0 vote2009-03-11Item W-1577-2-2009
33Planada Elementary School District1.25%1.55%2.55%That the bonded indebtedness of Planada Elementary School District not exceed 2.55 percent of the assessed valuation of taxable property of the district and that the waiver is limited to the sale of bonds approved by the voters in the November 2008 election.Approved by Consent2008-11-05Item W-1441-12-2008
34Alisal Union School District1.25%1.68%1.68%That the bonded indebtedness of Alisal Union Elementary School District not exceed 1.68 percent of the assessed valuation of taxable property of the district and that the waiver is limited to the sale of bonds approved by the voters in the November 2006 election. In addition, at no time is the tax levy to exceed the amount authorized by the voters to secure the bonds.Approved by 8-0 vote.2008-11-05Item W-128-8-2008
35Lindsay Unified School District2.50%2.81%2.81%That the bonded indebtedness of Lindsay Unified School District not exceed 2.81 percent of the assessed valuation of taxable property of the district and that the waiver is limited to the sale of bonds approved by the voters in the February 2008 election. In addition, at no time is the tax levy to exceed the amount authorized by the voters to secure the bonds. Approved by 8-0 vote.2008-09-10Item W-139-8-2008
36El Monte City School District1.25%1.43%1.43%That the bonded indebtedness of El Monte City Elementary School District not exceed 1.43 percent of the assessed valuation of taxable property of the district and that the waiver is limited to the sale of bonds approved by the voters in the November 2004 election. In addition, at no time is the tax levy to exceed the amount authorized by the voters to secure the bonds.Approved by Consent2008-07-09Item W-1817-6-2008
37Edison School District1.25%1.50%1.50%That the bonded indebtedness of Edison Elementary School District not exceed 1.50 percent of the assessed valuation of taxable property of the district and that the waiver is limited to the sale of bonds approved by the voters in the May 2004 election.Approved by Consent2008-01-09Item W-235-4-2008
38Garvey Elementary School District1.25%1.46%1.46%That the bonded indebtedness of Garvey Elementary School District not exceed 1.46 percent of the assessed valuation of taxable property of the district and that the waiver is limited to the sale of bonds approved by the voters in the November 2004 election.Approved by Consent2007-07-11Item W-313-10-2007
39Bassett Unified School District2.50%2.84%2.84%That the bonded indebtedness of Bassett Unified School District not exceed 2.84 percent of the assessed valuation of taxable property of the district and that the waiver is limited to the sale of the bonds approved by the voters in the November 2006 election, the waiver is effective until July 2012.Approved by Consent2007-03-07Item W-448-4-2007
40Los Gatos Union School District1.25%1.26%1.26%Approve with the condition that the bonded indebtedness of Los Gatos School District not exceed 1.26 percent of the assessed valuation of taxable property of the district and that the waiver is limited to the sale of the bonds approved by the voters in the June 2001 election.Approved by Consent2007-01-10Item W-217-1-2007
41Golden Valley Unified School District2.50%4.71%4.71%Approve with the conditions that the: (1) bonded indebtedness of Golden Valley Unified School District not exceed 4.71 percent of the assessed valuation of taxable property of the district; (2) waiver is limited to the sale of the bonds approved by the voters in the June 1999 and 2006 elections; (3) bond repayment from property taxes not exceed the tax rate promised to the voters for the June 1999 and 2006 elections ($100 per $100,000 of assessed value and $60 per $100,000 of assessed value, respectively); and (4) waiver is effective until August 1, 2014.Approved by Consent2006-01-12Item W-24-9-2006
42Alisal Union School District1.25%1.40%1.40%That the condition that the bonded indebtedness of Alisal Union School District not exceed 1.40 percent of the assessed valuation of taxable property of the district and that the waiver is limited to the sale of the bonds approved by the voters in the November 1999 election.Approved by Consent2005-01-13Item W-11-11-2005
43Greenfield Union School District1.25%1.31%1.31%On the condition that the bonded indebtedness of Greenfield Union School District not exceed 1.31 percent of the assessed valuation of taxable property of the district and that the waiver is limited to the sale of the bonds approved by the voters in the March 1999 election.Approved by 10-0 vote2004-09-09Item W-32-11-2004
44Moreland School District1.25%1.76%1.76%On the condition that the bonded indebtedness of Moreland Elementary School District not exceed 1.76% of the assessed valuation of taxable property of the district and that the waiver is limited to the sale of the bonds approved by the voters in the March 2002 election.Approved by 9-0 vote2004-09-09Item W-212-7-2004
45San Ysidro School District1.25%2.15%2.15%On the condition that the bonded indebtedness of San Ysidro School District not exceed 2.15% of the assessed valuation of taxable property of the district and that the waiver is limited to the sale of the bonds approved by the voters in the March 1997 election.Approved by 10-0 vote2002-11-13Item W-319-7-2004
46West Contra Costa Unified School District2.50%3.00%3.00%On the condition that the bonded indebtedness of West Contra Costa Unified School District not exceed 3.0% of the assessed valuation of taxable property of the district and that the waiver is limited to the sale of the bonds approved by the voters in the June 1998, November 2000, and March 2002 elections.Approved unanimously.2009-09-16Item W-37-0-2002
47Union Elementary School District1.25%1.69%1.69%For sale of the bonds approved by the voters in the June 1999 election.Approved2001-11-07Item W-19-9-2001
48San Ysidro School District1.25%1.56%1.56%For sale of the bonds approved by the voters in the March 1997 election.Approved2001-03-07Item W-1019-1-2001
-Oxnard School District1.25%1.59%N/AN/AWithdrawnN/A
-Reef-Sunset Unified School District2.50%2.75%N/AN/AWithdrawnN/A

Table A-4 California School Construction & Finance History

See the complete California Policy Center report For the Kids: California Voters Must Become Wary of Borrowing Billions More from Wealthy Investors for Educational Construction (complete, printable PDF Version, 4 MB, 361 pages)

Links to all sections of this study readable online:
Executive Summary: “For the Kids” – Comprehensive Review of California School Bonds (1 of 9)
More Borrowing for California Educational Construction in 2016 (2 of 9)
Quantifying and Explaining California’s Educational Construction Debt (3 of 9)
How California School and College Districts Acquire and Manage Debt (4 of 9)
Capital Appreciation Bonds: Disturbing Repayment Terms (5 of 9)
Tricks of the Trade: Questionable Behavior with Bonds (6 of 9)
The System Is Skewed to Pass Bond Measures (7 of 9)
More Trouble with Bond Finance for Educational Construction (8 of 9)
Improving Oversight, Accountability, and Fiscal Responsibility (9 of 9)
You are in this section: Guide to all Tables and Appendices – Comprehensive Reference for Researchers


YearEvent
1879The California Constitution allows school districts to issue general obligation bonds subject to the approval of two–thirds of local voters.
1947The State Allocation Board (SAB) is created to provide loans for school facilities paid for by proceeds from state bond measures.
1978Proposition 13 embeds tax limitation language and a two-thirds voter threshold for tax increases in Article XIII of the California Constitution. It states that “the maximum amount of any ad valorem tax on real property shall not exceed one percent (1%) of the full cash value of such property” unless approved “by a two-thirds vote of the qualified electors of such district.” (Ad valorem means “according to value” in Latin and indicates a tax is imposed on the value of property - in other words, a property tax.) It also prohibits local governments from issuing General Obligation bonds. The state helps to fund school construction through grants.
1980California voters reject Proposition 4, which would have restored the authority of local governments to issue bonds if two-thirds of voters authorize it.
1982E.F. Hutton begins underwriting municipal Capital Appreciation Bonds, a year after the first corporate Capital Appreciation Bonds were issued.
1986In the first of two statewide ballot measures to whittle away at Proposition 13, Proposition 46 amends Proposition 13 and allows school and college districts (and other local governments) to issue general obligation bonds if approved by a two-thirds vote. Community colleges and K-12 school districts have to consider the challenging but not impossible hurdle of winning two-thirds voter approval to obtain authorization to borrow money for construction.
1993Senate Bill 872 gives K-12 school and community college districts authority to sell bonds at a public sale at face value, above face value (at a premium), or below face value (at a discount). It authorizes local governments to adopt "modern" additional and alternative methods to issue (sell) and refund (refinance) general obligation bonds secured by a general levy of ad valorem taxes, in particular zero-coupon bonds (Capital Appreciation Bonds). Supporters of the bill contend it would “let cities and counties stabilize their debt and get the best interest rates” and “likely result in improved debt structuring with correspondingly reduced costs to property taxpayers.” It would also allow local agencies to “access a wider pool of investors who are interested in a broader array of financing instruments, terms of maturity, and tender options.” No individual or organization opposes SB 872 or expresses formal concerns about it. It passes the State Senate 38-0 and passed the State Assembly 76-0, with the Senate then agreeing to minor amendments on a 37-0 vote. In 1994, school districts begin selling Capital Appreciation Bonds.
1996The California legislature and Governor Pete Wilson establish a “Class Size Reduction Program” to reduce the number of students per certificated teacher in various grades. School districts claim they lacked sufficient facilities to implement the requirement, and they blame Proposition 13 for the deficiency. In addition, some school districts “perceived sort of ad-hoc discretionary nature of decisions by the Board” in which certain school districts used connections and relationships with board members to gain an advantage in the disbursement process. Various interest groups began exploring ways to get more money for school construction.
1998The California legislature passed and Governor Pete Wilson signs Senate Bill 50, the Leroy F. Greene School Facilities Act of 1998. It establishes the current funding structure for school construction in California by incorporating both state and local funding sources for school construction. The state pays 50 percent of the cost of new school construction and 60 percent of the cost for school modernization, generally on the condition that local school districts provide matching funds. The State Allocation Board oversees and directs the Office of Public School Construction - a successor agency to the Office of Local Assistance - in the California Department of General Services to manage the grant program. The post-1998 State Allocation Board has been described as a “quasi-legislative, sometimes quasi-judicial body” with state legislators comprising a majority of the board but acting as an agency of the executive branch, as permitted in a special provision in the California Constitution.
1998Voters approve Proposition 1A, which authorizes the state to borrow $9.2 billion to support matching grants for school and college construction projects.
1999Senate Bill 1118, sponsored by the Office of the California State Treasurer, is enacted to “streamline the complex procedures governing school bond elections and issuance.” It establishes the current system for how bond measures are brought before voters and how bond proceeds are managed after approval. It outlines the purposes for which a school or college district can use bond proceeds. It authorizes the creation of various accounts to hold money for various purposes related to bond finance and construction. The legislative record does not indicate that any individual or organization opposed SB 1118 or expressed concerns about it. It passes the State Senate 40-0 but was opposed by some Republicans in the State Assembly, where it passed 50-20 with 10 members of the Assembly (including some Democrats) not voting. Bill analyses for committees about SB 1118 provided almost no context and incompletely listed the many new provisions that the bill would add to state law.
2000In March, 51% of California voters reject Proposition 26, which would have reduced the voter threshold for approval of General Obligation bond measures from two-thirds to a simple majority.
2000In November, 53% of California voters approve Proposition 39, which creates an exception to Proposition 13 by allowing school and college districts an option of proposing General Obligation bond measures that win approval with a 55% voter threshold instead of two-thirds.

In addition, the passage of Proposition 39 triggers enactment of Assembly Bill 1908, which imposes requirements on school and college districts that win approval to issue bonds under the criteria of Proposition 39:

Debt obligations resulting from the bond measure cannot exceed 2.5% of assessed value for unified districts and 1.25% for elementary and high school districts.
Tax levies resulting from the bond measure cannot exceed $60 per $100,000 of assessed value for unified districts and $30 per $100,000 of assessed value for elementary and high school districts.
An independent citizens bond oversight committee with appointed representatives from specific constituencies must be established to ensure proceeds of bond sales authorized by the bond measure are only spent on projects identified in the ballot statement provided to voters.
2002Voters approve Proposition 47, which authorizes the state to borrow $13.05 billion to support matching grants for school and college construction projects.
2004Voters approve Proposition 55, which authorizes the state to borrow $12.3 billion to support matching grants for school and college construction projects.
2006Voters approve Proposition 1D, which authorizes the state to borrow $10.4 billion to support matching grants for school and college construction projects.
2006Assembly Bill 1482 brings a bit more transparency to the process of bond sales by requiring public notice of the method of sale and other pertinent information when a district intends to issue bonds. It was introduced by Assemblyman Joe Canciamilla, and signed into law by Governor Arnold Schwarzenegger in 2006. It passed the State Senate 28-4 with eight members not voting and passed the State Assembly 68-5 with six members not voting. The revised version of the bill was supported by the California Association of County Treasurers and Tax Collectors.

As introduced, this bill required that all sales of bonds by school districts occur through a competitive bid process, with specific exceptions granted in limited circumstances that would allow for a negotiated sale, if approved by the county treasurer or the State Treasurer. Opposition was strong from groups heavily involved in promoting bond measures for school construction, including California’s Coalition for Adequate School Housing (C.A.S.H.), the California Public Securities Association, the Association of California School Administrators, the California Association of School Business Officials, and the Small School Districts' Association. The two largest school districts in the state - Los Angeles Unified School District and San Diego Unified School District - also opposed it.

The Assembly Education Committee heard the bill but did not take action. Assemblyman Canciamilla then submitted a request to the Joint Legislative Audit Committee asking for an audit to determine to what extent true cost of issuance differed between comparable school district general obligation bond issues sold through a competitive bid process versus negotiated sale. The Audit Committee did not approve the request.Ultimately, the bill directed the state to collect additional information to get better insight on whether competitive bidding (as opposed to negotiated sales) provides lower costs to the bond issuer.
2007Housing prices in some areas of the state begin a dramatic four-year drop, in some regions declining 50% from their zenith, thus reducing assessed property valuation and the tax and debt limits based on it.
2009Assembly Bill 1388 gives local governments such as counties and cities the same authority as school districts and college districts to sell bonds at a negotiated sale for a price at, above, or below par value, under criteria already in place for educational districts. It was amended in the Senate to repeal a provision from SB 872 (1993) that prohibited a bond issue from being structured so that the maximum annual debt service payment of principal and interest to amortize the bonds never exceeds the minimum annual debt service payment by more than 10 percent.

No elaboration or explanation was provided in bill analyses regarding the amendment to AB 1388. The bill text itself simply said "Section 53508.5 of the Government Code is repealed." Obviously someone knew that this restriction was hindering bond sales – especially those involving Capital Appreciation Bonds.

School and college districts were selling Capital Appreciation Bonds shortly after the passage of SB 872 in 1993, but AB 1388 apparently encouraged their use at a time when educational districts found themselves unable to sell bonds for construction projects. The bill was sponsored by the California Public Securities Association and supported by the California State Association of Counties and League of California Cities. The legislative record does not indicate that any individual or organization opposed the bill or expressed concerns about it. It passed the State Senate 39-0 and passed the State Assembly 77-0.
2010The California Association of County Treasurers and Tax Collectors supports Senate Bill 623, which would have prohibited a local agency from using a bond underwriter that also provides campaign services to pass a bond measure, and Senate Bill 1461, which would have prohibited a local agency from using a bond underwriter or a financial advisor or a legal advisor that also provides campaign services to pass a bond measure or conducts feasibility studies and polling for a potential campaign. Both of these bills failed to pass the California legislature after resistance from school and college districts and parties involved in bond finance and in campaigns to pass bond measures.
2010Momentum starts in the California legislature and grows in the next six years to place another statewide bond measure on the ballot to fund school and community college construction.
2012California political leaders find out that the Poway Unified School District sold about $100 million in non-redeemable Capital Appreciation Bonds in 2011 that will impose almost $1 billion in debt service over 40 years. Other educational districts that sold Capital Appreciation Bonds with unusually high ratios of debt service to principal are subsequently exposed.
2013Assembly Bill 182 attempts to reign in the worst excesses of Capital Appreciation Bonds while still allowing school and college districts to use them as a debt finance tool. Assemblywoman Joan Buchanan - chairwoman of the Assembly Education Committee - introduces the bill, and it was signed into law in whittled-down form by Governor Jerry Brown in 2013.

Table A-5 Arguments for Capital Appreciation Bonds

See the complete California Policy Center report For the Kids: California Voters Must Become Wary of Borrowing Billions More from Wealthy Investors for Educational Construction (complete, printable PDF Version, 4 MB, 361 pages)

See the complete California Policy Center report For the Kids: California Voters Must Become Wary of Borrowing Billions More from Wealthy Investors for Educational Construction (complete, printable PDF Version, 4 MB, 361 pages)

Links to all sections of this study readable online:
Executive Summary: “For the Kids” – Comprehensive Review of California School Bonds (1 of 9)
More Borrowing for California Educational Construction in 2016 (2 of 9)
Quantifying and Explaining California’s Educational Construction Debt (3 of 9)
How California School and College Districts Acquire and Manage Debt (4 of 9)
Capital Appreciation Bonds: Disturbing Repayment Terms (5 of 9)
Tricks of the Trade: Questionable Behavior with Bonds (6 of 9)
The System Is Skewed to Pass Bond Measures (7 of 9)
More Trouble with Bond Finance for Educational Construction (8 of 9)
Improving Oversight, Accountability, and Fiscal Responsibility (9 of 9)
You are in this section: Guide to all Tables and Appendices – Comprehensive Reference for Researchers


Table A-5 is meant to provide a resource for policymakers and the public to organize arguments about Capital Appreciation Bonds for issue briefs, letters, speeches, public comments, etc

Table A-5
Arguments for Capital Appreciation Bonds
ArgumentRebuttal
URGENCY
School facilities are desperately needed now: schools are overcrowded, deteriorating, outdated, and unsafe. These claims are rarely quantified. There needs to be an objective way to determine that need overwhelms the risk of massive tax and debt burdens for future generations.
Despite 14 years of Proposition 39, educational districts continue to increase the number of bond measures on the ballot and the total amount authorized to borrow. It seems that spending between $100-$200 billion on construction since 2000 has only increased the need for more.
It’s possible that educational districts are preparing for a population boom that may never occur. Average Daily Attendance for California K-12 school districts has dropped from 5,927,951 in 2003-04 to 5,631,709 in 2008-09 to 5,501,603 in 2013-14. Actual California population growth is lagging behind projections made in the 1990s.
When the bond measure was before voters for consideration, the educational district made promises to residents about what was going to be built and what the tax rate would be. Those promises must be fulfilled. Voters want the projects now.Anecdotally, it appears that voters aren’t necessarily keen on immediately proceeding with construction projects listed in bond measure ballot statements if it requires borrowing money under outlandish terms via sales of Capital Appreciation Bonds or other unconventional methods of debt finance. Taxpayers would rather give their money to their local educational district than to bond investors.
Who actually applies the most pressure on the educational district to proceed with borrowing money? Are educational districts selling Capital Appreciation Bonds or other unconventional methods of debt finance because parents and teachers are demanding it? Or is the political pressure coming from the various interests that contributed to the bond measure campaign and now want to reap the rewards of contracts for this construction program?
Interest rates are low. This is a good time to borrow money, perhaps with a mix of Current Interest Bonds and Capital Appreciation Bonds. Rates may not be so favorable when assessed valuation of property in the district goes up.Interest rates are low and provide an advantage for educational districts issuing Current Interest Bonds, but the outrageous nature of Capital Appreciation Bond negates the benefit of lower rates. The ratio of debt service to principal should not exceed 3 or 4 (at the most) for an individual bond issue.
Educational districts will jeopardize the quality of education for students if they don’t get funding for construction now.Is it true that new and modernized facilities significantly improve academic performance and life preparation for students? Is the impact of bond measures on test scores proportionate to the amount of tax revenue spent on debt service for those bond measures? Or are bond measures simply an easy method to get more money flowing into the district?
Ongoing construction programs would have to stop if funding isn’t obtained now, causing inconvenience, stopping momentum, and risking a higher cost of construction in the future.A realistic projection for assessed valuation of property would allow for better planning of construction-related contracts. Future generations should not have to pay for the risky borrowing practices of this generation’s leaders.
STINGY STATE LAWS COMPEL USE
Educational districts have to sell Capital Appreciation Bonds or other unconventional methods of debt finance because of unreasonably low tax and debt limits established in state law.The California legislature established these limits in state law in 2000 as part of a strategy to boost voter support for Proposition 39, a statewide measure on the November 2000 ballot to modify Proposition 46 enacted in 1986 - an initiative that modified the high-profile Proposition 13 enacted in 1978. Without limits and other additional taxpayer protections, Proposition 39 might have failed, as Proposition 26 failed in March 2000.
Educational districts have to sell Capital Appreciation Bonds or other unconventional methods of debt finance because assessed valuation of property in the districts unexpectedly declined, thus forcing districts to confront tax and debt limits.It’s important to obtain an independent projection of assessed property valuation that does not extend a current exceptional rate of growth for 40 years.
THESE BOND FINANCE DEALS ARE MISUNDERSTOOD
It’s wrong to consider Capital Appreciation Bonds in isolation. They are usually just a piece of a package of bond issues. When considered in conjunction with other bond issues, the debt to principal ratio is usually reasonable.This doesn’t eliminate the reality that bonds are issued that will need to be paid back decades later with compounded interest. Why include them at all?
Focusing on long-term debt service is misleading. Just because there is a high number for aggregate accreted interest in 40 years doesn’t necessary mean that amount will ever be paid. Many Capital Appreciation Bonds are “callable” and can be redeemed (and are being redeemed) with a new issue of refunding bonds that have lower rates and can be issued as traditional Current Interest Bonds. Because of the consistent increasing value of property in California over several generations, an amount that seems high to taxpayers now will not be so daunting decades from now. Routine inflation will reduce the “real” cost of paying back Capital Appreciation Bonds decades from now. This is public money. The decision to borrow money via Capital Appreciation Bonds assumes that assessed valuation of property and the rate of inflation will increase substantially over decades. And some districts (such as Poway Unified School District) have sold Capital Appreciation Bonds that are not callable.
Contrary to claims made after the fact, plenty of information is provided to educational district administrators and elected board members about bond sales. There isn’t an excuse for not understanding the proposal.Information is not presented in a standardized way that is easy to understand. Most school board members do not have a background in accounting, finance, or bonds. In addition, school board members may be hesitant to publicly acknowledge their lack of understanding, especially if everyone else in the room is nodding heads during the bond consultant presentation.
Critics have self-interested motivations to criticize. Traditional and consistent ideological detractors of government schools want to take advantage of yet another opportunity to undermine the system. Cynical politicians want to exploit bad news in order to build a reputation. News media wants to improve reader and viewer ratings through sensational and misleading coverage.Most people would acknowledge that criticism of at least a few bond issues by California educational districts has merit. In addition, there are self-interested motivations for people denying that Capital Appreciation Bonds and other unconventional bond financing are unusual or unwise. Community college and K-12 school district elected officials wanted to stay in office. District administrators wanted to keep their jobs. And of course professionals in the financial industry wanted to continue making a living from the transaction fees generated by bond sales.
Assembly Bill 182 (2013) wasn’t really needed, but it is now law and there are no valid arguments to impose more restrictions on this valuable tool for educational districts.Educational districts are still selling Capital Appreciation Bonds (and also Bond Anticipation Notes) under the assumption that assessed valuation will continue to rise for decades. The bond financing industry will continue to use these schemes to bloat borrowing and collect more transaction fees.
Table A-5
Arguments for Capital Appreciation Bonds
ArgumentRebuttal
URGENCY
School facilities are desperately needed now: schools are overcrowded, deteriorating, outdated, and unsafe. These claims are rarely quantified. There needs to be an objective way to determine that need overwhelms the risk of massive tax and debt burdens for future generations.
Despite 14 years of Proposition 39, educational districts continue to increase the number of bond measures on the ballot and the total amount authorized to borrow. It seems that spending between $100-$200 billion on construction since 2000 has only increased the need for more.
It’s possible that educational districts are preparing for a population boom that may never occur. Average Daily Attendance for California K-12 school districts has dropped from 5,927,951 in 2003-04 to 5,631,709 in 2008-09 to 5,501,603 in 2013-14. Actual California population growth is lagging behind projections made in the 1990s.
When the bond measure was before voters for consideration, the educational district made promises to residents about what was going to be built and what the tax rate would be. Those promises must be fulfilled. Voters want the projects now.Anecdotally, it appears that voters aren’t necessarily keen on immediately proceeding with construction projects listed in bond measure ballot statements if it requires borrowing money under outlandish terms via sales of Capital Appreciation Bonds or other unconventional methods of debt finance. Taxpayers would rather give their money to their local educational district than to bond investors.
Who actually applies the most pressure on the educational district to proceed with borrowing money? Are educational districts selling Capital Appreciation Bonds or other unconventional methods of debt finance because parents and teachers are demanding it? Or is the political pressure coming from the various interests that contributed to the bond measure campaign and now want to reap the rewards of contracts for this construction program?
Interest rates are low. This is a good time to borrow money, perhaps with a mix of Current Interest Bonds and Capital Appreciation Bonds. Rates may not be so favorable when assessed valuation of property in the district goes up.Interest rates are low and provide an advantage for educational districts issuing Current Interest Bonds, but the outrageous nature of Capital Appreciation Bond negates the benefit of lower rates. The ratio of debt service to principal should not exceed 3 or 4 (at the most) for an individual bond issue.
Educational districts will jeopardize the quality of education for students if they don’t get funding for construction now.Is it true that new and modernized facilities significantly improve academic performance and life preparation for students? Is the impact of bond measures on test scores proportionate to the amount of tax revenue spent on debt service for those bond measures? Or are bond measures simply an easy method to get more money flowing into the district?
Ongoing construction programs would have to stop if funding isn’t obtained now, causing inconvenience, stopping momentum, and risking a higher cost of construction in the future.A realistic projection for assessed valuation of property would allow for better planning of construction-related contracts. Future generations should not have to pay for the risky borrowing practices of this generation’s leaders.
STINGY STATE LAWS COMPEL USE
Educational districts have to sell Capital Appreciation Bonds or other unconventional methods of debt finance because of unreasonably low tax and debt limits established in state law.The California legislature established these limits in state law in 2000 as part of a strategy to boost voter support for Proposition 39, a statewide measure on the November 2000 ballot to modify Proposition 46 enacted in 1986 - an initiative that modified the high-profile Proposition 13 enacted in 1978. Without limits and other additional taxpayer protections, Proposition 39 might have failed, as Proposition 26 failed in March 2000.
Educational districts have to sell Capital Appreciation Bonds or other unconventional methods of debt finance because assessed valuation of property in the districts unexpectedly declined, thus forcing districts to confront tax and debt limits.It’s important to obtain an independent projection of assessed property valuation that does not extend a current exceptional rate of growth for 40 years.
THESE BOND FINANCE DEALS ARE MISUNDERSTOOD
It’s wrong to consider Capital Appreciation Bonds in isolation. They are usually just a piece of a package of bond issues. When considered in conjunction with other bond issues, the debt to principal ratio is usually reasonable.This doesn’t eliminate the reality that bonds are issued that will need to be paid back decades later with compounded interest. Why include them at all?
Focusing on long-term debt service is misleading. Just because there is a high number for aggregate accreted interest in 40 years doesn’t necessary mean that amount will ever be paid. Many Capital Appreciation Bonds are “callable” and can be redeemed (and are being redeemed) with a new issue of refunding bonds that have lower rates and can be issued as traditional Current Interest Bonds. Because of the consistent increasing value of property in California over several generations, an amount that seems high to taxpayers now will not be so daunting decades from now. Routine inflation will reduce the “real” cost of paying back Capital Appreciation Bonds decades from now. This is public money. The decision to borrow money via Capital Appreciation Bonds assumes that assessed valuation of property and the rate of inflation will increase substantially over decades. And some districts (such as Poway Unified School District) have sold Capital Appreciation Bonds that are not callable.
Contrary to claims made after the fact, plenty of information is provided to educational district administrators and elected board members about bond sales. There isn’t an excuse for not understanding the proposal.Information is not presented in a standardized way that is easy to understand. Most school board members do not have a background in accounting, finance, or bonds. In addition, school board members may be hesitant to publicly acknowledge their lack of understanding, especially if everyone else in the room is nodding heads during the bond consultant presentation.
Critics have self-interested motivations to criticize. Traditional and consistent ideological detractors of government schools want to take advantage of yet another opportunity to undermine the system. Cynical politicians want to exploit bad news in order to build a reputation. News media wants to improve reader and viewer ratings through sensational and misleading coverage.Most people would acknowledge that criticism of at least a few bond issues by California educational districts has merit. In addition, there are self-interested motivations for people denying that Capital Appreciation Bonds and other unconventional bond financing are unusual or unwise. Community college and K-12 school district elected officials wanted to stay in office. District administrators wanted to keep their jobs. And of course professionals in the financial industry wanted to continue making a living from the transaction fees generated by bond sales.
Assembly Bill 182 (2013) wasn’t really needed, but it is now law and there are no valid arguments to impose more restrictions on this valuable tool for educational districts.Educational districts are still selling Capital Appreciation Bonds (and also Bond Anticipation Notes) under the assumption that assessed valuation will continue to rise for decades. The bond financing industry will continue to use these schemes to bloat borrowing and collect more transaction fees.

Table A-6 Arguments Against Capital Appreciation Bonds

See the complete California Policy Center report For the Kids: California Voters Must Become Wary of Borrowing Billions More from Wealthy Investors for Educational Construction (complete, printable PDF Version, 4 MB, 361 pages)

Links to all sections of this study readable online:
Executive Summary: “For the Kids” – Comprehensive Review of California School Bonds (1 of 9)
More Borrowing for California Educational Construction in 2016 (2 of 9)
Quantifying and Explaining California’s Educational Construction Debt (3 of 9)
How California School and College Districts Acquire and Manage Debt (4 of 9)
Capital Appreciation Bonds: Disturbing Repayment Terms (5 of 9)
Tricks of the Trade: Questionable Behavior with Bonds (6 of 9)
The System Is Skewed to Pass Bond Measures (7 of 9)
More Trouble with Bond Finance for Educational Construction (8 of 9)
Improving Oversight, Accountability, and Fiscal Responsibility (9 of 9)
You are in this section: Guide to all Tables and Appendices – Comprehensive Reference for Researchers


Table A-6 is meant to provide a resource for policymakers and the public to organize arguments about Capital Appreciation Bonds for issue briefs, letters, speeches, public comments, etc.

Table A-6
Arguments Against Capital Appreciation Bonds
ArgumentRebuttal
THE BOND FINANCE INDUSTRY IS NOT TRUSTWORTHY
Promoters of bond deals are motivated by transaction fees and tend to advance funding proposals in their own interest but harmful to the public interest.Borrowing money for long-term investment is a well-accepted practice in the United States and a fundamental part of our economic system.
Most people involved with bond finance are ethical and enjoy being in a professional financial vocation that helps students and society.
The few bond finance professionals who are alleged to advise decisions not in the interest of their clients earn a bad reputation and can’t stay in the business.
Companies and individuals who work in the business of assisting with capital transfer and earn fees on those transactions are an easy target to malign, but they are essential to a prosperous economy.
Proving their lack of responsibility to the public, the California Public Securities Association in 2009 sponsored Assembly Bill 1388, a self-interested bill that repealed a law requiring that the maximum annual payment of principal and interest on a bond issue cannot exceed the minimum annual payment of principal and interest by more than 10 percent.Actually, this bill helped educational districts by allowing them greater opportunity to borrow money despite reaching state tax and debt limits or despite reaching tax and debt limits indicated in the bond measure.
Excessive competition in the market to win contracts from educational districts for bond finance services has compelled some companies to overstate benefits and understate risks of unconventional bond finance.Increased competition in municipal bond finance gives educational districts the opportunity to compare numerous potential contractors and chose the one that best suits its needs. Districts concerned about debt accumulated through Capital Appreciation Bonds can award contracts to professional service firms that adopt a conservative approach to bond finance.
Increased competition in municipal bond finance has encouraged the development and promotion of more creative and effective options to help educational districts in bond finance, such as Reauthorization Bonds and Ed-Tech Bonds.
Corruption is rampant in the municipal bond finance business, as proven by apparent “pay to play” practices between educational districts and bond underwriters.Many parties in the bond financial industry resent how their reputation is tainted by a few companies that make substantial contributions to bond measure campaigns and/or consult for those campaigns and then obtain no-bid contracts and/or higher transaction fees. They have asked the Municipal Securities Rulemaking Board (MSRB) to restrict parties in the financial services industry from contributing to bond campaigns. They have also collectively adopted a voluntary internal moratorium on the practice.
Some county treasurers, for example in Los Angeles County, have ended business with securities brokers that contribute to campaigns for bond measures. The problem is being addressed.
The Municipal Securities Rulemaking Board already has a regulation requiring brokers, dealers, and municipal securities deals to disclose their campaign contributions to allow public scrutiny of such political activity.
Political campaigns are expensive. Parents and students are unlikely to be major sources of contributions to a campaign to pass a bond measure. There is nothing wrong with companies contributing to a campaign and expressing their First Amendment constitutional right to free speech.
No one has ever proven this practice actually happens.
Claims about this practice come from firms that want to stifle competition from other firms that work harder for educational districts.
Educational districts are no different than victims of loan sharks, payday lenders, mortgage scammers, and other unsavory usurers.Comparisons of professional, certified financial service providers to criminals is unjust. Boards elected by the people consider and vote on proposals for bond issues at public meetings regulated by open meetings laws. The process is highly regulated by the US Securities and Exchange Commission and the Municipal Securities Rulemaking Board. The news media has the opportunity to follow and report on the issue to the public.
LACK OF PUBLIC KNOWLEDGE COMPROMISES ACCOUNTABILITY AND ALLOWS TAXPAYERS TO BE EXPLOITED
Few Californians have ever heard of Capital Appreciation Bonds. An even tinier percentage of Californians could adequately explain them. As a result, the public is currently incapable of evaluating this method of bond finance and petitioning their school or college board members about it.Government does many things that the general public does not know about or understand. Accountability is inherent in the regular elections for governing boards. Candidates run for and get elected to public office based on their individual expertise and experience. Voters can subsequently choose to end the public service of those individuals based on their performance.
Educational districts have professional in-house superintendents and often have other administrators overseeing bond deals, including business officers assigned to work on bond finance.
Educational districts hire outside experts to maximize the effectiveness of their bond measures and best serve the public. Contracts for these experts include terms and conditions that provide protection for the district and accountability to the consultant.
State and county elected and appointed officials and their agencies serve as checks and balances for educational district decisions. In particular, county treasurers can and do play a role in evaluating questionable bond financing.
In the few cases in which excessive or inappropriate bond deals may have occurred, (for example, the 2011 bond issue at the Poway USD), elected county treasurers and the news media did identify the failure and publicized it. Assembly Bill 182 (now in law) is the product of research and reporting by elected government officials and the news media. The system of checks and balances worked.
Voters are not informed in election ballot material that some of the money they authorize to borrow via “general obligation bonds” ends up borrowed via Capital Appreciation Bonds and other unconventional borrowing practices.Actually, some ballot statements are now indicating that “no capital appreciation bonds shall be issued.” Inclusion of language specifying the type of General Obligation bonds to be sold should be a decision of the district board and not mandated by the state.
It’s unfair for educational districts to be forced to speculate to voters on how it might borrow money. Financing decisions are made by elected board members based on economic conditions that cannot be known at the time the bond measure is considered.
State law already imposes numerous burdensome and costly requirements on educational districts to ensure voters have a reasonable degree of information for consideration of a bond measure.
Ballot statements already are so long that few people would see any authorizations for the district to Capital Appreciation Bonds and other unconventional borrowing practices if they were included.
COST, TAXES, AND DEBT ARE FOOLHARDY
It’s foolish to borrow money and then wait for decades to start paying off the principal and accreted interest.What’s foolish are the tax and debt limitations established by state voters as Proposition 13 in 1978 and state laws (Assembly Bill 1908) enacted in conjunction with putting Proposition 39 on the statewide ballot in 2000. If those limits were set at a higher threshold or eliminated altogether, Capital Appreciation Bonds and other unconventional financing schemes would become rare.
Property taxes may increase substantially many years in the future when the district begins paying off the debt.It’s unlikely the taxes will end up being particularly noteworthy or burdensome after decades of increased property value and inflation.
The amount to be paid back under Capital Appreciation Bonds is too high.Just because there is a high number for aggregate accreted interest in 40 years doesn’t necessary mean that amount will ever be paid. Many Capital Appreciation Bonds are “callable” and can be redeemed (and are being redeemed) with a new issue of refunding bonds that have lower rates and can be issued as traditional Current Interest Bonds.
Because of the consistent increasing value of property in California over several generations, an amount that seems high to taxpayers now will not be so daunting decades from now.
Routine inflation will reduce the “real” cost of paying back Capital Appreciation Bonds decades from now.
Focusing on the amount of debt service generated by Capital Appreciation Bonds ignores the intangible benefits of high-quality schools with environments conducive to teaching and learning
Capital Appreciation Bonds are used too often.For most educational districts, Capital Appreciation Bonds comprise a small percentage of the total amount of bonds issued. Capital Appreciation Bonds are a legitimate and beneficial option for educational districts that want to obtain a bit more of the money that voters authorized to borrow for needed school construction.
Capital Appreciation Bonds allow educational districts to fund contracts with local contractors and vendors, thus encouraging economic growth and job creation in the community. Capital Appreciation Bonds pay for themselves by generating increased economic activity.
There are no legal or commonly accepted definitions of “too often.” The authority to issue Capital Appreciation Bonds is granted to the educational district’s board of trustees, who are elected by the people. Each educational district has its own comfort for Capital Appreciation Bonds, and this comfort usually reflected in the decision of the board. Trust our representative democracy.
Capital Appreciation Bonds assume an ability to pay based on projections of increased value of taxable property that may extend as many as 40 years into the future.Granted, no one can perfectly predict the future. But California remains a desirable place to live because of its climate, natural beauty, economic prosperity, and culture. It’s reasonable to assume that people with ability and ambition will always come to California, a beacon for the world, and thus increase demand for housing.
The best way to ensure increased property values in the future is to build a foundation of high-quality schools with environments conducive to teaching and learning. Funding for new construction - sometimes obtained through Capital Appreciation Bonds - allow these schools to be provided and fulfills the expectation for increased property values.
Without any sort of representation, future generations of taxpayers (children and grandchildren) are bound to repaying debts accumulated by unconventional borrowing practices of current generations.Schools built using Capital Appreciation Bonds are for the benefit of our children and grandchildren. Shouldn’t they contribute to paying for the system that helped to make them successful?
This is an unfortunate distortion of the concept of “taxation without representation” that applies to people who are deprived of their right for full participation in their current governance. Many of the important and transformational social programs in the United States and in California were adopted before the people now benefiting and paying for them were even born. Generations work together cooperatively to advance progress.

Tables and Appendices of “For the Kids: California Voters Must Become Wary…”

See the complete California Policy Center report For the Kids: California Voters Must Become Wary of Borrowing Billions More from Wealthy Investors for Educational Construction (complete, printable PDF Version, 4 MB, 361 pages)

Links to all sections of this study readable online:
Executive Summary: “For the Kids” – Comprehensive Review of California School Bonds (1 of 9)
More Borrowing for California Educational Construction in 2016 (2 of 9)
Quantifying and Explaining California’s Educational Construction Debt (3 of 9)
How California School and College Districts Acquire and Manage Debt (4 of 9)
Capital Appreciation Bonds: Disturbing Repayment Terms (5 of 9)
Tricks of the Trade: Questionable Behavior with Bonds (6 of 9)
The System Is Skewed to Pass Bond Measures (7 of 9)
More Trouble with Bond Finance for Educational Construction (8 of 9)
Improving Oversight, Accountability, and Fiscal Responsibility (9 of 9)
You are in this section: Guide to all Tables and Appendices – Comprehensive Reference for Researchers


Tables A1 to A6

Links to Tables A-1 to A-6

Appendices A to L

Background

The Public Policy Institute of California report Fiscal Effects of Voter Approval Requirements on Local Governments pointed out in 2003 that “Although ballot measures are playing a growing role in the functioning of local governments in California, there is no single, comprehensive source of information on them.” Researchers for that report obtained their data from the California Association of Realtors, the California Debt and Investment Advisory Commission, California’s Coalition for Adequate School Housing (C.A.S.H.), local newspaper stories and websites, and county elections offices.

The availability of data has improved somewhat, but it still remains a time-consuming challenge to collect and synthesize it, identify and correct inconsistencies in the data, and present it in a useful format. There doesn’t seem to be any evidence that compilation of debt service data for California local school and college districts had ever been done, so that information had to be collected and compiled from Official Statements for bond issues posted on EMMA.

Sources for Data in the Appendices: Name of School District, Election Date, Amount Authorized, Letter Designation on Ballot, Percentage Threshold for Approval, Number of Yes Votes, Number of Total Votes

To ascertain data in these seven categories, the following sources were converted into spreadsheets, data was cross-referenced, and discrepancies were reconciled. Close results were cross-referenced with Election Results pages of county election office websites.

California Secretary of State – County, City, School District & Ballot Measure Election Results at http://www.sos.ca.gov/elections/county-city-school-district-ballot-measure-election-results/

California Debt and Investment Advisory Commission (CDIAC), affiliated with the California State Treasurer – State and Local Bond and Tax Ballot Measures at http://www.treasurer.ca.gov/cdiac/publications/alphabetical.asp#s

California’s Coalition for Adequate School Housing (C.A.S.H) – School District Bond Elections – Local GO Bond Election Summary (1986-2014) at http://www.cashnet.org/resource-material/bondelec.html

California Local Government Finance Almanac, produced by Michael Coleman – Summary Reports and Analyses of Elections – California Local Ballot Measures at http://www.californiacityfinance.com

Ballotpedia, an Interactive Almanac of American Politics – School Bond Elections in California at http://ballotpedia.org/School_bond_elections_in_California

Sources for Data in the Appendices: Amount of Debt Service

Official Statements posted on the Electronic Municipal Market Access (EMMA)® database of the Municipal Securities Rulemaking Board (MSRB), a self-regulatory organization overseen by the U.S. Securities and Exchange Commission, at http://emma.msrb.org

Links to Appendices A Through L

Appendix A – All California Educational Bond Measures Pass and Fail – 2001-2014 Ranked by Percentage of Voter Approval

Appendix B – All California Educational Bond Measures Approved by Voters – 2001-2014 Ranked by Amount Authorized to Borrow

Appendix C – All California Educational Bond Measures Rejected 2001-2014 – Ranked by Amount NOT Authorized to Borrow

Appendix D – All California Educational Bond Measures Approved With a Two-Thirds Threshold Since November 2000 Enactment of Proposition 39 – Listed By Election Year

Appendix E – All California Educational Bond Measures 55 Percent – 2001-2014

Appendix F – All California Educational Bond Measures Repurposed or Reauthorized Since November 2000 Enactment of Proposition 39 – Listed by Election Year

Appendix G – All California Educational Bond Measures Approved by Voters with 55 Percent Threshold Since November 2000 – Results if Prop 39 Had Not Been Law

Appendix H – All California Educational Bond Measures Approved by Voters Under 55 Percent Threshold Since November 2000 Enactment of Proposition 39 – Failures Under 2:3 Threshold

Appendix I – All California Educational Bond Measures Approved by Voters – 2001-2014 Ranked by Amount of Debt Service

Appendix J – All Educational Districts in Which Voters Authorized Borrowing Via Bond Sales Since Proposition 39 – Ratio of Current Debt Service to Amount Authorized

Appendix K – All Educational Districts in Which Voters Authorized Borrowing Via Bond Sales Since November 2000 Enactment of Prop 39 – Ratio of Current Debt Service to Total Yes Votes

Appendix L – All Educational Districts in Which Voters Authorized Borrowing Via Bond Sales Since November 2000 Enactment of Prop 39 – Ranked by Amount Authorized Per Yes Vote

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