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Unions Seek Control of Recent California School Bond Measures

Has California school and community college facility construction become a perpetual government stimulus program for politically-favored construction trade unions?

Prop 39 BannerFifteen years ago, it was obvious that many school and college districts in California needed new construction, modernization, or renovation of their facilities for the safety and comfort of students, teachers, administrators, and support staff. That’s why 53% of California voters approved Proposition 39 in November 2000. It reduced the threshold for voter approval of school bond measures from two-thirds to 55%, increasing the passage rate for educational bond measures from under 50% to more than 80%.

But the purpose of borrowing money for school construction seemed to evolve after the 2008 economic collapse and subsequent November 2008 election.

Debt started piling up from relentless and repeated bond sales to investors. The “need” for more construction seemed immeasurable and unquenchable. Scandals began to pop up as clever people began to figure out how to manipulate the loopholes and ambiguities in ten year-old state laws regarding finance and construction of educational facilities.

Meanwhile, construction trade unions became much more aggressive in trying to monopolize educational construction by lobbying elected school board members for Project Labor Agreements. And local school and college elected boards became much more willing to grant those union monopolies.

Local elected officials in California recognized that political circumstances had changed. To quote a San Diego Unified School District board member immediately before the 3-2 vote on May 26, 2009 for a Project Labor Agreement:

I think the bigger picture that people are realizing – and this is what scares some people – is that San Diego is changing, the United States is changing…this is a different city…we are looking at a different community.

What has resulted from this change? A lot of debt has been imposed on future generations of Californians.

The California Policy Center released a report in July 2015 entitled For the Kids: California Voters Must Become Wary of Borrowing Billions More from Wealthy Investors for Educational Construction. This report identified $146 billion in authorized borrowing from 2001 to 2014 for California educational facility construction and $200 billion in existing debt service from bonds sold to pay for California educational facility construction.

In response to this report, some taxpayer advocates have asserted that momentum for additional local educational bond measures is propelled by construction trade unions that see local education districts as ripe targets to accumulate a pool of guaranteed government work. Union leaders remain nervous about the state’s economic prospects. They don’t want a painful revival of membership unemployment rates of 25%-50% experienced from 2009 to 2012.

Is this argument valid?

Below is a list of all of the K-12 school and college bond measures approved by voters in the last four primary and general elections (in 2012 and 2014) that became targets of construction unions for a government-mandated Project Labor Agreement (PLA).

 

Bond Measures Approved by Voters in June 2012

 

Amount Authorized to Borrow Name of School or College District Voter Approval Percentage Project Labor Agreement Activity
West Valley-Mission Community College District

$350,000,000

59.8%

Board approves PLA for upcoming “pilot project” 8/20/13.

Milpitas Unified School District

$95,000,000

64.1%

Board approves PLA 12/11/12.

Bond Measures Approved by Voters in November 2012

 

San Diego Unified School District

$2,800,000,000

61.8%

PLA approved in 2009 extends to this bond measure.

Coast Community College District

$698,000,000

57.2%

Board votes 5/15/13 to end consideration of a PLA.

Oakland Unified School District

$475,000,000

84.4%

PLA approved in 2004 extends to this bond measure.

Santa Monica-Malibu Unified School District

$385,000,000

68.1%

Board discusses PLA 11/20/14.

Board votes for contract to negotiate PLA 4/16/15.

West Contra Costa Unified School District

$360,000,000

64.4%

PLA approved in 2000 extends to all bond measures.

Cerritos Community College District

$350,000,000

70.3%

Board discusses PLA 4/16/14 and 6/4/14.

Solano Community College District

$348,000,000

63.5%

Board approves PLA 12/4/13.

Sacramento City Unified School District

$346,000,000

70.1%

Board votes 1/23/14 to extend PLA approved in 2005 to this bond measure.

Rancho Santiago Community College District

$198,000,000

72.6%

Board approves PLA 3/24/14.

Alum Rock Union Elementary School District

$125,000,000

79.5%

Board approves PLA 6/18/13.

East Side Union High School District

$120,000,000

71.6%

Revised PLA approved in 2009 extends to this bond measure.

Lynwood Unified School District

$93,000,000

57.4%

Board approves PLA 2/12/13.

Inglewood Unified School District

$90,000,000

86.1%

Board approves PLA 10/26/12.

Chula Vista Elementary School District SFID No. 1

$90,000,000

68.8%

Board approves negotiations for a PLA 4/15/15.

Oxnard School District

$90,000,000

66.4%

Board approves PLA 6/24/15.

Sacramento City Unified School District

$68,000,000

67.9%

Board votes 1/23/14 to extend PLA approved in 2005 to this bond measure.

Antioch Unified School District SFID No. 1

$56,500,000

62.8%

Board approves PLA 11/13/13.

Whittier City Unified School District

$55,000,000

72.4%

Board approves PLA 1/13/15.

Washington Unified School District

$22,000,000

72.8%

Board imposed a union-backed apprenticeship requirement for contractors and used it to disqualify non-union company from contract.

Bond Measures Approved by Voters in June 2014

 

Fremont Unified School District

$650,000,000

61.2%

Board approves negotiations for a PLA 8/12/15.

Contra Costa Community College District

$450,000,000

57.6%

Board approves PLA 10/10/12 for all projects of $2 million or more.

Culver City Unified School District

$106,000,000

76.3%

Community Budget Advisory Committee discusses PLA 5/27/15.

Bond Measures Approved by Voters in November 2014

 

Santa Clara Unified School District

$419,000,000

69.4%

Board discusses PLA 3/26/15.

PLA discussion scheduled for 8/13/15.

Sonoma County Community College District

$410,000,000

63.1%

Union officials have openly declared intent to lobby for a PLA.

College administrators have met with legal counsel regarding PLA.

San Mateo County Community College District

$388,000,000

66.2%

Board discusses PLA 7/8/15.

Norwalk-La Mirada Unified School District

$375,000,000

57.4%

Board discusses PLA 3/25/15.

San Luis Obispo County Community College District (Cuesta)

$275,000,000

62.6%

Board discusses PLA 2/4/15.

Board voted down PLA negotiations at 3/4/15 meeting.

Hayward Unified School District

$229,000,000

77.4%

Board votes for PLA 6/24/15.

Vacaville Unified School District

$194,000,000

62.0%

Board discusses PLA 3/9/15.

Board votes for PLA negotiations 6/25/15.

Alameda Unified School District

$179,500,000

62.8%

PLA discussion scheduled for 8/11/15.

Santa Rosa High School District

$175,000,000

64.0%

Union officials have openly declared intent to lobby for a PLA.

Salinas Union High School District

$128,000,000

60.3%

Board discusses PLA 3/24/15 and 5/12/15.

Board votes for PLA negotiations 5/26/15.

East Side Union High School District

$113,200,000

67.9%

PLA that applied to Measures G and E amended – apparently administratively – to cover Measure I.

Azusa Unified School District

$92,000,000

56.2%

Board discusses PLA 3/17/15.

Pittsburg Unified School District

$85,000,000

68.5%

Ballot arguments against the bond measure focused on PLAs imposed on previous bond measures; supporters’ rebuttal defended the PLAs.

Berryessa Union School District

$77,000,000

69.3%

Board votes for contract to negotiate PLA 3/10/15.

Santa Rosa Elementary School District

$54,000,000

69.1%

Union officials have openly declared intent to lobby for a PLA.

Washington Unified School District

$49,800,000

67.4%

Board imposed a union-backed apprenticeship requirement for contractors and used to disqualify non-union company from contract.

Bassett Unified School District

$30,000,000

62.4%

Board voted for PLA negotiations 1/20/15.

 

Kevin Dayton is the President & CEO of Labor Issues Solutions, LLC, and is the author of frequent postings about generally unreported California state and local policy issues at www.laborissuessolutions.com. Follow him on Twitter at @DaytonPubPolicy.

Californians Vote for More Taxes and More Borrowing

It has been argued that California’s voters defy their political stereotype when it comes to taxes. California’s property tax revolt in 1978 resulted in the passage of the historic Prop. 13, which limits property tax increases to 2% per year. As recently as 2009, California’s legislature joined with Gov. Schwarzenegger to place Propositions 1A through 1E on the state ballot. All of them would have raised taxes, and all of them were defeated by voters.

That was then.

In 2012 Californians voted to raise sales and income taxes through Proposition 30, which supposedly was designed to collect an additional $6 billion per year to fund public education. And while 2014 did not include major new tax proposals on the state ballot, in cities, counties and school districts throughout California, tax and bond proposals were placed before voters. Most of them passed.

In the June 2014 primary, 47 local bond measures were proposed, with 36 of them passing. Also in June, 44 local tax increases were proposed, and 36 of them passed. That was just a warm-up for the November 2014 election, where 118 local bonds – most of them for public education – were proposed, along with a staggering 171 local tax increases. At last count, 72 of the bond proposals were passed, 15 were defeated, and 31 remain too close to call. Of the 171 local tax proposals, 98 were passed, 45 were defeated, and 28 are still too close to call.

These local tax proposals are necessary to meet runaway employee compensation costs, especially for pensions. These local bond measures are largely to fund deferred maintenance, activities that might have been funded through operations budgets if it weren’t for excessive compensation and benefit costs.

In Stanton, a city where local firefighters average $221,000 per year in pay and benefits, and local sheriffs average $112,000 per year in pay and benefits, a 1% increase to the local sales tax was approved by 54% of the voters. In Palo Alto, where the local firefighters “only” receive pay and benefits that average $181,000 per year, and the local police officers earn pay and benefits averaging $164,000 per year, a 2% increase in their hotel tax was approved by 75% of voters.

In California in 2014, based on returns so far, if a local city or county wants to raise taxes, there is a 72% chance voters will approve them. If a school district wants to borrow money – over $11 billion just this November – there is an 81% chance voters will approve them. And if the proponents of more taxes and borrowing are unlucky, they can always try again the next election. The odds are in their favor.

Local taxes and borrowing matter. California has relatively decentralized governance. Of the roughly $430 billion in estimated state and local spending in California for the fiscal year ending 6-30-2015, only $107 billion of that is state government spending. Estimating total state and local government debt in California is nearly impossible because the largest single borrower, K-12 school districts, have not submitted their financials to the State Controller for consolidation since 2002. But a California Policy Center study from April 2013 estimated total state debt from all sources at $132 billion, whereas the same study estimated total local government debt in California at over $250 billion. That estimate relied on 2011 and 2012 data, grossly underestimated K-12 bond debt, and did not include any unfunded liabilities for pension and retirement healthcare.

When it comes to taxes, borrowing, and overspending, most of the action in California is at the local level. And there should be no question that current spending levels are financially unsustainable. If all California’s state and local pension systems had to do was account for their liabilities according to the same rules that have governed private sector pension plans for years, California’s state and local debt – including unfunded liabilities – would be well over $1.0 trillion. Moreover, such reforms – playing by the same rules as the private sector – would grossly increase the ongoing normal cost to funding pensions for state and local government employees.

Sooner or later California’s taxpayers are going to wake up. Because the Government Accounting Standards Board, Moody’s Investor Services, and eventually the U.S. Congress, are being compelled by financial reality to enact reforms to pension and retirement healthcare accounting, asset management, and funding. Once government entities have to follow the same rules as the private sector, spending will skyrocket or services will be scuttled. What we’ve seen so far, grievous though it may be, is nothing compared to what is to come.

There is an alternative. A bipartisan will to defeat government unions by an awakened populace. It may take a few more years, but it is inevitable – the hidden agenda behind all of these tax increases and new borrowings will be plain for all to see.

*   *   *

Ed Ring is the executive director of the California Policy Center.