California Policy Center Study Exposes School Bond Debt Loophole

California Policy Center Study Exposes School Bond Debt Loophole


Sacramento, California, March 30, 2015

Contact:, 916-439-2159

Stockton Unified School District Requests More Bond Indebtedness Waivers,

California Policy Center Warns About Process

On Tuesday, March 24, the Stockton Unified School District board of trustees held a hearing and unanimously voted to ask the State Board of Education for two waivers from bond indebtedness limitations in state law.

This would allow this district to circumvent state law and borrow more money for construction and educational technology by selling bonds. The district owes $366 million in bond principal and $869 million in debt service (principal + interest).

“The public doesn’t know enough about how California school districts are requesting and getting bond debt waivers from the State Board of Education,” says Kevin Dayton, who is working with the California Policy Center to research debt accumulated by California school and community college districts through construction bond measures.

On March 19, the California Policy Center published on its website the first comprehensive analysis and detailed report on waivers granted for bond indebtedness.

“We figured a lot of school districts would be requesting waivers from the State Board of Education this year, and Stockton Unified School District is an expert in the process,” says Dayton. “That district has already requested and received two waivers, in 2011 and 2013.”

The State Board of Education has NEVER rejected a request for a waiver: 48 out of 48 have been approved since 2000.

If Stockton Unified School District receives these two waivers, it will be tied with West Contra Costa Unified School District for most waivers given to a district (four waivers).

Dayton says the waiver process needs to be changed or eliminated completely.

“State law does not provide the California Board of Education with enough authority to reject a waiver request and protect taxpayers or their school district,” says Dayton. “Legal criteria for rejecting waivers do not relate to fiscal or budgetary issues for school districts. The waiver process is mainly set up for school districts to seek waivers in order to experiment with pedagogical innovations.”

The study’s conclusion recommends that the State Allocation Board, which manages disbursement of state matching grants for the Office of Public School Construction, should have authority for granting waivers, using clear criteria that sets a reasonable standard for approval.

The study also recommends that the annual reporting requirements concerning waivers from the State Board of Education be expanded to specify which districts are getting what waivers.


Stockton Unified School District March 24, 2015 meeting agenda item to approve a request for two bond indebtedness waivers:

The California Policy Center comprehensive analysis and detailed report (dated March 19, 2015) on waivers granted for bond indebtedness:

The complete list of waivers, never before available to the public, compiled by the California Policy Center:

Stockton Unified School District: Principal and Debt Service Owed on General Obligation Bonds:

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The California Policy Center is a non-partisan public policy think tank that aspires to provide information that will elevate and enlighten the public dialogue on vital issues facing Californians, with the goal of helping to foster constructive progress towards more equitable and sustainable management of California’s public institutions.

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