November 24, 2001 - From the November, 2001 issue

Speaking Truth To Power: LAO Urges New Blueprint For State's School Faclities Funding

School facilities throughout the state are crumbling and we wonder why. The Legislative Analyst's Office tried to remind Californians why in May with the release of its report "A New Blueprint for California School Facility Finance." However, those ideas were all but ignored. TPR was pleased to talk with Marianne O'Malley, Principal Fiscal and Policy Analyst for the LAO, who reminds us of the dysfunctional nature of the current system, what it's doing to school facilities throughout California, and the effects it is having not merely on the financial front, but on the educational front as well.

The LAO released a report in May which outlined a new blueprint for school facility finance in the state. Despite making 4 extremely practical recommendations, it was all but ignored through much of the last Legislative session. Are you seeing any ray of light that suggests it will be taken seriously in the near future?

The blueprint is only a few months old. Major changes such as the one we propose take a bit of time to take hold.

Our report is really asking both state and local governance structures for a profound shift in accountability and responsibility. And while no one predicted that a shift of this magnitude would happen overnight, we're already beginning to see signs that people are listening and interested in the concepts we detailed.

What motivated the Legislative Analysts Office to come out with this set of recommendations?

The LAO has been analyzing state school facility bond measures and the school facilities program for decades. Over time, we have been struck by the tremendous obstacles school districts face building and modernizing facilities. Under the existing system, local school districts are never sure when state money will be available, how much money will be available, or which school districts will receive funding. Because of this, school districts face significant difficulties implementing long-term capital outlay plans.

Your answer eludes to a key point, while local school districts offer their own bond measures every 2-3 years, they are never sure when state matching funds will be available. That paradigm leads to poor planning re: construction and modernization of school facilities. If the need for a correction is so apparent and a new school bond is set to be voted on in the fall, why is there so little reaction in the Capitol?

Before the Supreme Court's Serrano decisions and before Prop. 13, the state's role in K-12 finance, both on the operating and the facilities side, was very different. In those days, the school finance and governance systems were primarily local. Some 25 years ago, however, we started to alter the finance and governance structures-and we shifted considerable control over educational programs to the state.

Particularly in recent years, the Legislature, school districts and the LAO have begun to reevaluate the wisdom of such a shift. And from our perspective, we see many advantages to the notion of transferring greater control over school operations and facilities back to school districts.

Let me ask you to comment on a quote from Asm. Frommer in last month's TPR re: why the LAO report has failed to ring any bells in the Capitol. He states, "It's a David versus Goliath fight right now. You have a certain cadre of interest groups in Sacramento who believe they know it all. They're not interested in hearing criticism, new ideas or new philosophies. And because of them, those of us advocating for reform are having a difficult time being heard." Does he have it right? Are the entrenched lobbyists and interest groups in Sacramento stopping the school finance shift from happening?

A strong organizational effort aimed at promoting local control over school facilities does not exist in Sacramento. If this is a goal of local school districts, they may wish to dedicate more attention, resources, and effort to elevate this debate. If school districts want to see the notion of local control over school facilities gain greater attention in the Capitol, school districts will need to make that case more aggressively.

One would imagine that that coalition would include more than merely school districts. Don't cities and counties have an interest in whether this money is spent wisely? Have their voices been added to this chorus in the Capitol?

Cities and counties have a very significant interest in having school facilities meet the needs of their residents.

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At present, it is very difficult for school districts to plan a capital outlay program because, as we've mentioned, they never know when funding will become available-or what terms will govern the allocation of the funds. And these difficulties arise when districts are trying to build "ordinary" schools.

Today, school advocates are talking about building smaller schools, the reuse of strip malls, community centered schools, joint-use, etc. These kinds of plans can take additional time and can require coordination between local governments. In order to facilitate these new and evolving ideas of school construction, school districts really need to have a dedicated stream of revenue-and have greater flexibility over the expenditure of these funds. This would facilitate joint efforts between schools, cities, and counties because each local government would know what long-term funds for school facilities are available. Without these assurances, it is difficult to form partnerships.

In the Sept. TPR, LAUSD's Facilities Chief, Capt. Jim McConnell stated, "The way money is apportioned for deferred maintenance needs to be re-examined. Facilities management and construction isn't a high enough priority and I feel strapped by state regulators and processes that, taken together, seem to push against our success." Is this the kind of challenge that your report is trying to address?

Our proposal is for the state and local communities to provide school districts with a regular stream of revenues that school districts can use for a broad range of facility needs. In some parts of the state, districts may use these funds to rehabilitate existing schools. In other areas, this funding may give districts a newfound ability to plan and complete new construction projects. Still other communities may use their funds to adaptively reuse a facility.

The goal of our proposal is to give school districts the flexibility to design capital outlay programs to meet the needs of their students, teachers and communities.

There's a current conversation going on re: the next state school bond. Is there anything that could be injected into the language of that bond that would move us a half step toward the goals and objectives you mention here and in the Legislative Analysts Office's report?

We recommend that at least part of the next state bond be targeted to districts that have the largest backlog of school facility needs. In doing so, we would bring school districts' facility conditions to more comparable "starting points."

Once that big backlog of school facility needs has been substantially taken care of, we can replace the existing system of state support through bond funds with an annual stream of state revenues.

And again, what's the cost of not reforming the state's facilities funding process?

Speaking strictly in terms of financial costs, because of the unpredictability of state facility funding, some school districts with pressing facilities needs enter into financial arrangements, such as COPS or leases, to fund their facility projects. School districts enter into these arrangements under the hope that-at some future point-they will receive state funds. All of these financial arrangements, however, come at a financial cost: significant interest payments on the borrowed money. These financing costs, in turn, reduce the district's long-term ability to support their capital outlay program.

More important than these financial costs, however, the current school facility finance system hurts our children on the educational front. Based on information provided by school districts throughout the state, approximately one out of three school children attends classes in overcrowded classrooms -or classrooms in need of modernization. And while no one has been able to prove conclusively that there's a correlation between the quality of school facilities and educational outcomes, we all know intuitively that it is a more difficult task to educate a kid in a severely overcrowded classroom-or in a building lacking adequate laboratory facilities or functioning bathrooms.

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