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It’s important not to conflate state bonds with local bonds. And this November, voters will decide on both.
That’s, in part, due to Proposition 2, a state education facilities bond. If passed, it would provide $8.5 billion to TK-12 schools and $1.5 billion to community colleges to maintain, renovate and construct buildings. The state will pay for a percentage of these upgrades, but individual districts must raise funds — most commonly through local bonds — to pay for the rest of these construction projects.
Seven out of the 13 districts in Sacramento County are asking for voters to approve additional local bonds. (One district, Folsom Cordova Unified, is asking for two separate local bonds, one for their elementary schools and another for their middle and high schools.)
What's a state bond?
General obligation bonds are a common way of financing long-term building projects for both states and districts.
Proposition 13, which passed in 1978, changed the nature of school funding. The new law placed a ceiling on the amount property owners could be taxed. This, combined with existing law — which required two-thirds voter approval for local education bond measures to pass — limited funding for school facilities. Districts had to rely on state education funds to finance new projects,and many school sites went into disrepair.
Over two decades later in 2000 California voters passed Proposition 39, which lowered the approval threshold for local school bonds to 55% and made it easier for bonds to pass. Since then, voters have approved $181 billion in local bonds and $31.8 billion in state bonds for public school and community college facility projects.
When state education bond measures are approved by voters, California will sell bonds to investors. Then, a portion of the debt is set aside in the general fund the following years to pay back investors with interest.
If Proposition 2 — the state education facilities bond — passes, taxpayers will incur no additional cost.
What's a local bond?
For California school districts, a similar process occurs when acquiring a bond. However, bond debt, which has a capped interest rate, is repaid using property tax revenue from the designated area (as opposed to the state general fund).
Each bond will tax property owners based on assessed property valuation, not the market value of a property. Language like “$35 per $100,000 of assessed valuation” means the district’s taxpayers would pay $350 if their property is assessed for $1 million.
Local bonds can come with increased taxes. For instance, if the district has never had an education bond before and one is approved, taxpayers would face additional taxes. If an education bond already exists, the new measure could keep the tax rate the same, reduce it, or increase it depending on assessed property values. Changes in property assessments could also impact the taxed amount.
With Proposition 2 on the ballot, both the state and districts may share the cost of building and maintenance. Local education bond dollars are furthered by state education bond dollars because 50-55% of new construction projects and 60-65% of renovation projects can be covered by the state bond, if it passes.
Each district with an approved measure requires a citizen’s bond oversight committee, composed of community members who monitor the use of the funds. Any resident of a district with an education bond can apply to be on the oversight committee.
Local education measures on the ballot for facilities upgrades cannot be used for “general school operating expenses, including administrator and teacher salaries or pensions, or for any purpose or project other than those expressly stated in the measure.”
You can learn more about all eight TK-8 school board measures appearing on ballots in Sacramento County here.
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