School Facility Funding is the Most Inequitable Aspect of California Education Finance: Why do the two new school bond bills barely tackle it?

Posted on by jvincent

by Jeff Vincent, co-founder and director of public infrastructure initiatives at CC+S.

Will school buildings be safe and healthy enough for my kids to return to school? That’s the key question millions of parents across the country and California are asking.

Our awareness of the indoor spaces we enter these days, amidst COVID-19, is elevated. As it should be. The virus that causes COVID-19 is respiratory and highly transmittable through the air. Indoor spaces with numerous people and little or no fresh air ventilation or filtration are the riskiest places to be. A conundrum we collectively face is that this describes manymany of our public school classrooms.

Thousands of school buildings in California are aging and, too often, in disrepair. A 2020 Public Policy Institute of California study found that 38% of California students go to schools that do not meet minimum facility standards. 

A main culprit is severely limited funding – most school districts simply do not have enough money to repair and modernize their schools. Analyzing recent years spending by California school districts on their facilities, we found that the majority of school districts underspend on their facilities each year. In fact, more than three-quarters of California’s students attend school in districts failing to meet minimum industry standard benchmarks for annual facilities maintenance and operations investment, capital renewal investment, or both. These school districts accumulate “deferred maintenance” across their school building inventory – minor items of disrepair that, when left unfixed, grow into larger more expensive problems and risk becoming health and safety crises.

Here’s where state funding to help districts with their facilities is important. With limited exceptions, the state only provides funds for facility construction and modernization if the local district matches those funds with funds raised by the district. Primarily the district raises those funds by passing general obligation bonds that tax private property in the district’s boundaries. State law caps the percent of this property that can be taxed, establishing the district’s “bonding capacity.” The wealthiest 10% of school districts have more than $60,000 per student in bonding capacity, while the poorest 10% have less than $6,000. (Average is about $30,000 per student.) School districts with more property value to tax are clearly at a great advantage here.

The effects of this advantage are pernicious, as is clear in a 2018 analysis by Stanford University’s Getting Down to Facts II project of the state funding to school districts: much more state money is paid out per student to districts in high wealth areas than is paid out per student to districts in low wealth areas. The extent of this disparity is quite shocking: in the highest wealth quintile, as measured by local property values, the average state funding per pupil to school districts for school facility modernization was $5,361 during the years 1998-2017. In contrast, in the lowest wealthy quintile, as measured by local property values, the average state funding per pupil was $661. In other words, the highest wealth districts got, on average, eight times the amount of funding from the State of California to modernize their facilities, compared to the lowest wealth school districts.

School facility funding is the most inequitable aspect of California education finance. The recent Getting Down to Facts II study of 20 years of California public school facility finance for found wide disparities in school facility funding from district to district. The consistent patterns of inequitable access to school facility funding are systematically related to school district property wealth, household income, and students’ backgrounds. As a result, the researchers described California’s system of school facility finance as regressive.

November 2020 local school bond election results paint a similar picture – districts with higher property values are raising more dollars. It is clear that the long-standing patterns of inequity in public school facility funding in California remain strong.

Two bills were recently introduced in the state legislature to provide school facility funding – Assembly Bill 75 (O’Donnell) and Senate Bill 22 (Glazer).

Surprisingly, neither bill proposes any meaningful fixes to this problem; they make meager gestures at best. For example, one of these gestures is to allow more districts to qualify for “hardship” and thus get a higher state funding match. Both bills propose increasing the maximum level of total bonding capacity that a school district could have in order to be deemed eligible for hardship status – from $5 million to $15 million. So, for example, a district with $14 million in total bonding capacity could now apply for hardship status and potentially get up to 100% funding for their project from the state (whereas currenlty the district is not eligible).

While this change is a step in the right direction, its unlikely to make much difference. California has 944 K-12 school districts enrolling 6 million students. About 200 school districts (enrolling a total of 70,000 students) have total bonding capacity less than $5 million. Another 135 school districts (enrolling a total of 121,000 students) have bonding capacity between $5 million and $15 million. So, this proposal will add 135 more school districts to quality for hardship and thus potentially receive a higher state funding match - but this only affects about 2% of California’s students.

The other gestures toward equity in these two bills are likely to be similarly weak in terms of their general effectiveness. For example, SB 22 outlines a point system for funding priority and the amount of state match. However, the maximum state match for a disadvantaged district changes from 50% to 55% of project cost. While a move in the right direction, this is unlikely to have widespread impacts to remedy inequity.

Still, AB 75 and SB 22 provide an opportunity to fix the long-standing problem of inequitable access to school facility funds. The fact that there is a school funding bill in each house, signals lawmakers’ intent to act. They should consider three key reforms:

First, enable more districts to qualify for “hardship” and thus receive a higher state share of their project costs. This determination should be based not on total (AKA "gross") bonding capacity, but rather on bonding capacity per student. Because even if a district has relatively large total bonding capacity, if they have high enrollment then those dollars will only go so far across the district's schools. SB 22 does propose to use bonding capacity per student as part of its proposed priority point system, which is a step in the right direction.

Second, instead of having a group of districts that qualify for "hardship" (and thus more state funding) and the rest of districts that don't qualify for more state funding (even if they are still relatively low-wealth), the state should move to a local wealth-based “sliding scale” funding formula. As noted above, this determination should also be based on bonding capacity per student. Under this approach, each school district would have a state funding match proportionate to its property tax base. In other words, lower wealth districts would get more state funding than higher wealth districts. That’s essentially how we fund the rest of public education in California (through the Local Control Funding Formula). Why wouldn’t we extend that equity-oriented approach to school facilities funding?

Third, prioritize state funding for school buildings in most need of upgrades. State funds should be strategic and wisely used. Provisions in SB 22 that establish prioritization categories – with health and safety projects at the top, followed by projects qualifying for hardship status – are good ideas. But to do this right requires that the state set up a statewide inventory of public school buildings. In order to appropriately steer funding, we need to know where the problems are. Until we do that, we won't ensure statewide quality and equity in our public school facilities.

The bill has come due for California to attend to its school facilities problems — problems that this pandemic has laid bare. Lawmakers in Sacramento have an opportunity to make meaningful improvements to school buildings across the state. Let’s hope they take a thoughtful look at this problem and work together to add fair, equitable, and much-needed reforms to our school facility finance system.