Archive for Education

Nine Fall 2015 Commentaries on California School and College Bond Measures

News Coverage: California Voters Must Be Wary of More Borrowing Via Bond Sales for School and Community College Construction

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In July 2015, the California Policy Center released a 361-page report For the Kids: California Voters Must Become Wary of Borrowing Billions More from Wealthy Investors for Educational Construction. (Links to individual sections are below.)

For the Kids - California Voters Must Become Wary of Borrowing Billions More from Wealthy Investors for Educational ConstructionAs of August 26, 2015, the report has received the following news media coverage:

Six California School Districts Will Ask Voters on November 3 to Borrow $1.2 Billion From Bond Investors – commentary by Kevin Dayton – Flash Report – August 17, 2015

Unions Seek Control of Recent California School Bond Measures – commentary by Kevin Dayton – Union Watch – August 11, 2015

School Bonds May Equal Taxpayer BondageVictorville Daily Press – August 8, 2015

California Schools Stick Taxpayers with $149 Billion in Bond Debt – Breitbart News – August 5, 2015

California is in Huge Debt Hole Because of School Bonds – KFBK News Radio 1530 AM/93.1 FM in Sacramento – August 4, 2015

“For the Kids” Borrowing Will Saddle Kids with Debt – opinion piece by Gloria Romero in Orange County Register – August 4, 2015

Tough Education Reform, not More Borrowing and Spending, is What Students Need – commentary by Ed Ring – Union Watch – August 4, 2015

Specter of School Bonds Is Haunting Californians – opinion piece by Ed Ring in Sacramento Bee – August 2, 2015

Statewide Report Criticizes Passage of School Bonds – lead story in California League of Bond Oversight Committees Review – July 29, 2015

Doing the Math, Bond Debt for California Schools May Not Pencil OutModesto Bee – July 28, 2015

First look: Poll finds support for testing — Pell grants for prisoners — Washington state chief: Put more dollars into education – Politico (Morning Education) – July 28, 2015

School Bond Proposal Stirs California DebateThe Bond Buyer – July 27, 2015

Report: Voters Better Start Learning How Construction Bonds WorkLA School Report – July 27, 2015

Deceptive Ballot Language for Solano College Bond Measure Not Unusual – opinion piece by Kevin Dayton in Vacaville Reporter – July 25, 2015

Statewide Report Criticizes Passage of School BondsFresno Bee – July 24, 2015 (reprinted as Report Criticizes Passage of School Bonds in California in Education Week – July 27, 2015)

Here are links to each section of the report:

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Debt! On November 6, 2012, California Voters Approved 91 Local Ballot Measures to Authorize Borrowing $13.3 Billion for Construction by Selling Bonds

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UPDATE: the California school bond results for the November 6, 2012 election have been revised on the excellent www.californiacityfinance.com web site managed by Michael Coleman. Go to Local Revenue Measures in California: Final Results (February 6, 2013 FINAL).


Below are the final November 6, 2012 election results of the 106 bond measures for K-12 school and community college districts in California, sorted from largest amount to smallest amount. These bond measures were proposed by a total of 105 districts, as Sacramento City Unified School District had two bond measures (totaling $414 million).

Out of the 106 bond measures on the ballot authorizing bond sales totaling $14,429,141,190, voters approved 91 of them, thereby authorizing educational districts to borrow up to $13,278,801,190 for construction by selling bonds. This includes the whopping $2.8 billion Proposition Z for the San Diego Unified School District.

Keep in mind that this $13.3 billion will need to be paid back to bond investors with interest! Assume that these 91 bond measures will cost taxpayers about $25 billion to repay.

Voters rejected 15 bond measures totaling $1,150,340,000. The big one that voters rejected was the $497 million Proposition EE for MiraCosta Community College.

So the success rate for approval of individual bond measures was 86%, and the success rate for approval of dollar amounts of proposed bond sales was 92%.

I compiled the charts below by cross-referencing the Ballotpedia entry for “School Bond Elections in California” (November 6, 2012) with the chart of final November 6, 2012 election results for “Local Revenue Measures in California” on the www.californiacityfinance.com web site. I then referred to official county election records to resolve discrepancies and to double-check final results for bond measures in which the results were close.

The information on www.californiacityfinance.com and www.ballotpedia.org is current and accurate as of February 11, 2013. (I contacted www.californiacityfinance.com about changes and made the changes on www.ballotpedia.org myself.)

The “preliminary and unofficial’ revised list of “November 6, 2012 Local School Bond and Parcel Tax Measures Results” posted on the Coalition for Adequate School Housing (CASH) web site is current only through November 20, 2012 – it has not been updated to show the final results.

Educational Bond Measures Approved by California Voters

November 6, 2012
Sorted by Highest to Lowest Amount Authorized for Borrowing Through Bond Sales
San Diego Unified, Proposition Z

$2,800,000,000

Chaffey Joint Union High, Measure P

$848,000,000

Coast Community College, Measure M

$698,000,000

Oakland Unified, Measure J

$475,000,000

San Dieguito Union High, Proposition AA

$449,000,000

Grossmont-Cuyamaca Community College, Measure V

$398,000,000

Santa Monica-Malibu Unified, Measure ES

$385,000,000

West Contra Costa Unified, Measure E

$360,000,000

Cerritos Community College, Measure G

$350,000,000

El Camino Community College, Measure E

$350,000,000

San Juan Unified, Measure N

$350,000,000

Solano Community College

$348,000,000

Sacramento City Unified, Measure Q

$346,000,000

San Jose Unified, Measure H

$290,000,000

San Ramon Valley, Measure D

$260,000,000

San Bernardino City Unified, Measure N

$250,000,000

Palmdale Elementary, Measure DD

$220,000,000

Morgan Hill, Measure G

$198,250,000

Rancho Santiago Community College, Measure Q

$198,000,000

Temecula Valley Unified, Measure Y

$165,000,000

Rowland Unified, Measure R

$158,800,000

Stockton Unified, Measure E

$156,000,000

Perris Union High

$153,420,000

Pajaro Valley Unified, Measure L

$150,000,000

Panama-Buena Vista Union, Measure P

$147,000,000

Tustin Unified, Measure S

$135,000,000

Covina-Valley Unified, Measure CC

$129,000,000

Temple City Unified, Measure S

$128,800,000

Alum Rock Union, Measure J

$125,000,000

East Side Union High, Measure I

$120,000,000

Lynwood Unified, Measure K

$93,000,000

Chula Vista Elementary, Measure E

$90,000,000

Inglewood Unified, Measure GG

$90,000,000

Oxnard Schools, Measure R

$90,000,000

Cajon Valley Union, Measure C

$88,400,000

Alvord Unified, Measure W

$79,000,000

Bellflower Unified, Measure BB

$79,000,000

Chico Unified, Measure E

$78,000,000

San Carlos Elementary

$72,000,000

Folsom Cordova Unified, Measure P

$68,000,000

Sacramento City Unified, Measure R

$68,000,000

Jefferson Elementary, Measure I

$67,500,000

Lancaster Elementary, Measure L

$63,000,000

Redondo Beach Unified, Measure Q

$63,000,000

Visalia Unified, Measure E

$60,100,000

Antioch High, Measure B

$56,500,000

Burlingame Elementary, Measure D

$56,000,000

Whittier City Elementary, Measure Z

$55,000,000

Castaic Union Elementary, Measure QS

$51,000,000

Sanger Unified, Measure S

$50,000,000

Hemet Unified, Measure U

$49,000,000

Jefferson Union High, Measure E

$41,900,000

Coachella Valley Unified, Measure X

$41,000,000

Kings Canyon Unified, Measure K

$40,000,000

Soledad Unified, Measure C

$40,000,000

Templeton Unified, Measure H

$35,000,000

La Habra City Schools, Measure O

$31,000,000

St. Helena Unified, Measure C

$30,000,000

South Bay Union, Measure Y

$26,000,000

Ripon Unified, Measure G

$25,236,190

McFarland Unified, Measure M

$25,000,000

Mount Pleasant Schools, Measure L

$25,000,000

Sonora Union High, Measure J

$23,000,000

Washington Unified, Measure W

$22,000,000

Hueneme Elementary, Measure T

$19,600,000

Escalon Unified, Measure B

$19,500,000

Mendota Unified, Measure M

$19,000,000

Westside Union Elementary, Measure WR

$18,510,000

Little Lake City, Measure EE

$18,000,000

Lindsay Unified, Measure L

$16,000,000

West Hills Community College, Measure L

$12,655,000

Antioch Union High, Measure C

$12,300,000

Caruthers Unified, Measure C

$12,000,000

Standard School, Measure Q

$11,200,000

Fortuna Union, Measure D

$10,000,000

Weaver Union, Measure G

$9,000,000

Wheatland Union, Measure U

$9,000,000

Somis Union, Measure S

$9,000,000

Delhi Unified, Measure E

$8,000,000

Summerville Union High, Measure H

$8,000,000

Brawley Elementary, Measure S

$7,500,000

Arcata Elementary, Measure F

$7,000,000

Roseland Schools, Measure N

$7,000,000

Spreckels Union, Measure B

$7,000,000

Gravenstein Union, Measure M

$6,000,000

Ocean View Schools, Measure P

$4,200,000

Nuview Union, Measure V

$4,000,000

Wilmar Union, Measure P

$4,000,000

Earlimart Schools, Measure H

$3,600,000

Dehesa Schools, Measure D

$3,000,000

Pacific Elementary, Measure M

$830,000

TOTAL

$13,278,801,190

 

Educational Bond Measures Rejected by California Voters

November 6, 2012
Sorted by Highest to Lowest Amount Not Authorized for Borrowing Through Bond Sales

 

MiraCosta Community College, Proposition EE

$497,000,000

Ocean View Schools, Measure P

$198,000,000

Yucaipa-Calimesa Joint Unified, Measure O

$98,000,000

Porterville Unified, Measure J

$90,000,000

Del Mar Union, Proposition CC

$76,800,000

Ramona Unified, Measure R

$66,000,000

Mountain Empire Unified, Measure G

$30,800,000

Fountain Valley, Measure N

$23,500,000

Santa Ynez Valley Union High, Measure L

$19,840,000

Willows Unified, Measure P

$14,700,000

College School District, Measure K

$12,000,000

Gridley Unified, Measure G

$11,000,000

Elk Hills, Measure O

$6,200,000

Butteville Union, Measure R

$3,500,000

Knightsen Elementary, Measure H

$3,000,000

TOTAL

$1,150,340,000

 

New California Law for 2013: Labor History Month in Public Schools

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My article on Assembly Bill 2269, which establishes Labor History Month in California public schools, was posted on December 31, 2012 on www.UnionWatch.org. See How Will Students Celebrate Labor History Month in California Schools?

AB 2269 was signed into law in September 2012 by Governor Jerry Brown.

I wrote about this bill on April 14, 2012 in Soon, a Whole Month to Subject California Students to Union Propaganda in the Classroom. Here is the letter I submitted to the author of the bill in opposition: Dayton Letter Opposed to Assembly Bill 2269 – Labor History Month.

There was very little press coverage of this bill, but here’s an excerpt from a short article (Jerry Brown Signs Bill Declaring May to be Labor History Month) in the Sacramento Bee on September 26, 2012:

Gov. Jerry Brown, like the Democratic-controlled California Legislature, wants schoolchildren to learn about labor unions, preferably when they are in school and aren’t too busy with other matters…

Labor unions have had a significant impact on labor conditions for workers nationwide. They are also major contributors to Democratic politicians and their causes.

Also, see my article published in 2003 in the journal Government Union Review (Volume 21, Number 1): Labor History in Public Schools: Unions Get ‘Em While They’re Young

Foolishness That Won’t Be Stopped: California’s K-12 School Districts Use Borrowed Money from Bond Sales to Buy iPads and Other Technological Gadgets

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The web site www.EdSource.org (“Engaging Californians on Key Education Challenges”) has an article today (December 18, 2012) entitled Districts Face Questions in Spending Long-Term Bonds for Short-Lived Technology. It’s a good summary of how some K-12 school districts in California are using language in Proposition 39 to justify spending borrowed money from bond sales to “equip” schools with computers and other technological products.

Money borrowed through bond sales is typically paid back with interest over a long period of time – much longer than the useful life of computers. Aren’t you glad you didn’t take out a 30-year bank loan to pay for your Radio Shack TRS-80?

Chris Reed had a short piece posted in the December 9, 2012 www.CalWatchdog.com entitled Will School Finance Scams Be Addressed? One of Two at Best. He predicts the California state legislature will restrict the ability of educational districts to sell Capital Appreciation Bonds (CABs), but will not prevent educational districts from using bond proceeds to buy technological products.

Proposition Z was and still is the Zombie Tax.

Proposition Z was and still is the Zombie Tax.

The most prominent recent controversy about California school districts using borrowed money from bond sales to buy technology occurred during the fall 2012 campaign to pass the $2.4 billion Proposition Z bond measure for the San Diego Unified School District. The San Diego County Taxpayers Association led the charge in pointing out how the school district was spending bond proceeds on iPads. In the October 9, 2012 article Is School Bond Money Going to iPads Over Repairs? Fact Check, Voice of San Diego reported the following:

As of mid-September, the district says it had spent more than $379 million of its Prop. S funds. About 11 percent of that has been used to buy iPads, computers and other technologies, according to figures released by school officials.

While the article never actually stated the amount, 11 percent of $379 million is $42 million.

In a subsequent October 25, 2012 article $2,500 iPads? Fact Check, Voice of San Diego reported these findings:

A display case at San Diego Unified School District administrative headquarters highlighting the Proposition S bond measure. The school board has not yet directed district personnel to enhance the display with the original signed Project Labor Agreement negotiated with union officials.

A display case at San Diego Unified School District administrative headquarters highlights the Proposition S bond measure.

The school district used some money collected under Proposition S, the bond approved in 2008, to invest in classroom technology upgrades, including more than 21,500 iPads and nearly 77,800 laptops. More purchases are planned next year…

The iPad purchases came in two phases. First, the district used a series of highly controversial 40-year bonds to buy 10,729 iPads. The district says each iPad cost $420 plus another $116.50 for three-year warranties and accessories. After reviewing bond documents, we calculated that the district will pay an average of about 7.6 times that amount once the final bill comes due. That means a single iPad will cost $4,077.

The district’s second purchase of nearly 10,800 iPads will be less burdensome. The next set of bonds came with a bill that’s an average of about 5.1 times the original cost. Our math shows the district can expect to pay about $2,731 per device for iPads purchased in the second wave.

San Diego voters didn’t care: 61.80% of them voted for Proposition Z on November 6, 2012 and guaranteed that the San Diego Unified School District will have the authority from the 2008 Proposition S and the 2012 Proposition Z to borrow millions of dollars more to spend on iPads.

Besides the bond investors, the people making money on this activity are investors in Apple, Inc. I tweeted the following about the www.EdSource.org article:

California school districts using borrowed $ from construction bond sales to buy computers. (What’s Apple’s position?)

Finally, Jack Weir, a member of the Pleasant Hill City Council and an activist in several community and taxpayer groups in Contra Costa County, emailed a provocative response to the leadership of the Contra Costa Taxpayers Association in response to the www.EdSource.org article:

From:Jack Weir
Sent:Tuesday, December 18, 2012 9:26 AM
To: xxxx
Subject: Re: Should schools be using bond money for technology which is so short lived?

As Alicia Minyen, Anton Jungherr and other CalBOC board members have amply demonstrated, school bond programs are largely out of control – literally.  Mt. Diablo and West County districts have abused Prop 39 on a major scale, although there are far more egregious examples elsewhere in the state.  The new Mt. Diablo board is committed to address their Measure C issues, but will have little corrective latitude.  Dismantling the massive damned solar canopy won’t unring the bell.

There is a whole industry of bond counsels and consultants that work this field, operating in tandem with teachers unions and Democrat politicians that advocate milking the school construction programs to wring additional operational (compensation) funding from local property-owning taxpayers.

After ten years of wrestling with the problem of bringing public (government) education into the 21st century, it is clear to me that nothing short of a whole new paradigm is needed.  And, to get there, we should be asking broad future-focused questions, such as:

> Do we really need brick and mortar facilities dedicated exclusively to classroom teaching?  (Ditto brick and mortar “libraries.”)
> Does it make sense to continue to load ten year-olds with 50 back-breaking pounds of paper books*, when most have (or should have) access to digital devices and the internet?  Within five years, every bit of data and information needed for a good education will be available on the “cloud,” accessible only via digital devices.  Other countries (and states) will leap-frog traditional educational models and kick our economic asses.  Take a look at what India did to bring education into its remote rural villages 25 years ago, and now their kids are coming here to work on H-1B programs.
> Who should pay for K-12 education?  “Free” education ain’t; certainly not to taxpayers, who currently gain a pathetic return on their “investment.”
> What’s the right role for taxpayer advocates in the political forum going forward?

It’s time to start over.
Jack

Based on the results of the November 6, 2012 elections, Californians don’t want to start over. They like the current paradigm, in which the kids get to use “free” iPads.


* Note from Kevin Dayton: regarding the weight of paper textbooks, Assembly Bill 2532, signed into law by Governor Gray Davis in 2002, required the California Board of Education, on or before July 1, 2004, to adopt maximum weight standards for elementary and secondary school textbooks. The California Board of Education subsequently adopted regulations concerning textbook weight standards.

A Ten-Year Old Review of Another Class Warfare Film in the Oeuvre of Fred Glass, Producer of the Controversial New California Federation of Teachers Video “Tax the Rich: An Animated Fairy Tale”

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The California Federation of Teachers (CFT) released an eight-minute video this week called Tax the Rich: An Animated Fairy Tale. According to the California Federation of Teachers web site, the video is “narrated by Ed Asner, with animation by award-winning artist Mike Konopacki, and written and directed by Fred Glass for the California Federation of Teachers.” It argues the case for higher taxes on rich people in the context of a socioeconomic framework based on class exploitation.

A segment in the original release of the video depicted a rich man urinating on the poor to symbolize “trickle-down economics.” This imagery earned some negative news media attention (see links below), which probably explains why the original video is now labeled “private” and original web links to California union press releases about the video do not work (see dead links below).

I’m familiar with a much longer film produced by Fred Glass: the 1999 documentary Golden Lands, Working Hands he developed for California high school students. As seen in Tax the Rich: An Animated Fairy Tale, the same simplistic view of historical events from the perspective of class consciousness pervades this video, too. It also includes a cartoon (with a rap).

Here’s my report on that film, excerpted from my 2002 article “Labor History in Public Schools: Unions Get ‘Em While They’re Young” in the journal Government Union Review:

High school students may watch a 10-part video series written and directed by the California Federation of Teachers’ communications director, Fred Glass, who is also a union organizer and labor studies professor. Funded by the AFL-CIO, the California Labor Federation and several individual unions, the Golden Lands, Working Hands video series explains California labor history from the union point of view. Michelle Vesecky at the U.C. Berkeley Center for Labor Research and Education recognized the unprecedented achievement of this video in her article “Golden Lands, Working Hands: The History of the Future:”

Other states, such as Minnesota, Rhode Island, Wisconsin, Illinois, Massachusetts, Ohio, Iowa, Michigan, New Jersey, and Virginia have already developed labor history programs. However, Golden Lands, Working Hands is groundbreaking. No other state has developed a curriculum as comprehensive as the CFT’s multi-media project. Golden Lands, Working Hands will be the first of its type to have both its own textbook and an hour long video.

While Glass claims the video series is “politics-proof” because it mentions past episodes of corruption and discrimination in organized labor, he has a political goal: encourage young people to join unions or organize employees at their workplace into a union. “Students who go through the Golden Lands, Working Hands unit will be in the workforce within a year or two … It will give them the knowledge necessary to be able to say ‘Union Yes’ if they are working in a place where they have that choice.” According to Glass,

(T)he video explores a great deal of the events and issues in the history of California labor and takes us right up to the present, dealing with current issues such as mass corporate ‘downsizing,’ part-time and temporary employment, inadequate health care coverage, and the battle for a living wage. It shows how today’s labor movement is attempting to reinvent its tradition of standing up for working people, and how it continues to make history in theprocess.

Vesecky at the Center for Labor Research and Education makes the intent clear: “The CFT plans to raise awareness in future workers, future voters, and future policymakers. Through education, hopefully worker empowerment will result.”

A theme of the video series is that life was relatively good for American workers when unions were at their zenith, and now life is a struggle for American workers because unions represent a much smaller percentage of the workforce. The classroom guide for teachers to use in conjunction with the video series summarizes the 22-minute long final segment in the series – “Golden Lands, New Demands” – as the story of how “a new corporate regime ruthlessly replaces full-time ‘middle class’ union jobs with part-time, temporary, ‘disposable’ employment.” But the summary notes that not all is lost: “In response, a new organizing mood emerges among California working people grappling with the effects of the global economy, spurring struggles for full-time work, living wages, health care and dignity.”

California working people struggling for dignity in the last segment of the Golden Lands, Working Hands video series include bike messengers, hotel workers, janitors, and college instructors targeted by current organizing campaigns. Departing from history into the realm of contemporary union politics, the segment depicts four examples of union activism: the “Justice for Janitors” organizing movement of the Service Employees International Union; the AFL-CIO “Union Summer” program in which mainly young participants work in internships as part of organizing campaigns; the “Living Wage” campaign for municipalities; and fighting “anti-union” politicians and proposals such as California’s Proposition 226, a “paycheck protection” proposal on the June 1998 ballot. Perhaps with the intention of introducing students to the struggles of young workers, the video focuses on efforts of some San Francisco bicycle messengers to organize into a union with the help of the International Longshore and Warehouse Union. Bike messengers complain that they need a union because their work is dangerous, they get low pay, they don’t get respect, and rich multi-national corporations are taking advantage of them.

Although the video obviously is biased toward presenting the union view of history, one area in which the Golden Lands, Working Hands video series becomes excessively simplistic in its politics is when it relates the 1992 Los Angeles riots to the decline of unions. According to the video, in the 1950s unions provided good jobs and were a responsible agent to address community frustration about racism. In the 1990s, without strong unions or good jobs, rioting provided the outlet to address racism. For students too young to remember the riots or understand the complicated causes behind them, this explanation is grossly incomplete.

Like the labor history program produced by the American Social History Project, the Golden Lands, Working Hands program emphasizes collective viewing and discussion. “Group screening and interaction can, at least potentially, create the energizing connection of ideas shared among people, on the basis of which they can act,” Glass writes. Not only does the content of labor history question the benefit of individualism in the workplace, but the methodology of teaching labor history seems to reject individualism in the classroom as well. Obviously the gentle guidance of the teacher combined with the peer pressure of fellow adolescents will lead students to a preordained positive conclusion about unions.

Now that Labor History Week is in effect, the California Federation of Teachers plans to implement the Golden Lands, Working Hands program as part of the California high school history curriculum, using teachers’ union locals and an anticipated recommendation from a future California History-Social Science Curriculum Framework and Criteria Committee to “allow the more rapid dispersion of the curriculum throughout the state’s school districts.”

…Will the Golden Lands, Working Hands video series inspire young people to support unions? Although testimonials, video footage, and even a pro-union rap cartoon video are included in the video series to stimulate student interest in a potentially dry topic, watching and understanding the video requires close attention and a knowledge of American and California history that may be too difficult an obstacle for most students, even with the teacher’s use of accompanying lesson plans and classroom guide. The best target for the unions’ labor history curriculum may be students in Advanced Placement American history classes.

See the broken links to the California Federation of Teachers’ announcement Animated Fairy Tale Makes the Case for Fair Taxation and the California Federation of Labor’s Labor’s Edge Blog: Tax the Rich – An Animated Fairy Tale.

News coverage for Tax the Rich: An Animated Fairy Tale:

Ed Asner Defends Crude Union Video, Asks to “Piss On” Fox News Producer – Fox News – December 5, 2012

California Teachers Union Video Shows Rich Man Urinating on Poor to Make Taxes Case – Fox News – December 5, 2012

Ed Asner Blasts Rich People in New VideoWall Street Journal (blog) – December 5, 2012

Crass Warfare by Teachers’ OrganizationSan Francisco Chronicle (editorial) – December 5, 2012

Ed Asner Under Conservative Attack Over ‘Tax the Rich’ Teachers Union VideoHollywood Reporter – December 4, 2012

News Media Beginning to Pick Up on Story about California School Districts Selling Insidious “Capital Appreciation Bonds” – Dayton Public Policy Institute an Early Informant to California Taxpayers

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Finally, the news media is discovering and reporting on how many California school districts are selling “Capital Appreciation Bonds” to investors, thus committing future generations of California property owners to staggering tax payments.

To summarize this obscure issue in two paragraphs, when California voters approve “bond measures” so that school districts or other government entities can borrow money for construction projects, voters are directing local governments to sell “General Obligation Bonds” to investors such as individuals, commercial banks, insurance companies, and money market funds. Investors make money through the interest paid by the municipal government during the time it borrows the money. “General Obligation Bonds” are backed by the “full faith and credit” of the government entities, meaning the investors are guaranteed to get the principal and interest on the investment.

Traditionally, school districts and other government entities have sold General Obligation Bonds that provide investors with a semi-annual interest payment throughout the term of the bond, with the principal returned to the investors when the bond matures. But a recent trend for California school districts is selling a different type of General Obligation Bond. These are called “Capital Appreciation Bonds” (CABs), also known as Zero-Coupon Bonds, in which interest is compounded over the life of the bond and then paid all at once with the principal to the investors when the bond matures. This means that the government entity can delay collecting property taxes and backload the tax burden to the later years of the term of the bond, which can be as long as 40 years. Compound interest (paying interest on the principal AND interest) can accumulate huge financial obligations over such a long time period.

A reporter for the Detroit Free Press newspaper named Joel Thurtell found this same racket going on at Michigan school districts in the early 1990s and wrote some comprehensive articles exposing it, starting with the April 5, 1993 story “Michigan Schools Load the Future With Debt.” His reporting was one of the catalysts leading to a provision in Michigan law prohibiting the sale of Capital Appreciation Bonds. It was added to a school finance bill on June 22, 1994 as an amendment offered by State Senator Joanne Emmons, and Governor John Engler subsequently signed the bill into law.

Now retired from the Detroit Free Press but continuing his journalism with a blog (Joel on the Road: Words Shot With a Loose Cannon), Mr. Thurtell discovered earlier this year that California school districts were now playing this game. The giveaway was an outrageous 2011 sale of Capital Appreciation Bonds by the Poway Unified School District (just north of San Diego) that allegedly will cost taxpayers a total of $981 million by 2051. That’s the price of borrowing $105 million in 2011!

As I say to Californians whenever I try to explain this:

School board members don’t care how much these Capital Appreciation Bonds cost after 30 or 40 years. By the time property owners are assessed with the staggering tax burden, the elected board members will be out of office and probably dead. They won’t be accountable for the consequences, but they’ll still have their names on rusty plaques next to the front doors of deteriorating schools.

I learned about Capital Appeciation Bonds at the California League of Bond Oversight Committees (CalBOC) annual conference on May 11, 2012. (I’m on the Board of Advisors for this group.) I was astonished at the lack of news coverage about this potentially disasterous practice for the state and posted an article about it that evening.

I was still thinking about the issue a few days later and wondering why so few Californians knew or cared. Looking through my notes from the conference, I saw that the feisty and determined Mt. Diablo Unified School District Measure C 2010 Citizens’ Bond Oversight Committee member Alicia Minyen (an unsung hero for fiscal responsibility in California) mentioned that a reporter in Michigan has exposed the racket there, which led to a state ban on school districts selling Capital Appreciation Bonds. Researching on the web, I identified the reporter and then found his blog. I discovered he had posted several articles in the previous two weeks on the threat of Capital Appreciation Bonds in California, starting on April 27, 2012:

Muni bomb ticks in California

Posted on April 27, 2012 by Joel

By Joel Thurtell I was sipping coffee and reflecting on the ignorance displayed for all the world to read in a New York Times article. It was January 9, 2009. The Times story claimed to offer “a rare glimpse into … Continue reading →

I posted a comment on his blog to let him know that a fiscally conservative policy consultant in California had noticed the issue and planned to spread the news. He then mentioned me in his blog:

See no evil: CABS and media

Posted on May 16, 2012 by Joel

By Joel Thurtell Thanks to Kevin Dayton of the Dayton Public Policy Institute for noticing my recent columns about the evils of Capital Appreciation Bonds. He covered the May 11, 2012 meeting of California’s League of Bond Oversight Committees annual … Continue reading →

Fast forward to August 2012, and people are giving as much attention to my May 2012 articles about Capital Appreciation Bonds (Please Read This, Even If You Think Municipal Bonds Are Really BORING: We’re Setting Up the Next Generation of Californians to Pay Staggering Property Taxes and Reporter Behind Michigan’s 1994 Prohibition of Capital Appreciation Bonds (CABs) Watches and Writes about the CAB Frenzy at California School Districts) as they are to my posted photo of the closest Chick-fil-A to San Francisco. The issue is now getting attention, perhaps in part because big urban school districts such as the Sacramento City Unified School District, the West Contra Costa Unified School District, and the San Diego Unified School District are asking voters on November 6, 2012 for approval to borrow hundreds of millions and even billions of dollars through bond sales to investors.

A big break for exposing the issue was a Voice of San Diego article on August 6, 2012:

Where Borrowing $105 Million Will Cost $1 Billion: Poway Schools

After putting together a bond that will cost taxpayers almost 10 times what they borrowed, the Poway Unified School District has become California’s poster child for a form of exotic financing.

I suspect that a key element in the successful spread of this article was the brightly-colored pie chart that put the astonishing news into graphic form for people to understand.

The Voice of San Diego then provided a nifty guide on August 8, 2012 to other school districts selling Capital Appreciation Bonds:

Find High-Interest School Bonds in Your District: A Five-Step Guide

Want to find out if your local school district has borrowed money using expensive capital appreciation bonds? Follow our guide.

Regrettably, as other news media outlets picked up on the story and circulated it nationwide, Mr. Thurtell and the Voice of San Diego received some attention for their dispute over proper attribution of sources and credit for the story. I’ll let them speak for themselves on their web sites, but I am pleased to see this issue brought to the attention of the public as more California local governments and the State of California itself careen toward bankruptcy. (For example, see The Right Way, the Wrong Way, and the Poway of School Bond Financingwww.CalWatchdog.com – August 9, 2012)

Something has to be done now to protect today’s California children from oppressive taxes in 20-40 years when they start families, buy a house or other residential property, and own small businesses with property. (I’m assuming there will still be private property in California in 2052 – am I being too optimistic?) I want to see someone in the California State Legislature introduce a bill banning the sale of Capital Appreciation Bonds and limiting all General Obligation Bonds to a maximum time period of 30 years. It can be modeled on the law in Michigan.

Will any California state legislator dare to challenge the many special interests that regard school bonds as “chasing after money…live for today and don’t worry ’bout tomorrow, hey, hey, hey” (Use the chorus of this song as the theme music for the effort.)

Also, I thank Joel Thurtell for mentioning my early attention to this story in his blog:

Credit

Posted on August 9, 2012 by Joel

By Joel Thurtell I appreciate the article by Andrew Donohue in the Voice of San Diego acknowledging my work in uncovering and reporting about the Capital Appreciation Bond scandal in California. Donohue responded to my complaint that reporter Will Carless of the … Continue reading →

I’m in Michigan. The first California reporter to write about California’s Cab scam was Kevin Dayton, on May 11 and May 14.

Two California Urban School Districts Notorious for Project Labor Agreements Team Up With Construction Unions to Seek Voter Approval for Construction Bond Measures

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Two California urban school districts notorious for requiring their construction contractors to sign Project Labor Agreements (PLAs) will be asking voters to approve huge bond measures at the November 6, 2012 election. The elected board members of the San Diego Unified School District and the Sacramento City Unified School District expect that voters turning out to support President Barack Obama’s re-election will also vote for new taxes on property owners to fund school construction. Campaign support for these bond measures will come from construction unions, who will control the work because the school boards are requiring construction companies to sign Project Labor Agreements with unions as a condition of work.

Voters have overwhelmingly approved bond measures in these two districts in the past, but government-mandated Project Labor Agreements were not an issue in those elections. The big question now: will advocates of fiscal responsibility develop an organized and effective campaign to offset the campaign resources of the unions and the subtle support of the school districts?

SAN DIEGO UNIFIED SCHOOL DISTRICT

Last night (July 24, 2012), the Board of Education of the San Diego Unified School District approved a resolution to place a $2.8 billion bond measure on the November 6, 2012 ballot. This plot to get more taxpayer funding for construction has been in the works since the board’s November 1, 2011 meeting, at which the board directed staff to study the feasibility of a new capital facilities bond measure. The board received the results of the feasibility study on February 14, 2012, and of course the bond measure was highly feasible.

This is the third time in 15 years that the San Diego Unified School District has asked voters to approve billion-dollar bond measures. On November 3, 1998, 78% of voters approved the $1.51 billion Proposition MM, under which construction was awarded under fair and open bid competition, despite union lobbying for the school district to mandate that construction contractors sign a Project Labor Agreement.

Not knowing at the time that construction unions would be given control of the work, 69% of voters approved the $2.1 billion Proposition S on November 4, 2008. A Project Labor Agreement was sprung by the school board in January 2009 after union special interests won a seat in the same election and attained 3-2 majority control. The final version of the Project Labor Agreement was approved in July 2009 on a 3-2 vote, and the two board members who voted against it are no longer on the board.

In contrast to 2008, San Diego voters in the November 2012 election will be fully aware that the school board has given unions control of most of the work funded by the proposed $2.8 billion bond measure. To lock in the Project Labor Agreement for additional work funded by future bond measures, the school board voted 5-0 at the July 24, 2012 meeting for a resolution that expands the scope of the Project Labor Agreement for all projects that exceed $1 million and are paid for in whole or in part with future local bond funds.

Usually school boards are coy about their plans to mandate a Project Labor Agreement until after voters approve a bond measure. In this case, voters will be considering the wisdom of government-mandated Project Labor Agreements as well as the wisdom of taxing the citizens and businesses of San Diego an additional $2.8 billion (plus billions more in interest) for school construction.

SACRAMENTO CITY UNIFIED SCHOOL DISTRICT

On July 19, the Board of Trustees of the Sacramento City Unified School District approved a resolution to place a $346 million bond measure on the November 6, 2012 ballot. This plot to get more taxpayer funding for construction has been in the works since the board’s January 19, 2012 meeting, at which the board authorized the development of a Sustainable Facilities Master Plan. A feasibility study for this bond measure, including polling of voters, is ongoing, but you can bet that the bond measure will be found to be highly feasible.

This is the third time in 15 years that the Sacramento City Unified School District has asked voters to approve multi-million-dollar bond measures. On October 19, 1999, 79% voters approved the $195 million Measure E in a special election. On November 5, 2002, 67% of voters approved the $225 million Measure I.

The board of the Sacramento City Unified School District voted 5-1 on September 1, 2005 to require all contractors to sign a Project Labor Agreement with construction unions in order to work on projects worth $1 million or more funded by the remaining $170 million authorized by Measure E (1999) and Measure I (2002). On September 4, 2009, the board voted 5-0 to extend the district’s Project Labor Agreement on all Sacramento City Unified School District projects worth $1 million or more for another four years. International Brotherhood of Electrical Workers (IBEW) Local No. 340 union official and board member Patrick Kennedy did not vote, in order to avoid a conflict-of-interest. See the amended and extended Project Labor Agreement here.

The school board for the Sacramento City Unified School District has considered Project Labor Agreements three times since 2000.  The change in voting patterns symbolizes the change in the political climate of California over the past 15 years.

  • 2000          Board voted 4-3 to reject a PLA.
  • 2005          Board voted 5-1 to approve a PLA. (Actual vote count was 5-2.)
  • 2009          Board voted 5-0 to renew a PLA. (Actual vote count was 7-0.)

Does the Topic of Education Reform Make You Weary? America Was at Risk in 1959 and America Is at Risk in 2012: Same Problems with Same Unwanted Solutions

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My kids love to visit my parents’ house in Connecticut, not only because of all the books and curiosities in the main living space, but also because the house actually has a basement, and it’s crammed from floor to ceiling with stuff. (Basements aren’t common in the major metropolitan areas of California, so a basement is a novel concept to them.)

Knowing that one day a major hurricane will flood that basement and ruin everything, I take time during every visit to go through some of the thousands of books stacked and shelved everywhere and salvage some to mail to California. One of the books included in the last shipment was a 1962 paperback revised version of The Big Red Schoolhouse, written by Fred M. Hechinger (education editor of the New York Times from 1959 to 1990) and originally published in 1959.

The book’s title of The Big Red Schoolhouse plays on the American idyllic image of the little red schoolhouse, which is about to be crushed by the centralized, nationalized, state-serving education system of the Soviet Union. I had never heard of this 50 year-old book, but I figured it would be an enlightening and interesting time capsule about American education policy at the end of the 1950s, after the Soviet Union launched the Sputnik satellite into orbit. This Cold War artifact did not disappoint me.

The introduction leads off with this statement: “When the history of twentieth-century America eventually is written it will be recorded that the date of October 5, 1957, was a turning point in American education. Sputnik didn’t do it alone – the times were ripe for change.”

Well, perhaps that date will continue to get a brief mention in the history books, although its significance will continue to fade as an entire generation of Americans enters adulthood either confused or blissfully ignorant about why Americans regarded the Soviet Union as an international threat for 70 years.

I would include Sputnik as just one incident in a list (off the top of my head) that also includes these developments affecting educational policy:

  • Enactment of the original G.I. Bill of Rights in 1944 and subsequent amendments, resulting in college becoming a more mainstream pursuit for the middle class.
  • Various events related to school desegregation – perhaps, in retrospect, the most important turning points in 20th Century American education.
  • The U.S. Supreme Court decision (Engel v. Vitale) in 1962 striking down government-sanctioned prayer in public schools, which some Americans believe was the incident that started a long slide of public schools to disorderly chaos and chronic disrespect for authority.
  • Development of more meritocratic admission policies for the nation’s elite colleges, including opening admission to women and recruiting a more diverse body of students.
  • The establishment of collective bargaining rights for teachers and the transformation of professional teachers’ associations into labor unions. (See a PowerPoint of the Association of California School Administrators on “A Brief History and Overview of Collective Bargaining in California Public Schools” here.)
  • The emergence of marginal societal dysfunctions as mainstream behavior among students (i.e. sex, drugs, and rock-n-roll). (Peak year for using marijuana at least once: 1979, at 60.4%; the percentage has been 40-45% for the past several years – see here.)  
  • Passage of Title IX in 1972, forcing schools to reallocate resources and fill a growing demand among girls and women for official sports teams and other extracurricular sports activities. (See the National Women’s Law Center web site on Title IX here; also, 57% of college students are women, according to the U.S. Census Bureau – see here.)
  • Establishment of the U.S. Department of Education in 1979, as a result laying a foundation for what could one day evolve into a nationalized education system.
  • 1983 publication of A Nation at Risk and the resulting movement at the federal government (for example, through Goals 2000, enacted in 1994) and in the states toward more student testing and curriculum standards. (See the U.S. Department of Education’s A Nation Accountable: Twenty-Five Years After A Nation at Risk here.) 
  • A rush of non-English speaking immigrants into the school systems of many states following the Immigration Reform and Control Act of 1986.
  • A movement for inclusion of students with learning disabilities or special needs in the regular classroom.
  • A push for various degrees of school privatization, including vouchers, charter schools, Channel One, Edison Schools, for-profit post-secondary education, and web-based schools.
  • Enactment of the No Child Left Behind Act of 2001, continuing a quiet but inexorable trend of the federal government using financial incentives as leverage to arrogate authority in education policy from state and local governments.
  • Stable middle class families with traditional conservative values – long the backbone of American public education at the community level – increasingly choosing to circumvent the public school system altogether through homeschooling.

We know now that the ruckus after the launch of Sputnik really wasn’t much of a turning point at all – the basic structure of American education remains the same 55 years later. There has been some minor tweaking of curriculum standards and some devolution of power from local school districts to state governments and the federal government, but the situation described in The Big Red Schoolhouse generally remains the same: “Our schools have been, in large part, molded by public demand in each individual community.”

Claims Made in The Big Red Schoolhouse about American Education 1959 (and 1962)

Nothing is new under the sun, and some things never change. Here’s the status of American education as seen in 1959 and again in 1962:

  1. In a free society such as America, forces and counterbalancing forces are at work in the political arena and prevent rapid changes to curriculum or other educational policies. American public education is a fusion of the priorities of many societal interests – some in complete opposition – along with various European and home-grown educational philosophies and theories of social science.
  2. One trend remains constant in American education: the resolute aim to make education universal through high school. Generally, the system tried to be comprehensive in serving the needs of all children, regardless of backgrounds or aspirations. Americans are leery of an educational system that would create a privileged class of the educated elite.
  3. The ability of the American educational system to take a diverse people of immigrants and transform them into a common American citizenry is an unprecedented wonder of history. It is in direct contrast with the ideologies of other nations and civilizations.
  4. The launch of Sputnik has convinced influential Americans and the education establishment that the country must make some dramatic changes in American schools, or else continued complacency will lead to the ultimate triumph of Communism in the “gigantic struggle between two civilizations.” Maintaining the status quo while monitoring textbooks for signs of subtle Communist infiltration will not be sufficient to ward off the Communist threat.
  5. It is difficult to assess the quality of American schools because of the diversity and decentralization of the system, with its local controls and uneven standards. No one in the United States has the authority to officially pronounce a system “correct” or “incorrect” (although many try to do so).
  6. Americans live in a prosperous country in which someone does not need to be an intellectual or do well in school as a prerequisite to live a life of ease, comfort, and entertainment. There is not a sense of urgency about intellectual preparation.
  7. Americans value their educational system more for the symbols (such as grades, diplomas, and degrees) and the “sideshows” (such as marching bands and sports) more than the nature and content of the education itself. Americans also see the educational system as a program for children to learn how to get along with other people and groups, develop new tastes, and become curious for further exploration and learning. Most Americans do not want children to be pushed too hard to learn things in school, and they want the schools to extend the concept of childhood to some extent even into high school (rather than schools treating students as miniature adults). The only societal inducement for an American student to work hard is to win admission to one of the top, selective colleges.
  8. The lack of value Americans place on quality education is shown by the low salaries of teachers. Comparing the United States to the Soviet Union, he writes “It is one of the great ironies of this century that a police state rather than a democracy thinks more highly of its teachers than of its policemen.” The prospective teacher soon learns that the salary he will earn depends not on how well he teaches, but only on how long he has taught. The teaching profession does not attract smart people. “The popular esteem for teachers will show little improvement until better salaries attract into the teaching ranks a higher caliber of intelligence.” American teachers are trained in how to teach, not on what to teach. Many teachers know the methods but don’t know the subjects.
  9. The United States is “struggling to maintain” a teacher-student ratio of one to twenty-six.
  10. The American educational system relies heavily on tests to determine the child’s current knowledge and natural aptitude for learning, and then builds the system around the child’s needs.
  11. Many colleges need to provide remedial English classes to their freshmen because the high schools have failed to provide fundamental instruction such as the essentials of grammar or good writing. Only 7% of high school students study Latin, Greek has practically disappeared, less than 1% of high school students take an ancient history class, and the classics, for all intents and purposes, are no longer taught at all. The United States permits generations to grow up in a historical vacuum. Only 16% of high school students study a foreign language, and many of that small group studied that language for only two years. Ironically, the Soviet Union rejects Western tradition, but requires its students to study it (within a critical Marxist-Leninist context, of course).

Proposed Solutions in The Big Red Schoolhouse to America’s Education Problems 1959 (and 1962)

  1. Establish some national standards through appointed board of experts so the United States can survive in technological competition with the Soviet Union. Local control is often a weakness in the system.
  2. Require students to take more classes in English, math, sciences, history, and foreign languages. Reduce the opportunity for students to choose a potpourri of unrelated, uncoordinated electives.
  3. Listen to committees of scholars and experts in their fields who are convening to discuss and propose changes to the school curriculum.
  4. Make better use of technology by creating listening and viewing rooms for students to use records, films, and kinescopes. (It’s OK to snicker about this – I think they used slide rules at that time too.)
  5. Attract leading experts from the community to interact with students for consultation, discussion, advice, and criticism.
  6. Start challenging students with an intellectually rigorous curriculum at a younger age.
  7. Put more money in the system, especially for teacher salaries.
  8. Teachers need to be better educated about the actual subjects they teach.
  9. Allow for student failure by ending automatic promotion to the next grade and withholding diplomas. Don’t be dominated by the idea that the stigma of failure is so psychologically damaging that it requires the absence of incentives to work for success.
  10. Stop assuming that a few American geniuses will perpetually allow the rest of America to enjoy a leisurely, uncompetitive learning environment and still maintain a comfortable life.
  11. Preaching to students about the rewards of hard work in school is futile, because Americans know they can have a comfortable life without working too hard in school. It’s not hard for an American to get a job or get into a college even if he doesn’t work hard in school.

Sound familiar? Remember, this book was written in 1959 (revised in 1962).

Next time you hear a politician talk about his or her amazing, cutting-edge, common-sense ideas to reform public education from within the system, go back to this list and understand that it’s just the same old problems with the same old solutions.

American education reflects American values, and as long as the nation is relatively prosperous and relatively free, we will rely on motivated immigrants and a small group of home-grown intellectuals to launch our own future Sputniks. We don’t even have the ideological threat of the Soviet Union or the economic threat of Japan to fear anymore. The People’s Republic of China is the foreign motivator of the moment for educational reform, but fundamental rights there are still limited and controlled, and I’ll guess that a new country will emerge as “the threat” in my lifetime.

Also, what happened to the kinescopes?