The Bond Measure Debate has Officially Begun
Last night, the PVPUSD School Board officially began discussing the specifics of the potential bond measure that could be voted upon this November. Heads up, this is a long newsletter with a bunch of math and numbers, but it is important because it affects both the quality of our school campuses as well as our property taxes for potentially the next 25 years. If it’s too much for you, there’s a TL;DR (too long; didn’t read) version at the end.
The discussion at the meeting concerned two topics:
The terms of the bond itself
The tax rate (per $100K of assessed property value)
The payoff time frame (15, 20, or 25 years)
Whether there should be one or two bonds on the ballot
The types of projects that the bond would pay for, separated into three tiers of projects
Tier 1: “Modernizing” (i.e. repairing/replacing) existing teaching spaces (not including multipurpose rooms, gyms, admin and food service spaces), installing/replacing security fencing, replacing site utilities
Tier 2: All of Tier 1 plus installing turf fields to replace grass
Tier 3: All of Tier 2 plus “modernizing” multipurpose rooms, gyms, admin and food service spaces
There will be two more future board meetings about the bond. The June 4th meeting will discuss the specific language of the bond measure and will outline all the projects on the detailed project list. On the June 26th meeting, the board will vote on a resolution to place the bond measure on the ballot.
Before last night’s discussion started, I addressed the board with my concerns about their transparency in the process. In short, the district has inherited a credibility problem from the failure of the prior bond measure which lost by a 30% margin. I asserted that the solution should be for them to be as open and transparent as possible, but they information they have been publishing has been confusing at best, and misleading at worst. (To her credit, Superintendent Dr. Serrano emailed me the next morning to tell me that they have removed one of the infographics at issue from their website).
Once the discussion started, there were two primary documents referenced which I’ve linked below. Warning: there are a LOT of numbers and the math can be tough to follow, but I’ll try to simplify it as much as possible.
Project Tiers and Bond Options
The “Project Tiers” document shows the total cost to the district for the three tiers described above. The main number to look at is toward the bottom left: $380,580,008 just to complete Tier 1 projects.
The “Bond Options” document is a little more complicated. You’ll first notice three colored tables: orange (25 year repayment), blue (20 year repayment), and green (15 year repayment). These three tables correspond to how long it would take our district to pay off the bond. Along the left side of each table are four tax rates ($29, $39, $49, $60). Those rates are how much each resident would be taxed annually per $100,000 of assessed property value. (Assessed value is different and usually lower than the actual market value of your home). For example, if your home was assessed at $1 million, and the $39 tax rate was approved by voters, you would add an additional $390 to your property tax bill every year.
The interesting sections of these tables are the “Total Proceeds” and “Total Debt Service” columns. “Total Proceeds” describes how much money will actually be available for construction projects. “Total Debt Service” describes how much we as voters will end up actually paying, including interest payments.
You’ll see that for a given tax rate (like $39), as you move from a 15 to 20 to 25 year term, the total proceeds increase. This makes sense because everyone in our district will be paying that extra amount on their tax bill for longer. You'll also see that as you increase the term length, the total debt service will increase by an increasing amount, which is reflected in the adjacent column called “Repayment Ratio.” So for the 15 year term, voters will end up paying 31% more in interest payments than the money the district receives for projects. For the 25 year term, those interest payments are 81%.
Comparing the “Bond Options” document to the “Project Tiers” document, you’ll notice that only a few of the combinations of term length and tax rate result in a value of total proceeds that meets the minimum requirement of $380,580,008 as determined for Tier 1 projects.
However, even the total cost for Tier 3 projects was not inclusive of everything the district really needs. The board briefly discussed the facilities master plan, a comprehensive list of projects that eventually need attention. The current total cost estimate for the full facilities master plan is over one BILLION dollars.
Advantages and Disadvantages
Tax Rate: The obvious advantage of increasing the tax rate is that more money is available for construction and repair projects. The disadvantage is that it will add a larger tax to everyone’s property tax bill, which can be politically dangerous. For reference, the bond that failed to pass in 2020 had a $39 tax rate.
Term Length: The advantage of a longer term length is that for the same annual tax rate, more money is available for construction and repair projects. The disadvantage of a longer term length is that more of the total money that people pay will go toward interest payments rather than funding school facility needs. One board member even described this as “government waste” (although another board member disagreed with that description).
Transparency or Deception?
Two experts were there to answer questions from the board: John Isom of Isom Advisors who conducted the financial analysis and voter polling, and Jesse Miller of DLR who prepared the cost estimates for construction and repair projects. Both were experts in their respective fields, but two interactions stood out that were troubling.
In the first, board members were asking for clarification as to what specific utilities were covered in the Tier 1 replacement of site utilities (i.e. HVAC, plumbing, sewer, etc). Jesse Miller replied that “you want to purposely be a little bit vague” when answering questions from voters.
The second wasn’t one specific interaction, but rather occurred during the entire conversation. Any time the question was raised about whether the board should select a 15, 20, or 25 year term length, instead of giving an objective answer covering both sides of the decision, John Isom guided them back to the 25 year term length. It happened multiple times during the meeting.
Who said what?
Board Member Sara Deen compared this decision to her time as a dentist, saying that the needs of the patient are more important than the cost. Board Member Julie Hamill was concerned about attaining and maintaining the trust of the district voters because, as she argued, even if this bond passes, we may eventually need to go back for another bond to meet the full needs of the district. Both Secretary Linda Reid and Vice President Linda Kurt noted that several people will likely sell their house and leave the district during the next 25 years so they argued that we might as well go with the 25 year term length. Board President Ami Gandhi mainly tried to get board consensus and was hesitant to repeat the same $39 from the previous failed bond. Everyone agreed that having two separate bond measures on the ballot was a not the right choice.
If I had been on the board…
First off, it is frustrating that the State of California has left us no choice but to try again for a bond, even while the State Constitution mandates that it “provide for a system of common schools by which a free school shall be kept up and supported in each district.” Regardless, here we are, and that is a different fight for another day.
A few weeks ago I went on a tour of our school facilities and they truly are in dire shape. Something needs to be done—soon. The question about what tax rate and what term length really comes down to one question in my mind: which one is most likely to be approved by the voters in our district? As I said in my comments to the board, the district has a credibility problem from the last bond that failed in 2020. If we fail to pass a bond again, not only will our schools and students suffer in the short term, but we will have a long term problem too: a chronic inability to raise money for our schools.
So for me, the choice is clear: I would select the lowest tax rate and the shortest term length. It would show the people in our district that we heard their concerns and we take seriously our responsibility to be good stewards of the money they entrust us with. It gives us an opportunity to show that we are worthy of their trust while imposing the smallest tax burden option presented. Yes, I realize that the total proceeds would be less than the Tier 1 project requirements, but so is zero dollars, which is what we would receive if the bond measure fails again.
Too Long; Didn’t Read—What was the end result?
The board was convinced to go with the 25 year term length to maximize total proceeds, knowing that it also came with a large total debt service. They backed away from the previously failed tax rate and went with a slightly decreased tax rate of $35. While this decision is not binding yet, it guides the rest of the discussions that will happen next month.
