In November, WCCUSD voters overwhelming passed a bond measure to complete the district-wide replacement or rehabilitation of all WCCUSD campuses, perhaps the most ambitious school; district capital improvement program in California. While the voter approval is water under the bridge, the District must jump one more hurdle, a waiver by the California Board of Education to issue bonds in an amount that exceeds an arbitrary proportion of the assessed value of property in the District. The Contra Costa Times’ staff columnist, Dan Borenstein, who has done a tremendous public service in keeping the unfunded pension obligations of local government in front of us, has editorialized against the waiver in the column copied below.
I disagree with Dan on this one. He cites a typical property tax payment of about $1.25 a day as being excessive for “poor and working-class residents” to invest in education of our children. In the new information based economy, education is the best investment we can make in our future, and investing in the places where that education take place can provide a clear advantage. See “18 Reasons Why Design Matters” and “Architecture Matters”.
Unlike pensions, which are paid for by taxpayers decades after the benefits have been accrued, the debt service on school bonds will be paid for by those generations that are directly benefitting for the educational experience they provide.
Read Borenstein’s editorial below, then read the response that follows by WCCUSD Board President Madeline Kronenberg and former Board President Charles Ramsey.
Tom Butt
Daniel Borenstein: Time to slow West Contra Costa's deceptive school construction program
By Dan Borenstein Staff columnist
Posted: 03/01/2013 05:00:00 PM PST
Updated: 03/01/2013 05:13:52 PM PST
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The West Contra Costa school district should slow its deceptive school construction program because it's pushing too much debt onto property owners and will soon exceed tax limits it promised voters.
From 1998 to 2012, the district obtained voter authorization for six bond programs, totaling $1.6 billion. As a result, in the first 10 years, West Contra Costa issued more bonds for school construction than any other K-12 district in the state except much-larger San Diego and Los Angeles.
Today, the district has $797 million of outstanding debt. The average homeowner in the district, with a house assessed at $215,000, will pay an extra $464 in property taxes this year to fund the district's annual bond payments. Owners of property with higher assessments will pay proportionately more.
Those taxes will increase more than 35 percent in the next four years if the district proceeds with current plans to issue additional bonds.
Despite the revenues from property owners, district officials have struggled to pay bondholders, in one case using funds from one bond program to make payments on another -- akin to borrowing from one credit card to pay off a second.
In another case, the district was so tapped out when it needed money in 2010 that it had to issue $2.5 million of bonds with back-end payments 25 years later of $34 million -- an astounding $13.50 for every dollar borrowed.
In their quest to rebuild or replace every school, district officials are moving too fast, behaving irresponsibly and overtaxing poor and working-class residents.
The district finds itself so deeply in debt that it must obtain California Board of Education approval to issue more. The district cannot legally have outstanding bonds worth more than 2.5 percent of the assessed value of property in the district without a state waiver.
The district has hit its limit -- again. The state board granted it waivers in 2002, 2009 and 2011. Indeed, no other California school district since 2000 has obtained waivers to issue as many bonds as West Contra Costa. No other school district has come close.
District officials counter that voters approved the borrowing. But that's largely because of the district's misleading campaigns.
Each time they went to the ballot, district officials presented that particular bond measure to voters as if it were the only one. They never mentioned the outstanding debt taxpayers already owed from prior measures.
School officials also claim they warned voters before the 2012 vote that they would need the state waiver. That's a fib. The ballot wording actually said just the opposite, that the district would stay "within legal rates and bonding capacity limits."
But buried on the last of 14 pages of ballot pamphlet material on the measure -- at the end of a paragraph that is, believe it or not, three pages long -- voters are told that "the District may seek a waiver from the State Board of Education of the applicable bonding limit requirements."
May seek? They knew last summer that they would need a waiver. That's why they buried that clause where no one would see it.
It's unlikely the state board will turn down the waiver request. While the district must apply, California law gives the board limited reasons to deny the request -- and none have to do with financial burden on local taxpayers.
District officials have another problem. They gave voters an estimated top tax rate for each ballot measure. For the 2002 and 2005 bond programs that limit was $60 per $100,000 of assessed value.
But that was based on unrealistic district assumptions about growth in property values that haven't panned out. Consequently, the district must charge higher tax rates than promised to raise funds needed to pay off already-issued bonds. Meanwhile, going forward, the district continues to use unrealistic assumptions.
It all adds up to too much debt, and too great a taxpayer burden. District officials need to start thinking about property owners who foot the bill. New schools are nice, but they must also be affordable.
Contact columnist and editorial writer Daniel Borenstein at 925-943-8248 ordborenstein@bayareanewsgroup.com
Response by Madeline Kronenberg and Charles Ramsey
First, and foremost, the board takes great pride in its bond program. We are humbled by the continual show of support for supporting bond measures for the kids for the past 15 years. We don't take this support for granted. We understand that our responsibilities must be as the fiscal stewards of this community's valued resources. We appreciate and recognize and are grateful to the voters who continually remind us that they want the best for these children.
Consequently, we feel compelled to respond to Dan Borenstein's recent article which makes unsubstantiated and erroneous statements. Borenstein has no evidence that voters' tax payments will increase in the next four years. Quite the contrary, our district has set aside over $12.5 million dollars to be certain that tax rates don't increase over the next four years. This was as a result of our hugely successful refunding in June 2012 - a refunding that enabled us to also lower tax rates for our Measure M bond measure, Measure D2002 bond Measure, Measure J Bond Measure and Measure D 2010 bond measure. It should be noted that Borenstein - in September 2011 - made the claim that our tax rates would rise and that has proven to be far from the truth. If he was wrong then, he is wrong now. As a matter of fact, voter tax rates that were authorized in 2012 actually were reduced to voters by over 15% - tax rates actually went down last year, rather than have an increase.
In 2009, the district used $1.5 Million from Measure J to stabilize tax rates for the Measure D 2002 bonds, because we wanted to keep our promise and not exceed statutory tax rates. This was accomplished. We were not borrowing from one credit card to another - we were using funds strategically from surplus funds from construction projects coming in lower than it was expected.
Dan Borenstein also mentions the use of capital appreciation bonds in 2010. What Dan leaves out is the rest of the story and this is why we believe he is engaged in deception and not us. The 2.5 million CAB was part of an overall transaction where we were taking advantage of the stimulus money from Barack Obama and we actually got a subsidy on $25 million worth of our bonds at 1-1/4%. The use of the CAB was to complete the overall transaction. If we had not done the CAB, we would have lost out on the subsidy and not been able to rebuild Ohlone Elementary. This transaction ultimately resulted in the best overall deal for the district with the lowest interest rate on a bond transaction in the school district’s history. The overall repayment is just 59 million Dollars on a 27 Million transaction, just a little over 2-1 in repayment. No worse than a home loan on a thirty year note.
Our journey on the debt limit waiver application has been transparent. Not only did we publish notice of our waiver application twice in the Contra Costa Times, but we have gotten 11 different public entities to support the waiver and had a full public meeting to discuss our support of the waiver. Moreover both Nancy Skinner and Loni Hancock have written letters in support of the debt limit waiver application.
Noticeably missing is any mention of the enormous amount of state matching money that we have garnered from the State from our bond program. To date, we have collected over 116 Million Dollars. This is money that is not assessed against the tax payer. Moreover, we have another 20 Million in the pipeline for Portola Middle School from the Seismic Safety fund. A fund that has been untapped by almost every other school district in the state.
We got bond finance for our own Leadership Charter school. A school that was recently highlighted in the West County Times. Due to the vigilance and doggedness of the school board in 2011, we had 21 Million Dollars financed of debt by the California Finance Agency that saved taxpayers millions of dollars of interest and allowed us to lower tax rates from 48 dollars for Measure D-2010 to 31 Dollars. We also completed the overall bond sale at 3.24 % on a 100 Million Dollar Bond Sale that will complete several schools currently under construction in the School District
Voters are not dumb. We constantly polled our voters and they repeatedly told us to continue to move ahead with the program. Our community is savvy and wise. They understand the grand bargain and are able to make sense of a ballot pamphlet. Any suggestion otherwise is an insult to our community. Borenstein needs to just accept the fact that the smart money is here in West Contra Costa. Voters and Homeowners know that other communities are behind the times and need to get with our excellent program.
As stated before ,We recently held a public meeting and discussed the bond program for over three hours at a televised meeting - we are the epitome of transparency - not deception. Borenstein has twisted the facts to match his predetermined adjectives:
- He calls our property value projections "aggressive" (when they are not); he describes us as "plagued with deception" and "hiding the costs" (because we followed a ballot procedure dictated by statute and precedent (and, I might add legal boilerplate) - and we (our attorneys) did not adopt a procedure that is his (Borenstein's) own invention -- embedding a list of all previously approved bond measures within our ballot statement).
- He characterizes our position as "so deeply in debt" that we must seek a waiver - without any mention of any extenuating, mitigating circumstances (which have impacted every program in the state). He is, of course, correct that no other school district has "come close" to asking for so many waivers - (no other school district has executed on a vision for all their "poor and working-class" families to support them with facilities that will allow them to achieve the economic growth we need).
- He continues that we conducted "misleading campaigns" (primarily because we did not follow his personal dictate regarding listing all bond measures referred to above) . Then, he delights in calling us "fibbers" - (this is based on the fact that we used boilerplate legal ballot language and did not prominently highlight a technical financial area - the need for a waiver of an arcane Ed Code provision - which is currently being used as another way to "redline" poor communities - making them have to "beg" the state to allow them to have the same opportunities that wealthy communities take for granted.)
The bottom line is that our community values our children and wants them to have only the best - they've proven it time and time again.
Madeline Kronenberg and Charles Ramsey
WCCUSD School Board President and Clerk
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