Editorial: Ballot plan shows California school construction inequities

Editorial: Ballot plan shows California school construction inequities

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For Tuesday’s election, only one school district in Santa Clara County has proposed a bond measure to raise money for constructing and rehabilitating education facilities.

Sunnyvale School District voters should approve Measure C. But they and all Californians should recognize the teachable moment the measure presents about inequities in how we fund school construction.

The lesson starts with understanding that issuing bonds is a form of borrowing, much like a mortgage. The money must be paid back.

So, school bond measures are also property tax measures, with the money raised used to pay off the debt. The total tax needed depends in part on the amount of money borrowed, interest rate for the bonds and duration of the payback period.

The responsibility for paying off the bonds is divided between property owners based on the assessed valuation of their properties. Those properties include homes and commercial properties.

The moral of the story: If a school district has a lot of high-valued commercial properties within its boundaries — like, say, those belonging to major technology companies — the impact on homeowners is less.

Sunnyvale is one of those school districts blessed with key technology companies. And that’s how the district can propose to issue $214 million more in bonds and still have relatively low homeowner tax rates for paying off the loans.

Here are the numbers for Measure C: The $214 million in new borrowing would be added to three prior voter-approved bond measures. Combined, the four measures would have about $900 million in principal and interest to pay off by about 2059.

Without Measure C, property owners next year would pay about $33 for every $100,000 of assessed value. Measure C would add another $15 per $100,000 of assessed value.

If Measure C passes, the owners of a single-family home in the district with an average assessed valuation of $864,000 would see their annual supplemental tax bill for the district’s school bonds increase from about $285 to $415.

That’s very low for so much bond debt in a small district, but it’s possible in large part because of the values of commercial property in the district. Most school districts in the Bay Area would be envious.

To be sure, because the Sunnyvale district only covers students for pre-kindergarten and K-8, property owners must also pay taxes on bonds for the Fremont Union High School District, which also includes much of Cupertino.

That district also benefits from being able to spread out bond costs over its lucrative commercial tax base. Between Sunnyvale and Cupertino, the Fremont Union district has properties owned by companies such as Google, Apple, Lockheed, LinkedIn and Applied Materials.

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The result is that if Measure C passes, the combined debt — principal and interest — for the two districts will be about $2.4 billion, for which individual property owners will be levied a combined annual tax of about $93 per $100,000 assessed valuation.

For comparison, Hayward, where commercial and residential property values are less, is proposing a bond measure that would result in about the same amount of total debt, but the tax rate would be about 75% more.

The other key factor to consider in evaluating Measure C is how the bond money would be spent. And there, Sunnyvale has a well-thought-out spending plan for upgrading and modernizing schools that’s spelled out in the district’s facilities master plan. They’ve broken down the allocations for each of nine different school sites.

The inequity between school districts in California is stark. Homeowners in the Sunnyvale district are lucky they don’t have to spend more on school bond taxes. Leaders of other districts wish they could so easily afford the same.