California School Facilities Funding

Facilities

Major Sources of Facility Funds
Obligations Under the Williams Settlement

For the most part, funding for the construction and repair of school facilities is separate from funding for operations. The bulk of capital costs are paid for through public bonds.

For many years, particularly through the 1990s, public schools in California faced a serious facilities crisis. The number of students was increasing, many schools were overcrowded, and an alarming number of buildings needed renovation and modernization. Californians responded to this need by passing both statewide and local general obligation (G.0.) bonds for facilities.

Major Sources of Facility Funds
School districts rely on state and local G.O. bonds to raise money to build and remodel school buildings and purchase long-term equipment. Some districts also generate funds by levying developer fees and forming facility districts.

General Obligation (G.O.) Bonds
California has a statewide school building program—the School Facilities Grant Program—supported by statewide bond measures. Statewide bond measures require a simple majority (50% plus one) to pass.

For more information about Proposition 39, see EdSource’s September 2000 voter guide on the proposition.
Download the PDF file.

Local school districts can also issue school construction bonds and levy property taxes to pay for them, provided they get voter approval. Prior to 2001, districts needed two-thirds approval to pass local G.O. bond measures, and more than 40% of local school bonds failed. But in November 2000 California voters passed Proposition 39, which allows school bonds to be approved with a 55% “super-majority” (with restrictions on the amount of the bond and greater accountability requirements). Since the passage of Proposition 39, districts have had the choice of whether to seek two-thirds or 55% approval. Local elections that rely on 55% approval have been more successful, with more than 80% passing.

See Current Facilities Funding

Developer Fees
School districts also have the authority to levy developer fees on residential and commercial construction or reconstruction, but statewide these fees generate significantly less money than bonds. The money may be used only for school facilities, including portable classrooms. These fees are charged both to developers of new properties and to property owners who remodel. They are based on the concept that new construction will lead to additional students. Individual school districts decide whether to levy the fees and at what rate up to the allowed maximum. Districts are required to substantiate the financial impact of the new development and show that they have used the revenues to address that impact.

The State Allocation Board adjusts the fees for inflation in even-numbered years. In 2006 and 2007, the maximum was set at 42 cents per square foot on commercial construction and $2.63 per square foot on residential construction.

Facility Districts
School districts are also able to tax just a portion of their districts—often new housing developments—by establishing a Mello-Roos Community Facility District or a School Facility Improvement District (SFID).

Under Mello-Roos, which requires two-thirds voter approval, property owners pay a special tax based on a formula. School districts have been able to establish Mello-Roos districts since 1983.

In 1998 school districts were first able to form SFIDs, which generate funds through general obligation bonds based on the value of the property. In response to Proposition 39, legislators passed a law in July 2001 that allowed the voter-approval threshold for SFIDs to be either two-thirds or 55% (with added accountability provisions). Since then, SFIDs have become much more common than Mello-Roos districts and represent almost all facility districts established today.

Maintenance Funding
The ongoing maintenance of facilities comes out of district operating funds in ways that are partially determined by state law. Districts are required, for example, to maintain a Routine Restricted Maintenance Fund that dedicates 3% of their general fund budget to this purpose. In addition, they can receive state funds for deferred maintenance projects as long as they provide matching local funds.

The routine cleaning and upkeep of facilities—custodial work, in other words—cannot be funded from the above sources. Instead, it comes out of regular district operating funds.

See Current Facilities Funding

Obligations Under the Williams Settlement
The Williams v. California lawsuit, originally filed in 2000, charged that the state had failed to give thousands of children the basic tools necessary for their education, including "inadequate, unsafe, and unhealthful facilities." The 2004 settlement included accountability measures, extra financial support, and other help for low-performing schools.

The state agreed to provide $800 million for critical repair of facilities in future years for the state’s lowest-performing schools. That includes 1,475 schools that were in the bottom three deciles of the state’s 2003 Base Academic Performance Index (API) rankings, according to the California Department of Education (CDE). Those schools serve more than one million students.

The settlement also requires all schools—no matter how they rank on the API—to post signs in every classroom that explain the standards for facilities. Any school that receives funding from the state’s school building program must also establish a facilities inspection system to ensure that schools are well maintained.

In addition, all schools must report the condition of their facilities in their School Accountability Report Cards (SARCs). Because of Williams, all districts must also have a uniform complaint process for complaints regarding unsafe or unhealthy facilities.

For more information, see the Williams section of the California Department of Education's (CDE) website.

See CDE website