1998 Bond

 
 


We support the utilization of bond funding for school facility improvements.  Practicality indicates that there will be more desired projects than can possibly be funded.  For that reason, there should be  careful planning in advance as to how the funds will be allocated.  Changes to the plan, if needed as time goes on, should be clearly communicated.  Dollars budgeted should reflect expected increases in building costs in the year of planned construction.

Los Altos School DIstrict is about to go to the voters with a request for approximately $150 Million1  to fund capital improvements to district properties, and potentially to buy new property and build new buildings.  Based on the record in planning for the expenditure of its last bond which authorized $94.7 Million in borrowing, the district needs to improve planning for this upcoming bond.   We taxpayers are still paying off the costs of the previous bond (Measure H) ,and this will last for 10 more years, with a cost of $60 per $100,000 of assessed valuation each year.  More details about the projects undertaken by LASD from 2000 to 2008 are available in Measure H Projects and Permanent Versus Portable Space.  What eventually happened was that the district utilized several obscure and more expensive finance methods3 to borrow more funds than the $94.7 Million, spending a total of $116 Million.  At the same time, the refurbishments performed were not consistent from school to school.  We can strive to handle this better this time around.

As an example of the way the refurbishment standards increased from period to period during the spending of Measure H funds, consider the following chart.  This bar graph groups the projects done in the indicated time period, and indexes the cost according to construction price increases.  As you can see, consistently as time went on, more was spent per unit of permanent space being refurbished.  This is something which could have been avoided by better management of the bond spending.

By the time projects were done at Gardner Bullis, the cost per permanent square foot refurbished had doubled.  In the first 2 years when Egan, Blach and DIstrict Administration improvements were made, the cost per square foot normalized to constant year 2002 construction dollars (or 'indexed')  was $282.  When Gardner Bullis was done in 2008, that cost increased to $573, also indexed. See the numbers below the bar graph for the raw and indexed values.

                            Costs shown are indexed to US Average Construction Costs in 2002 

   Cost in Year Spent
  $ 274
  $ 320
  $ 426
  $ 489
  $ 841
 
   Cost Indexed to 2002
  $ 282
  $ 320
  $ 425
  $ 462
  $ 573
 


Example of Bond Fund Planning -- Palo Alto


The approach Palo Alto Unified has taken with its $378 Million bond authorized in June of 2008 has been transparent and comprehensive.  They had developed an allocation of spending within one year.  This plan anticipated projects which would be started at a later date, and provided a reasonable unallocated buffer for unanticipated developments.  See the first year report or the figures below.



Additionally, Palo Alto has provided yearly updates to the above plan.  Several informative web pages were created and you can see from this list.



1 Bond funds represent money borrowed from investors and paid back over 25 or more years as a line item on property tax bills to all the property within the district boundaries.  Much of the cost to the property owners comes from interest which is paid to the investors buying the bonds.  The district receives the full proceeds from each bond issued up front and can then spend it subject to certain requirements.  No money can be used to pay employee salaries, for example.  The LASD Board has not yet finalized the formulation of the proposed bond.

2 The district provided a general description of needs in its last bond request (see Measure H Ballot Language), but did not provide an upfront budget as to how the funds would be allocated across the various projects. 

3Source:  "Los Altos School District 2013 Tax and Revenue Anticipation Notes" bond prospectus Prospectus Excerpt pp. 24-25.