McGeorge School of Law

Proposition 55

Proposition 55:
The Kindergarten-University Public Education Facilities Bond Act of 2004

By Dean Okimoto
JD, McGeorge School of Law, University of the Pacific
to be conferred December 2004
B.A., Mass Communications, University of California at Berkeley, 1999

Copyright © 2004 by University of the McGeorge School of Law

Table of Contents

I. Executive Summary
II. The Law
III. Drafting Issues
IV. Constitutional Issues
V. Public Policy Considerations
VI. Conclusion

I. Executive Summary

The Kindergarten-University Public Education Facilities Bond Act of 2004 is the "second half" of the two-part statewide bond package, in a continued response to build new classrooms over the next few years to relieve overcrowding, accommodate student enrollment growth, and to repair older schools. California Teachers Association, California Educator, Bond Act Could Provide Relief From Overcrowding. The California Senate Rules Committee's analysis of Assembly Bill 16 (Hertzberg) provided that over the next four years, there will be a need for $21.1 billion in state bonds for school facilities to meet increasing enrollment demand and modernization needs. Cal. Sen. Rules. Comm., Analysis of AB 16, at 7 (April 3, 2002). Additionally, over the next four years, it is projected that $9 billion will be required for facility needs of the University of California, California State University, and the California Community Colleges. Id.

Proposition 55, the Kindergarten-University Public Education Facilities Bond Act of 2004, would provide aid to school districts, county superintendents of schools, county boards of education, and higher public education institutions to modernize educational facilities. Cal. Assembly 16, 2001-2002 Reg. Sess. 2 (April 29, 2002). Proposition 55, with voter approval, would authorize the sale and issuance of state general obligation bonds in an amount not to exceed $12.3 billion. Id.

Proposition 55 follows the passage of Proposition 47 in 2002, the Kindergarten-University Public Education Facilities Bond Act, which authorized $13.05 billion in state general obligation bonds to modernize educational facilities. Id. Proposition 47 was enacted to provide funding necessary for education facilities to relieve overcrowding and to repair older schools. Cal. Sec. of State, Ballot Pamph., Gen. Election, Prop.47, Kindergarten-University Public Education Facilities Bond Act of 2002, Ballot Measure Summary 11 (November 5, 2002). Funds from Proposition 47 were also used to upgrade and build new classrooms in California Community Colleges, the California State University system, and the many University of California campuses. Id.

According to the California Senate Rules Committee, AB 16 authorized two statewide general obligation bond elections; one in 2002 (Proposition 47 was passed by voters on November 5, 2002), and another in 2004, in the total amounts of $13.05 billion and $12.3 billion, respectively. Cal. Sen. Rules. Comm., Analysis of AB 16, at 2. By early 2004, virtually all of Proposition 47's funds will be committed to thousands of overdue school construction and repair projects across the state. Californians for Accountability and Better Schools, Support the 2004 Statewide School Bond.

The goals of Proposition 55 are generally the same as those of Proposition 47. The primary objectives are to maintain and improve the quality of education in California by allowing school districts and higher public educational institutions to modernize old buildings and construct new facilities to relieve overcrowded classrooms. Telephone Interview with Paul Mitchell, Chief of Staff for California Assemblymember Nicole M. Parra (October 31, 2003) (notes on file with the McGeorge School of Law, University of the Pacific, Capital Center for Government Law and Policy).

Passage of Proposition 55 would secure funds to ensure that new schools and classrooms are built to relieve overcrowding and accommodate new enrollments expected over the next few years. Californians for Accountability and Better Schools . Further, Proposition 55 is set to strike a fair balance between the need to begin work on overdue school construction and repair projects, and the need to set aside funds for projects in densely populated communities. Telephone Interview with Paul Mitchell (notes on file with the McGeorge School of Law, University of the Pacific, Capital Center for Government Law and Policy).

Of the $12.3 billion, $10 billion of the general obligation bonds for K-12 education facilities would be divided as follows:

. $5.26 billion for new school construction related to growth; . $2.25 billion for modernization of older schools;
. $2.44 billion for Critically Overcrowded Schools; and
. $50 million for joint-use facilities.

Cal. Sen. Rules. Comm., Analysis of AB 16, at 3-4.

In addition, $2.3 billion would be for higher education facilities as follows:

. $690 million for the University of California;
. $690 million for the California State University; and
. $920 million for the California Community Colleges. Id.

II. The Law

A. Existing Law

1. Background

The $12.3 billion Kindergarten-University Public Education Facilities Bond Act of 2004 is one of a two-part statewide bond package that would be utilized to relieve overcrowding, accommodate student enrollment growth, and to repair older schools. California Teachers Association. The majority of California's primary and secondary school facilities are over 25 years old. Californians for Accountability and Better Schools, Why California Kids Need the Bond, (accessed November 12, 2003). California's public colleges and universities are also badly in need of repair to meet today's safety and earthquake standards. Id. California schools are also in need of modernization to provide for today's computer and communications technology. Id.

Under current law, Proposition 47 of 2002, the "first half" of the Kindergarten-University Public Education Facilities Bond Act in a two-part statewide bond package, allowed the State of California to issue general obligation bonds in order to repair, upgrade, and build new schools. Californians for Accountability and Better Schools.

In November 1998, the California voters approved Proposition 1A, which authorized a total of $9.2 billion in state General Obligation bonds for educational facilities. Cal. Sen. Rules. Comm., Analysis of AB 16, at 2. The amount of $6.7 billion was for K-12 facilities, and the remaining $2.5 billion was for higher education facilities. Id. The only California proposition that failed to provide General Obligation bonds for K-12 school construction was Proposition 1B in June 1994, which failed by 0.4 percent of the vote. Id. at 7.

2. Proposition 47

Prior to the passage of Proposition 47, the Kindergarten-University Public Education Facilities Bond Act of 2002, four years had passed since the issuance of the last bond providing funding for educational facilities. Cal. Sen. Rules. Comm., Analysis of AB 16, at 2. In November 2002, voters approved Proposition 47, which passed with a 59.1% vote in favor of the measure. California Secretary of State, Vote 2002, State Ballot Measures (accessed November 2, 2003). Proposition 47 is the largest school construction bond measure in the history of California. California Division of the State Architect, Proposition 47 School Construction Bond Project Forecast <http://www.dsa.dgs.ca.gov/forecast.htm> (accessed September 18, 2003). The bond provided $13.05 billion to fund necessary education facilities to relieve overcrowding, repair older schools, and build new classrooms to provide adequate higher education facilities to accommodate growing student enrollment. Ballot Pamph., 11 (November 5, 2002).

Of the $13.05 billion in state general obligation bonds for education facilities, $11.4 billion was designated to K-12 educational facilities. Cal. Sen. Rules. Comm., Analysis of AB 16, at 2. From this $11.4 billion, $4.8 billion went towards new construction and modernization projects. Id. at 3. Further, $3.45 of the $11.4 billion went towards new school construction related to growth. Id. Of this $3.45 billion, $100 million was set for charter schools. Id. Moreover, of the $11.4 billion, $1.4 billion was allocated for modernization of older schools. Id. In addition, $1.7 of the $11.4 billion was allocated for Critically Overcrowded Schools, and $50 million for joint-use projects to construct facilities on K-12 school sites. Id. The remaining $1.65 billion of the $13.05 billion went towards higher education facilities; $408.2 million for the University of California, $495.9 million for the California State University, and $745.9 million for the California Community Colleges. Id.

B. The Effects of Proposition 55

Assembly Bill 16 (Hertzberg) authorized Proposition 55 to be submitted to the voters at the March 2, 2004, direct primary election. Cal. Assembly 16, 2001-2002 Reg. Sess. 2. If the voters at the March 2, 2004, direct primary election, do not approve Proposition 55, then a second Kindergarten-University Public Education Facilities Bond Act of 2004 will be submitted to the voters at the November 2, 2004, statewide general election. Id. Thus, the Kindergarten-University Public Education Facilities Bond Act of 2004 will get two bites at the apple. Interview with Christopher C. Carlisle, Principal Consultant for Assemblymember Nicole M. Parra (September 9, 2003) (notes on file with the McGeorge School of Law, University of the Pacific, Capital Center for Government Law and Policy). Voter approval of Proposition 55 would result in general obligation bonds being issued in the total amount of $12.3 billion. Cal. Sen. Rules. Comm., Analysis of AB 16, at 3. Of the $12.3 billion, $10 billion would be designated for K-12 education facilities. Id. Of the $10 billion, $5.26 billion would be allocated for new school construction related to growth. Id. at 4. Of this amount, $300 million is designated for charter schools, subject to subsequent legislation. Id. Further, $2.25 billion would be allocated for modernization of older schools. Id.

Similar to Proposition 47, Proposition 55 requires the state modernization grants be matched by the school districts on a 60/40 state/local basis for projects filed after March 15, 2002. Id. at 5. The previous match was 80/20 state/local. Id. In addition, $2.44 of the $10 billion would go for Critically Overcrowded Schools. Id. at 4. According to AB 16, Critically Overcrowded Schools are schools that have a high number of students per acre. Cal. Assembly 16, 2001-2002 Reg. Sess. 21. Specifically, AB 16 defines Critically Overcrowded Schools in grades K-6 as schools that have pupil population density greater than 115 pupils per acre, or in grades 7-12 with greater than 90 pupils per acre. Id.

Moreover, $50 million of the $10 billion would go to joint-use facilities. Cal. Sen. Rules. Comm., Analysis of AB 16, at 4. The joint-use project is for a kindergarten to grade 12/higher education collaborative effort to provide teacher education or improve academic achievement. Cal. Assembly 16, 2001-2002 Reg. Sess. 18. The joint-use project will increase the size or extra costs associated with the joint use of multipurpose rooms, libraries, gymnasiums, and childcare facilities. Id. The joint use partners may consist of the community colleges, universities, or other governmental facilities. Id.

The remaining $2.3 of the $12.3 billion would go towards higher education facilities; $690 million for the University of California, $690 million for the California State University, and $920 million for the California Community Colleges. Cal. Sen. Rules. Comm., Analysis of AB 16, at 4.

Proposition 55 allows the State Treasurer to sell $12.3 billion of general obligation bonds as authorized by the State School Building Finance Committee at any time necessary to service expenditures required by apportionments. Cal. Assembly 16, 2001-2002 Reg. Sess. 40. Successive issues of bonds may be authorized and sold to fund those apportionments progressively; it is not necessary for all of the authorized bonds to be sold at one time. Id. The proceeds from the sale of bonds, issued and sold in accordance to Proposition 55, would be deposited in the 2004 State School Facilities Fund, and would be allocated by the State Allocation Board. Id. Proposition 55 provides that all monetary funds deposited in the 2004 State School Facilities Fund, that is derived from premium and accrued interest in bonds sold, shall be reserved in the fund and be available for transfer to the General Fund as a credit to expenditures for bond interest. Id. at 41.

General obligation bonds are supported by the state; in other words, the state is obligated to pay the principal and interest costs on these bonds. Ballot Pamph., 10 (November 5, 2002). General Fund revenues are to be used to pay for these costs. Id. These revenues would be created from state income and sales taxes. Id. The proceeds of the bonds issued and sold are to be deposited in the 2004 State School Facilities Fund, and allocated by the State Allocation Board. Cal. Assembly 16, 2001-2002 Reg. Sess. 40. The bonds sold to investors would be repaid with interest earned from the California State General Fund. Telephone Interview with Paul Mitchell (notes on file with the McGeorge School of Law, University of the Pacific, Capital Center for Government Law and Policy). General Fund debt service costs vary depending on the rate at which the bonds are sold, because many of these bonds may not be sold for several years. Cal. Sen. Rules. Comm., Analysis of AB 16, at 8.

III. Drafting Issues

At first glance, Proposition 55 clearly states what it intends to carry out. In short, Proposition 55 would continue to supply the much needed funds to school districts, county superintendents of schools, county boards of education, and higher public educational institutions to modernize educational facilities. Cal. Assembly 16, 2001-2002 Reg. Sess. 41. However, there exists ambiguous terminology in the text of Proposition 55, thus making it difficult to comprehend the full effects of Proposition 55, despite its clear intentions.

As indicated above, Proposition 55 provides that of the $10 billion allocated for K-12 education facilities, $5.26 billion would be distributed to new school construction related to growth. Id. Of this $5.26 billion, $300 million is for charter schools "subject to subsequent legislation" enacted after the effective date of Proposition 55. Id. One concern regarding ambiguous language is what the "subsequent legislation" entails. A plain reading of the text gives the reader no idea of what "subsequent legislation" includes. However, it is common for "trailer bills," which is subsequent legislation, to be enacted after the initial legislation (i.e.: AB 16) to clarify its technical points. Telephone Interview with Paul Mitchell (November 3, 2003) (notes on file with the McGeorge School of Law, University of the Pacific, Capital Center for Government Law and Policy). Thus, there is little likelihood that Proposition 55 will be challenged on the ground that it contains this ambiguous phrase.

Another ambiguous term of Proposition 55 is written in the text itself, because it states that this bill will "enact the Kindergarten-University Public Education Facilities Bond Act of 2004, to become operative only if approved by the voters at the 2004 direct primary election." Cal. Assembly 16, 2001-2002 Reg. Sess. 2. However, the Kindergarten-University Public Education Facilities Bond Act of 2002 stated that this bill would "become operative only if approved by the voters at the November 5, 2002, statewide general election." Id. Furthermore, as indicated above, if the first 2004 bond act (i.e.: Proposition 55) is not approved by the voters, then this bill will further "enact a second Kindergarten-University Public Education Facilities Bonds Act of 2004, to be submitted to the voters at the November 2, 2004, statewide general election." Id.

It is unclear why the bill specifically states the dates of the two statewide general elections, but not the date of the 2004 direct primary election. A plain reading of this text gives the reader no idea as to when the 2004 direct primary election will be held. However, because it is possible the California Legislature was going to move the date of the 2004 direct primary to the end of July, the Legislature did not want the wrong date written into the bill, thus causing the bill not to make the ballot. Telephone Interview with Paul Mitchell (October 31, 2003) (notes on file with the McGeorge School of Law, University of the Pacific, Capital Center for Government Law and Policy). Therefore, it is unlikely that Proposition 55 will be challenged on this ambiguous phrase either.

Lastly, the text of Proposition 55 provides that $2.44 billion will be allocated to Critically Overcrowded Schools. Cal. Assembly 16, 2001-2002 Reg. Sess. 41. However, the text of Proposition 55 does not encourage immediate school construction. William J. "Pete" Knight, State Senator, Guest Commentary, UCLA Today, Two Sides on Proposition 47, Voters Face Largest School Bond in History, (accessed September 7, 2003). Thus, the Critically Overcrowded School districts can reserve bond money by simply stating an "intent" to build a school in a general location. Id. Therefore, Proposition 55 will allow Critically Overcrowded school districts to tie up bond funds while other sites that are ready-to-build go unfunded. Id.

Furthermore, the distribution of funds allocated from Proposition 55 is ambiguous. Los Angeles Unified School District (LAUSD) would get approximately 24% of the new construction funds, even though the districts accounts for only 12% of the state's student population. Id. Thus, LAUSD will have the ability to lock up Critically Overcrowded School funds by stating its intent to build a school, then turn around and apply for non-Critically Overcrowded School funds that other districts have to compete for. Id. LAUSD should not be able to double-dip; there should be a wall between the Critically Overcrowded School and non-Critically Overcrowded School money. Id.

Although Proposition 55 does not expressly state these facts, it is unlikely that it will be challenged on its omission. Instead, opponents will raise it as a public policy consideration to the voters before the March 2, 2004, direct primary election. This issue will be discussed further below in the public policy discussion.

IV. Constitutional Issues

A. Federal Constitution
Proposition 55 does not raise any federal constitutional issues.

B. State Constitution

On the face of Proposition 55, there does not appear to be any state constitutional issues expressly raised. However, there are two interesting issues that will be discussed.

1. Public Finance

California Constitution Article XVI, Section 1.5 allows the Legislature to create and establish a "General Obligation Bond Proceeds Fund" in the State Treasury, and provide for the funds of the sale of the general obligation bonds to be paid into or transferred to the "General Obligation Bond Proceeds Fund." Cal. Const. art. XVI, § 1.5. A bond is a long-term, interest bearing debt instrument that the government issues to provide for a specific financial need. Black's Law Dictionary 69 (Bryan A. Garner ed., pocket ed., West 1996). General obligation bonds are supported by the state; in other words, the state is obligated to pay the principal and interest costs on these bonds. Ballot Pamph., 10 (November 5, 2002). General Fund revenues are to be used to pay for these costs. Id. These revenues would be created from state income and sales taxes. Id.

In addition, Section 1.5 of Article 16 of the California Constitution states that accounts shall be maintained in the "General Obligation Bond Proceeds Fund" of all moneys deposited in the State Treasury to the credit of that fund, and proceeds of each bond issue shall be maintained as a separate and distinct account and be paid out only in accordance with the law authorizing the issuance of the particular bonds from which the proceeds were obtained. Cal. Const. art. XVI, § 1.5. Further, Section 2 of Article 16 of the California Constitution states that each measure providing for the preparation, issuance, and sale of bonds of the State of California shall be submitted to the electors in the form of a bond act or statute. Cal. Const. art. XVI, § 2.

Proposition 55 appears to adhere to the California Constitution. Proposition 55 provides that the bonds in the total amount of $12.3 billion may be issued and sold to provide a fund for carrying out the purposes of Proposition 55, and to reimburse the General Obligation Bond Expense Revolving Fund. Cal. Assembly 16, 2001-2002 Reg. Sess. 41. Proposition 55 adheres to Section 1.5 of Article XVI of the California Constitution, because in creating AB 16 the Legislature, which authorized Proposition 55 to be submitted to the voters for the March 2, 2004, direct primary election, created and established a General Obligation Bond Proceeds Fund in the form of a General Obligation Bond Expense Revolving Fund for the maintenance of the proceeds from the issuances of the bonds.

Finally, Proposition 55 adheres to Section 2 of Article XVI of the California Constitution, because Proposition 55, which provides for the preparation, issuance, and sale of bonds in California, will be submitted to the electors in the form of a bond act. Id. at 2.

2. Single Subject Rule

California Constitution Article II, Section 8(d) states that "an initiative measure embracing more than one subject may not be submitted to the electors or have any effect." Cal. Const. art. II, § 8(d) (West 2002). The California Supreme Court has recognized a standard requiring separate parts of an initiative to be reasonably germane to each other.

Brosnahan v. Brown, 32 Cal. 3d 236, 241 (1982). In Senate v. Jones, 21 Cal. 4th 1142 (1999), the California Supreme Court held that as long as provisions of an initiative are reasonably related to a common theme or purpose, the measure does not violate the single subject rule. The issue in that case was whether the proposition violated the single-subject requirement since its provisions were not reasonably germane to a common theme or purpose, because the initiative embraced at least two separate and unrelated subjects. Id. at 1143.

The provisions of Proposition 55 do not appear to violate the single subject rule. The goals of Proposition 55, like Proposition 47, are to maintain and improve the quality of education in California by allowing school districts and higher public educational institutions to modernize old buildings and construct new facilities to relieve the overcrowded classrooms. Telephone Interview with Paul Mitchell (notes on file with the McGeorge School of Law, University of the Pacific, Capital Center for Government Law and Policy). However, the text of Proposition 55 states that if the voters at the November 2002 election did not approve Proposition 46, the Housing and Emergency Shelter Trust Fund Act of 2002, then $25 million of the Bond Act proceeds shall be available for the purposes of Sections 51451.5, 51453, and 51455 of the Health and Safety Code. Cal. Assembly 16, 2001-2002 Reg. Sess. 41. In other words, $25 million will become available for reimbursements to homebuyers for fees paid to school districts to fund new facilities if voters did not approve of Proposition 46 in the November 2002 election.

Since Proposition 46 passed in the November 2002 election by a 57.6% vote in favor of this measure, this issue is moot. California Secretary of the State . Therefore, there is no violation of the single subject rule standing before Proposition 55.

V. Public Policy Considerations

A. Proponents

Proponents of Proposition 55 view it as a wise and urgently needed investment in students and schools, as well as the future of California. Robert M. Hertzberg and Bill Leonard, Guest Commentary, Contra Costa Times, Bond's Goal To Make Schools Superior Again (April 28, 2002). Since California schools are aging, many educational facilities are in need of basic repairs and routine maintenance. Id. Proponents include the California State PTA, California Teachers Association, California Business Roundtable, California Taxpayers Association, and Coalition for Adequate School Housing. Californians for Accountability and Better Schools .

Proponents of Proposition 55 contend that like Proposition 47, Proposition 55 will continue to build new schools and repair old ones without raising taxes. Id. Proposition 55 will be used to build new schools, reduce class size, repair and upgrade older classrooms, construct laboratories and other facilities, wire for technology, and help make our schools earthquake safe. Id. Money cannot be used for any other purpose. Id.

California classrooms are already the most overcrowded in the nation. Id. Without Proposition 55, there would not be enough classrooms to meet this demand. Id. As a result, children in over-crowded classrooms cannot learn to read at the same level as children in smaller classes. Id. More importantly, elementary enrollments are expected to grow through 2006, which means that high school populations will continue to increase. Id. Thus, Proposition 55 will reduce classroom overcrowding so teachers can spend more quality time teaching in smaller classes where children learn more efficiently. Id.

Since the passage of Proposition 47 in 2002, the authorized funds have been put to their intended use. However, by early 2004, all of the funds authorized under Proposition 47 will be committed to thousands of overdue school construction and repair projects across the state. Id. Passage of Proposition 55 would be the "second half" of the two-part legislation in which voters overwhelmingly passed the first half, Proposition 47, the existing educational facilities bond act. Id.

In light of the public policy view towards general obligation bonds, the proponents will contend that California needs bond financing, because this allows educational facilities that will be used for many years, to be built earlier than otherwise possible based on normal budgeting allotment. Ballot Pamph., 36 (November 5, 2002). Absent the sale of the bonds, the large dollar costs for these facilities can be difficult to finance in one payment. Id. Additionally, the use of bonds can enable the State of California to use available tax dollars for other purposes, such as medical benefits and the safety and upkeep of the roads and highways. Id.

Furthermore, another advantage to selling general obligation bonds is the associated low interest costs. General Obligation Bonds. Since general obligation bonds are legally backed by the full faith and credit of the issuer (here, the State of California), the bonds are considered low risk for the investor. Id. Consequently, general obligation bonds usually sell at the lowest rates of interest. Id. Also, general obligation bond issues are often not as complex as revenue bonds, so administrative costs may be reduced in preparing the issue. Id. Lastly, another advantage to general obligation bonds is derived from the necessity of receiving voter approval through a bond referendum. Id. Voter passage of a bond referendum confirms popular support for the project being financed. Id.

On the fiscal side, the direct costs of bond financing for the State of California depends mainly on the interest rates of the bonds and the time period over which the bonds are repaid. Id. Most general obligation bonds currently being issued are repaid over a 30-year period. Id. Assuming the current tax-exempt interest rates for such bond (about 5.25 percent), the cost of paying the bond back over 30 years is about $2 for each dollar borrowed; that is, $1 for the dollar borrowed and $1 for interest. Id. However, this cost is spread over the entire 30-year period, so actually the cost after adjusting for inflation is about $1.25 for each dollar borrowed. Id.

B. Opponents

Opponents argue that Proposition 47 was $13.05 billion and by far the largest educational bond in the history of California. California Division of the State Architect http://www.dsa.dgs.ca.gov/forecast.htm. The combined total of Proposition 55, along with the passage of Proposition 47 of 2002, will be a $25.35 billion bond seeking voter approval in March 2004. Cal. Assembly 16, 2001-2002 Reg. Sess. 2.

Opponents, like those who opposed Proposition 47, will most likely include the California Taxpayer Coalition, which consists of about 30 taxpayer organizations from various parts of California. This group opposed Proposition 47, because California has too much debt on the books. Ballot Pamph., 12 (November 5, 2002). Similar arguments against Proposition 55 will likely be made.

Furthermore, opponents claim that there exists an inequity in the distribution of the money to school districts. William J. "Pete" Knight . For example, Los Angeles Unified School District (LAUSD) houses about 12 percent of the state's students, but qualify for about 24 percent of the $2.44 billion allocated for overcrowded schools. Id. Opponents argue that LAUSD will have an unfair ability to lock up Critically Overcrowded Schools allocated money just by stating an intent to build a school, then turn around and apply for the other allocated (non-Critically Overcrowded Schools) amounts of money that the other districts have to compete for. Id. Under Proposition 1A, in 1998, money distributed for educational facilities was granted on a first come, first serve allocation. Telephone Interview with Paul Mitchell (notes on file with the McGeorge School of Law, University of the Pacific, Capital Center for Government Law and Policy). Thus, LAUSD got "shafted" for funds. Id. Therefore, it may be fair to say that the Kindergarten-University Public Education Facilities Bond Acts were drafted in a way for LAUSD to get their fair share of the educational facilities funds, as a make up for LAUSD getting little funds under Proposition 1A. Id.

In regards to the public policy view towards general obligation bonds having a fiscal effect, the opponents may argue that the State of California should live within its means, and not incur additional debt. Douglas Kane, Decide Merits of a Project First - Then the Financing (accessed November 18, 2003). Moreover, interest payments on bonds almost double the total cost of the project. Id. A further argument can be made that since bond financing is easy to gain voter approval, it encourages projects that would not be undertaken if finances had to be secured through current taxes (such as here, Proposition 55). Id.

Furthermore, although general obligation bonds are typically the cheapest type of

debt available to the State of California, there are additional drawbacks to using general obligation debt in certain situations. General Obligation Bonds. For example, the need for a voter referendum stalls the financing of the project. Id. Also, if the voters do not approve the sale of the general obligation bonds, then officials must find an alternative way to finance the project, or cancel the project outright. Id. Additionally, the ability to issue general obligation bonds may be restricted by legal debt limits for entities with such limits. Id. This may lead to either a project, such as a school not being built, or money being taken away from another project, such as Medicare.

Lastly, when general obligation bonds are paid from general tax revenues, the bonds do not necessarily equate the taxpayers benefit with the taxpayer cost of the project. Id. For example, most senior citizens and working professionals have either reached their educational fulfillment at their age, or have completed their educational training. Therefore, why should these folks, as part of the taxpaying public, be obligated to help fund a project that serves no benefit to them?

However, the proponents can counter this argument, because it can be said that all taxpayers benefit from Proposition 55, since education helps aid children to contribute in society, get better jobs, and provide for their families. Id. Therefore, the burden for repaying the bonds for such projects is rightly distributed among all taxpayers. Id.

VI. Conclusion

On March 2, 2004, voters will determine whether to enact Proposition 55, the "second half" of the Kindergarten-University Public Education Facilities Bond Act. Proposition 55 would continue to provide aid to school districts, county superintendents of schools, county boards of education, and higher public educational institutions to modernize educational facilities. Cal. Assembly 16, 2001-2002 Reg. Sess. 2. It would authorize the sale and issuance of state general obligation bonds in an amount not to exceed $12.3 billion. Id.

Public policy considerations warrant the attention of the voters, such as the contention that there is an inequity of the distribution of the money, resulting in the LAUSD getting about 24 percent of the $2.44 billion allocated for Critically Overcrowded Schools when they represent only about 12 percent of the state's student population. William J. "Pete" Knight. Further, LAUSD may have an unfair ability to lock up Critically Overcrowded School money just by stating an intent to build a school, then turn around and apply for the other non-Critically Overcrowded School money that other districts have to compete for. Id. However, on the other hand, if voters approve Proposition 55 in March, this bond act will continue California's efforts to address the needs of building new classrooms to relieve overcrowding, and repair and upgrade older schools. Californians for Accountability and Better Schools .

Finally, if California voters do not approve Proposition 55 this upcoming March, the voters will have another chance at approving this school bond again in November of 2004. If voters successfully approve Proposition 55, the educational facilities all across the State of California will continue to be shored up immediately, and will improve the quality of education for the future leaders of tomorrow.