State of Support

State governments are intimately involved in paying for the operation of public school districts. On average, they account for about half of a local district's operating funds. But historically, most states have had a hands-off approach when it came to providing money to build and renovate school facilities.

But in recent years, states are getting more involved with school facilities — and that includes opening their purse strings. Many states have begun to channel money to districts to help them repair and replace school buildings that have aged and fallen into disrepair.

The change in attitude about capital funding was never more clear than one day this summer in Ohio, where state support for school construction funding was insignificant until about five years ago. On July 23, 2002, the state's School Facilities Commission committed more than $2.8 billion in state funds to school construction when it signed off on a massive building program encompassing Ohio's six largest school systems.

The districts — Cleveland, Columbus, Cincinnati, Toledo, Akron and Dayton — must come up with the other half of the $5.7 billion needed for the projects. The result will be 276 new schools and 186 renovated facilities.

Ohio is one of many states in which local districts are benefiting from their state's decision to take greater responsibility for capital improvements. The continued aging of school facilities, the inability of many local districts to generate enough funds for needed upgrades, and legal rulings that have directed states to assume a greater role in paying for facilities have resulted in building improvements that would have been far beyond the means of local districts a few years ago.

“Without this funding, it would be business as usual trying to keep up some very old buildings,” says Jim Beal, staff architect with the Akron district.

Local vs. state

Traditionally, most states considered school facilities a local issue. Even where districts received sizeable amounts of state aid to hire teachers and run their schools, it usually was left up to local school boards to find the funds for major capital projects such as school construction. The most common approach was holding an election to win approval for a bond issue.

“It was the old theory that a school building was a local thing,” says John Augenblick, an education-finance consultant based in Denver who has advised many school districts and states. “A state wouldn't want to pay for a building if it couldn't control how it was built and how it would be maintained.”

But because the money to build most schools came from property taxes, wealthier districts could more easily raise the substantial amount of funding needed to build and renovate school facilities.

Also, Augenblick notes, money for operations can be adjusted year-to-year depending on financial conditions, but a capital project like a school building represents a financial commitment that can't be altered as easily.

“Facilities are in kind of a time warp,” says Augenblick. “You may have to deal with decisions that were made 20 years ago — where a school was built, how it was built.”

In the 1960s and 1970s, as financial inequities among districts became more pronounced and intolerable, many people began suing states to bring about a fairer system of allocating funds. But most of those lawsuits dealt with operating funds, not money for facilities.

“It wasn't raised as an issue,” says Augenblick “There was a sense that the state ought to do something about day-to-day operations. But there never was an expectation that the state would provide much for facilities. Seeking equity for operating funds was an uphill battle on its own. Going after facilities was thought to be too much.”

Too serious to ignore

As time went by, the condition of school facilities continued to worsen to the point that national attention was focused on the problem. Educators pointed to a growing number of studies that indicated the quality of school facilities did affect student performance. A healthy economy made it less painful for legislators to loosen their grip on state funds and allocate it to school construction.

“The attitude kind of changed,” says Augenblick. “There was a realization among many people that a good school building is as much a part of a good education as a good teacher is.”

But it took more than arguments about educational quality to persuade most state lawmakers. “I don't think that has swayed legislators,” says Augenblick. “Not many legislators are very well acquainted or knowledgeable about school finance. They deal with it reluctantly, even though it is in many cases the largest part of their budget.”

Lawsuits were one way to force legislators to act. As school finance litigation evolved, those seeking equity began to widen their challenge to include educational facilities.

“The cost of a lawsuit is huge,” says Augenblick. “To avoid a suit, legislators could make a gesture with some money and not be pushed too hard.”

For instance, in Colorado, the state settled a school facilities lawsuit in 2000 by agreeing to set aside $190 million over 11 years for construction and repair projects in the state's neediest districts.

“The amount is pretty puny, but it's more than anyone got before,” says Augenblick.

Arizona's legislature, after several state Supreme Court rulings forced it to get involved in school construction, created the “Students First” program, which in effect turned over the responsibility for funding and building school facilities to the state, in the form of the Arizona School Facilities Board.

Other states began to step forward with needed funding. California passed a statewide referendum in 1998 that earmarked $9.2 billion for K-12 and higher-education facilities. In 1997,Ohio established its school facilities commission to manage the construction and renovation of the state's school infrastructure. In 1999, the state's “Rebuild Ohio” initiative committed $10 billion that will be combined with $13 billion in local money over 12 years to deal with the facilities needs of every Ohio school system.

Our money, our rules

When states provide financial subsidies to school districts, the money often comes with strings attached. Some states that offer construction money also have specific guidelines about how a school is built and what it contains.

In Arizona, the state's involvement can even extend to where a school is built. The Arizona School Facilities Board rejected a proposed high school site in the Tanque Verde Unified District after developers learned of the school district's interest, bought the land and raised the price.

In other cases, Arizona's jurisdiction over construction projects has meant that recently built schools lack amenities that some districts are accustomed to. Some of those districts have supplemented the state money with local funds to provide those amenities.

In Ohio, the school facilities commission has established an assessment system that determines whether it is more cost efficient to renovate a facility or replace it with a new school. In Akron, the assessment formula was used on three “virtually identical” middle schools, says Beal.

“One building, which we had found the most troubled, was to be kept and remodeled according to the assessment, while the other two were to be demolished and replaced,” says Beal. “The scores were very close. There were very slight differences.”

The district appealed to the facilities commission to be flexible about the assessment procedure and take into account the opinions of local officials.

“We argued that to the public, who will be voting on these proposals, these three buildings are perceived as identical,” says Beal. “How is the public going to look at this? That was something that the assessments did not consider.”

The commission ultimately listened to Akron's views.

“We demonstrated to their satisfaction that the buildings should be retained and remodeled,” says Beal. “They respected our opinion. They realize that unless these district projects are successful, the School Facilities Commission won't be successful.”

Overall, Akron will spend $693 million over the next 15 to 17 years and build 36 new schools and renovate 21 others. The average age of Akron's elementary schools is 70 years, and at least one facility dates to the late 1880s, Beal says. The district is responsible for 41 percent of the cost, and the state pays the rest.

But before those facilities can be built or renovated, Akron must come up with its share of the money. Rather than seek a bond issue and a property tax increase, the school district has teamed with the other districts in Summit County, Ohio, and the county council to propose a half-cent sales-tax hike. Estimates indicate that the tax will bring in about $30 million a year for 30 years, and Akron will receive about a third.

Hard times, less money

As the economy has weakened and state governments scramble to slash costs and balance budgets, the flow of money to local districts for school construction has slowed in some states.

In Arizona, which overhauled its school construction funding methods only after several rulings from the state Supreme Court forced its hand, legislators raided the school facilities fund as soon as budget troubles arose. Faced with a deficit, lawmakers found the money they needed to balance the books in the Students First school construction program. Even though the money was supposed to be off limits, lawmakers diverted $61.3 million from the program's 2002 Building Renewal Fund.

For poor school districts in Arizona, the fund represented the only ongoing source of funds for major repairs and improvements to their schools, according to Tim Hogan, a lawyer for The Arizona Center for Law in the Public Interest, which had filed earlier lawsuits challenging Arizona's funding methods for school construction.

The center challenged the reduction in court, and a Maricopa County Superior Court judge agreed and ruled that the reduction in the fund was unconstitutional. Undaunted, the legislature appealed the judge's ruling, and decided to reduce the 2003 Building Renewal Fund by $90 million — from $138 million to $28 million. Hogan has filed another lawsuit challenging the latest reductions. He argues that the Students First program must be funded fully for it to meet constitutional guidelines.

Hogan says the state can back away from the Students First plan only if it has another school facilities plan in place to meet the requirements spelled out by the Arizona Supreme Court.

“As long as they're maintaining that Students First is the solution, they have to fund it,” says Hogan.

More help sought

Despite the tough economic times, some states are not easing up in their efforts to secure more money for school facilities.

In November, just four years after voters approved a $9.2 billion school facilities package, Californians will pass judgment on Proposition 47, which seeks authorization for $13 billion in bonds for school facilities across the state. The first bond issue helped ease some of the pressing space needs in the nation's largest state, but the problems are still far from resolved. In fact, the $13 billion request is only the first part of a two-pronged proposal; the state will return to voters in 2004 with a $12.3 billion proposal to address the rest of the state's school facility needs.

According to Yes on 47 for Accountability and Better Schools, a coalition working for passage of the bond issue, California needs 46,000 more classrooms in the next five years to alleviate crowded schools. One of every three students in California attends a school that is overcrowded or needs modernization.

Also in November, voters in Alaska will decide on a $236.8 million bond issue for school facilities there. The highest-priority projects are at schools with the most overcrowding or that have health and safety risks. Those include projects in sparsely populated rural areas without the tax base to support local financing of school construction. If the proposition passes, it also will trigger legislation that enables local districts to receive reimbursement from the state for bond issues approved between 1999 and 2005.

Sidebar: Helping hand

Here's the district-by-district breakdown of the $5.7 billion in school construction projects approved earlier this year by the Ohio School Facilities Commission. To qualify for the state funds, a school district must have funding in place. Cleveland voters approved a $335 million bond package in 2001 to cover much of the district's local share; the other districts have not yet put their requests before voters.

District

Cost

Local share

New schools

Renovations

Cleveland

$1.5 billion

32%

52

59

Columbus

$1.3 billion

70%

63

67

Cincinnati

$916 million

77%

35

31

Toledo

$798 million

23%

57

7

Akron

$693 million

41%

36

21

Dayton

$488 million

39%

39

1

Sidebar: Funds for college

Unlike K-12 school districts, public colleges and universities are viewed more as statewide institutions and have typically received state funds to build and renovate their campus facilities. The increase in state funding for elementary and secondary schools does not mean higher education institutions are being neglected.

The $9.2 billion bond issue approved by California voters four years ago included $2.5 billion to repair aging college facilities, fix structural, health and safety deficiencies, and build much-needed classrooms. This year's proposed $13 billion bond issue, if approved, will provide $1.65 billion for higher education: $408 million for University of California campuses, $496 million for the California State University system, and $746 million for the state's community colleges.

Before 1996, bond proposals for higher education were separate from proposals for elementary and secondary schools. But after voters rejected higher-education proposals twice in the early 1990s, the legislature began to combine the K-12 and college bond requests into one proposal.

Alaska's statewide $236 million proposal includes $61 million that would pay for classroom and facility projects in the University of Alaska system — $48 million for upgrades at the Anchorage, Juneau and Fairbanks campuses, and $13 million for other campuses throughout the state.

Kennedy is staff writer for AS&U.