Dublin Resident Kerrie Chabot on the School Funding Debate and Overcrowding Challenge

Why the current approach is costing residents hundreds of millions, and what can be done about it.

Dublin schools are excellent because we have great teachers, actively engaged parents, and talented students who have propelled Dublin to one of the best school districts in the State of California. This success is a magnet that has helped drive tremendous growth in new residential construction. Unfortunately, this growth has led to chronic school overcrowding requiring hundreds of millions in school infrastructure spending just to keep the problems from getting worse.

Thank you OneDublin.org for the opportunity to share some information and opinions with the wider Dublin community on the important topic of school funding. [EDITOR’S NOTE: We welcome other individuals and groups to provide letters to the editor on this topic to editor@onedublin.org.]

State of California Senate Bill 50 (SB 50), which became effective in 1998, was intended as a cost sharing mechanism for new school construction projects. Under this program, 50% of new school construction costs are intended to be covered by Level 2 developer fees and the other 50% are intended to be covered by the State. Local residents were not expected to pay any of the costs for new schools. The local general obligation bond funds (Measure C and E) were approved by resident voters to update aging existing facilities in Dublin, not for construction of new schools.

Unfortunately, since the 50/50 funding program was implemented in 1998, the developer fees have covered less than 20% of new school construction costs in Dublin as opposed to the targeted 50%. Currently, Level 2 developer fees in Dublin are $6.89 per square foot for residential construction. (prior to August of this year, the Level 2 developer fee was $5.91 per square foot for residential construction). For a typical new residential construction of 2,200 square feet, the Level 2 developer fees would amount to approximately $15,000. The actual cost to educate each additional new student is approximately $100,000 (as per a school board discussion on Nov. 10) meaning that developers cover less 20% of the cost to house each new student and assuming that each new home has only one student.

This funding shortfall is further exacerbated by mitigation agreements (for example Dublin Ranch including Wallis Ranch) that in many cases allow developers to pay substantially less than $6.89 per square foot.
There are various reasons for this funding shortfall (20% vs 50%) including the fact that actual construction costs have been higher than prescribed by the State. However, the largest contributor to the shortfall is demographic projections that have ended up being grossly inaccurate which has directly resulted in lower developer fees. Around 2005 the school board approved plans to invest in one high school to accommodate 2,500 students expecting this to serve the community for at least the next 25 years. This expectation was based upon the demographer’s data. The district then used local bond money (Measures C and E) to increase high school capacity from 1,600 to 2,500 rather than relying on developer fees. As recently as 2010, this same demographer, a paid DUSD consultant, stated that “it would not be until 2035 that the high school would see an enrollment of 2,700.” Unfortunately, the use of local bond money led the district to not charge developer fees related to high school construction costs from 1998 to August 2015.

As many residents are aware, the high school is expected to reach capacity within two years and rapidly increase to as many as 4,000 students by year 2020-21 based on current 6th grade class size of approximately 1,000. Due to the student growth rate, the district concluded that new high school capacity was needed. Since August 2015 roughly half of the Level 2 developer fees ($6.89 per square foot) is attributable to high school capacity needs.

This funding shortfall and the related school overcrowding is a major issue for all of Dublin – East/West, young/old. Furthermore, the prevailing view from DUSD, City Council, and State leaders is that residents must pay for this funding shortfall.

Additionally the State has not approved a state bond and therefore has been unable to provide its 50% share. Many State leaders including the Governor believe that new schools should be funded at the local level -presumably by developers – but they have failed to allow school districts to charge Level 3 developer fees which are intended to fully cover the costs of new schools when state funding is not available.

To date, Dublin taxpayers have incurred hundreds of millions in debt in the form of general obligation bonds that are paid for in the form of incremental property taxes over multiple decades. Approximately $57 million of $99 million Measure E bond which was approved to fund improvements to aging facilities in East and West Dublin- including the high school, were used to build the new Amador Elementary and will soon be used to construct Jordan Ranch Elementary.

Residents should know that a new local general obligation bond will likely be on the June 2016 ballot which will be used to fund future schools including Dublin Crossing (Camp Parks) Elementary and perhaps some form of additional high school capacity.

New homeowners in Dublin tend to focus on neighborhood elementary schools, and these new schools continue to help sell more homes.
While there is no single simple solution to funding new school development, we offer the following recommendations:

1. The School Board should publicly and immediately state that our schools are overcrowded and that there are insufficient resources (funding, etc.) to resolve this in the foreseeable future. This will both fairly inform potential homeowners of the current reality, and will put pressure on developers to mitigate the issue.
2. In accordance with city ordinances, the City Council should immediately implement a moratorium on new residential development based on the conclusion from DUSD that schools are overcrowded.
3. DUSD should factor in the land acquisition costs into the the Level 2 developer fee calculation, which will almost double the fees from $6.89 to approximately $12.50. The new level will be in line with Pleasanton’s fee of $12.41 per square foot.
4. DUSD should re-evaluate the Facilities Master Plan (FMP) timeline and approach to ensure the right information is available at the right time to enable effective decision making. There have been two FMP meetings with resident committee members, yet these residents have not been provided with numbers to make the meetings meaningful. And DUSD insists the FMP will be ready after the new year so they may pursue another bond measure for June 2016. We believe that bond should only be put on ballot when resident FMP committee members (excluding those paid by the district) agree that there is sufficient analysis and information to move forward.
5. DUSD should be more transparent about what expanding school site capacity really means. Just because there is land to add 14 portables to a school site originally built for 550 students does that really mean that the school site capacity is now above 1,000? What about the impact on other school infrastructure: multi-purpose rooms, teacher break rooms, and the impact on the local neighborhood including increased traffic and safety? Does simply adding numerous portables to Dublin High, mean its capacity can be increased to 4,000 plus students?
6. DUSD should evaluate more cost-effective solutions for new school facilities. Our construction costs are substantially higher than other districts and even higher than developer-built schools such as Green and Fallon.
7. DUSD should publish a comprehensive report on existing mitigation agreements including how fees under such agreements compare to current Level 2 fees, including what is charged by comparable neighboring districts, and why such agreements make sense as opposed to charging the maximum allowable developer fees. The purpose of this report is transparency and improving our ability to maximize developer fees in the future.
8. The City should encourage developers to implement Mello Roos (special tax districts) for new development.
9. The State should immediately allow districts to charge Level 3 fees which are designed to cover 100% of new school construction costs.
10. Any proposed local general obligation bond should be:
    • Appropriately sized considering the overall tax burden on the community. For example we should not exceed the state cap rate of 2.5% of tax base.
    • All related bond projects should be prioritized and cost estimates should be provided.
    • The bond should require that funds can only be for the projects specified in the bond.
    • The interplay between the allowable level of developer fees and the use of local bond money to increase new school capacity should be fully evaluated. It seems that using local bond money has the unintended consequences of lowering the amount of developer fees that can be charged and this effect should be avoided or minimized in a strategic manner.
    • The authority of the Citizens Bond Oversight Committee should be enhanced to ensure greater transparency.

Kerrie Chabot is a Dublin resident, parent of three children who have attended Dublin public schools, and is a founding member of Dubliners for Change. Please visit http://www.dublinersforchange.com or send an email to dublinersforchange@gmail.com for more information.