Community College District Seeks Expansion via $450 million Bond

On Wednesday, February 26th, the Contra Costa Community College District Board of Directors will consider placing a $450 million bond measure before voters on the June 3, 2014 election ballot (see agenda item 57-D on page 174 here).  For more than a year the District has explored ways to finance the expansion and modernization of its facilities, called for by its Master Plan, at an estimated cost of $700 million. 

Based upon polling results presented in December, the Board decided to place a $450 million bond on the June ballot and directed staff to make preparations accordingly. The last day for the District to file county election paperwork for the June ballot is March 7th. School bond debt requires approval from at least 55% of voters.  

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Taxpayer organizations have expressed concerns about this large amount of debt, particularly given the weak financial condition of the Community College District. The Contra Costa Community College District expenses continue to exceed income and the annual revenue shortfall is expected to exceed $2.2 million by the end of the 2015-16 budget year.  Pension and benefits costs are continuing to increase, even as student enrollment trends are in decline.

Fair and open competitive bidding for District construction contracts has also been a point of disagreement between concerned taxpayers and the District.  Since 2011 the Community College District has allowed only union contractors to bid on its construction contracts. By prohibiting free market competition, taxpayers pay an estimated 13-15% more for construction services, according to a 2011 study conducted by the National University Institute for Policy Research. It remains to be seen whether the Board will continue its controversial policy that shuts out local small businesses from the competitive bidding process and considerably drives up construction costs unnecessarily to taxpayers.

The Community College District faces numerous challenges including declining student enrollment, rising costs for employee health insurance, anticipated increases in CalSTRS pension rates, over $188 million in unfunded liability for retiree health/dental benefits and growing costs for deferred facilities maintenance.

Simple arithmetic alone makes it questionable whether the Community College District can afford to incur new bond debt and cover expenses for scheduled maintenance of new expanded facilities.

A new building campaign is certain to aggravate the District’s budget difficulties. In light of the shaky finances of the Community College District and  numerous other tax measures on upcoming election ballots throughout Contra Costa, it is doubtful that residents will support adding $450 million in costly new debt to the taxpayers’ tab.

 

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Comments

  1. Ken Hambrick says

    With a declining enrollment and a significant budget deficit, why should this district go after a huge bond measure?

    Unfortunately this district has set aside very little from its operating budget for care, upkeep and renovation of its existing facilities. That is a very bad business practice.

    With its expenses exceeding revenue, just how does it expect to pay for these bonds? It just won’t have the money. $450 million in bonds will cost the taxpayers at least $900 million over the life of the bonds. It is still paying off the bonds from 2002 and 2006. It just can’t afford a third bond.

    And with the declining enrollment and weak financial condition, why is the college even thinking of expanding? It just doesn’t make sense. The Board is certainly not a good steward of the taxpayers dollar.

    On top of all this, the Board put in place a Project Labor Agreement which effectively bars non-union contractors from bidding of the projects and assures the bids go to the unions. With that PLA in place, we get at least 15% less for our money – and more likely 20% less. Again, the district is not a good caretaker of our money.

    There are at least eight tax and bond issues which are going to to be foisted on the taxpayers of the county this year. College bonds should be low on anybody’s priority list. Remember bonds are not free, and the cost of them will appear on your property tax bill

    No one should vote for this outrageous bond measure, period..

  2. Lou says

    We all been taxed to much already. I wont vote for any of that. There is to much waste and the people aint got any more money to give. They are trying to make up pay more for fire and police. We already pay that. Maybe if they cut them 100 thousand dollar pay outs we would be back to normal.

  3. Bruce R. Peterson, Lafayette says

    Good reading on this subject is “The Bank,, the school and the 38 year loan”. Orange County Register.
    It explains how a $200,000,000 bond destroyed the Placentia and Yorba Linda school district.
    We have a school district that wants to more than double their mistake.