warning Hi, we've moved to USCANNENBERGMEDIA.COM. Visit us there!

Neon Tommy - Annenberg digital news

Measure E Bond Tax Rates Cause Controversy

Sarah Zahedi |
February 6, 2013 | 7:48 p.m. PST

Staff Reporter

A school in need of improvement. (Sarah Zahedi / Neon Tommy)
A school in need of improvement. (Sarah Zahedi / Neon Tommy)

 

Beverly Hills voters in 2008 approved a $334 million school bond in part because the Beverly Hills Board of Education promised that property tax rates would not increase as a result.

However, that promise could be broken.

The board is discussing increasing property taxes, so it can borrow more money sooner. That would allow the district to speed up improvements to schools. The discussion has not only created controversy among residents but also among board members.

Board member Brian Goldberg is the only one currently opposed to accelerating the tax rate on the Measure E bond. While Goldberg said he understands why his colleagues want to accelerate the bond, he noted that it would be a negative move.

“When the bond was passed in 2008, a promise was made to voters that the board would not increase their tax rate if the bond was passed. I think we’re breaking the trust of the voters if we decide to accelerate the tax rate,” Goldberg said.  “That’s something I cannot do and will not do as a board member.”

However, board member Noah Margo said that the acceleration of the tax rate on the Measure E bond would be a positive move.

“I think the acceleration, accompanied with our community’s blessing, will help expedite the construction process over the next 10 years or so,” Margo said. “At the same time, it will save tax payers close to $2 billion on the back end of bond repayments.”

Margo said the district would save money due to the acceleration of the tax rate because it would lead to reduced use of capital appreciation bonds that allow districts to defer payments well into the future, by which time a great deal of interest has accumulated on the payments. According to Margo, the acceleration would allow the district to replace some of the capital appreciation bonds with less risky current interest bonds on which interest payments are made to holders on a periodic basis.

Measure E bond, passed by voters on Nov. 4, 2008, authorized the school district to issue local government general obligation bonds, municipal bonds or loans that are backed by the local government’s ability to levy taxes, usually in the form of a property tax, in order to pay bondholders.

Funds received from the sale of the bonds were set to provide safe and modernized school facilities, make structural seismic safety repairs, upgrade aging infrastructure, roofing, heating, plumbing, ventilation, and electrical systems, and to better protect schools from security risks.

Despite the fact that an acceleration of the tax rate on the Measure E bond would result in lesser use of capital appreciation bonds, Goldberg said that the fact that they are being used at all is a topic of concern.   

Several California government officials have called for a state moratorium on capital appreciation bonds or CABs, including California State Treasurer Bill Lockyer and State Superintendent of Public Instruction Tom Torlakson. CABs have left many California school districts in large amounts of debt, as school districts are not required to make immediate and regular payments on the bonds.

“CABs are predicated on a lot of ‘what ifs’ and that’s not a good way to finance and leave future taxpayers to foot the bill,” Goldberg said. “When dealing with taxpayer money, it’s always better to take a step back and make sure you’re spending those funds appropriately rather than trying to rush to get something done.”

Other Beverly Hills residents, like BHUSD parent and Beverly Hills Vice Mayor John Mirisch, agree, especially given the fact that in 2011, Measure E backers were arrested for corruptly misusing funds and defrauding the Beverly Hills Unified district. Both former BHUSD facilities director Karen Christiansen and former BHUSD Superintendent Jeffrey Hubbard misappropriated funds from the Measure E bond, according to prosecutors.

Mirisch, who wrote a ballot argument opposing Measure E in 2008, said his concern that the motives of the people drafting Measure E were not legitimate and honest is what deterred him from approving of the bond in the first place. 

“I wouldn’t have had a problem with a bond that would have given specific projects and given more accountability and avoided some of the pitfalls that actually happened,” Mirisch said. “I was afraid people pushing for the bonds weren’t on the ‘up and up’ and turns out that it was exactly the case.”

Mirisch suggested that instead of accelerating the tax rate on the bond, the board should first keep it at the current rate and work to show the community that they have a distinct plan given that the voters’ confidence in the board is now at stake.

“They should first come back with a record to the community to prove that they can manage the money and that they are accountable and transparent,” he said.

If the board does not do so before accelerating the tax rate, Mirisch said he feels that the board would have misrepresented the way the Measure was sold to the community.

“While they legally have the power to do so, it would be morally wrong,” Mirisch said.

BHUSD parent Damien Bean also said that he feels the lack of a detailed plan has led him to disapprove of the acceleration of the tax rate on the Measure E bond.

“I could get behind accelerating the bonds if I had any faith that it would be money well spent,” Bean said. “But without any plan at all or a management team that can actually execute, I’m opposed.”

Despite the controversy among residents and board members, all can agree that several necessary improvements have been made to BHUSD schools, like at Horace Mann School, with funding from the Measure E bond.

The board unanimously agreed to spend over 50 million dollars in renovations to Horace Mann School through funding from the Measure E bond. 

Principal Steve Kessler at Horace Mann School said he’s been very pleased with the changes to the school.

“I’m very happy with the progress thus far and to see this construction going on,” Kessler said. “I feel that once all these improvements are made, our school will be a jewel. I know it will be a source of pride for all the stakeholders of Horace Mann and the district as well.”

Noting Horace Mann as an example of constructive work that has been done with Measure E funds, Margo urged that the acceleration of the Measure E bond tax rate is needed as to offer better and safer instructional facilities, like the ones being created at Horace Mann, as soon as possible.

“It may not be our children that will benefit immediately from all this construction and modernization, but some children will,” Margo said. “That’s what we are doing it for."

Board members have until June 30th to decide if they will accelerate the tax rate on the bond. If they do not meet the deadline, they will have to wait until 2014 to see benefits from the acceleration.

 

Reach staff reporter Sarah Zahedi here.



 

Buzz

Craig Gillespie directed this true story about "the most daring rescue mission in the history of the U.S. Coast Guard.”

Watch USC Annenberg Media's live State of the Union recap and analysis here.

 
ntrandomness