Factors influencing the successful passage of a school bond referendum as identified by New Jersey school superintendents
TABLE OF CONTENTS Abstract ii Table of Contents iv List of Tables vii Chapter 1 Introduction Introduction 1 Statement of the Problem 2 Purpose 3 Research Questions 3 Significance 4 Definition of Terms 5 Chapter 2 Review of the Literature Introduction 8 The Need for School Bond Referenda 8 School Bond Referenda on a National Level 9 Historical Review of New Jersey Educational Funding 13 The Educational Facilities Financing Act, S-200 in New Jersey 16 Influential Factors in School Bond Referenda 22 Chapter 3 Methodology Introduction 37 iv
Purpose 37 Research Questions 37 Population 38 Instrumentation 40 Validity 44 Data Collection 44 Data Analysis 46 Chapter 4 Findings, Results Introduction 48 Demographic Data 48 Dominant Political Affiliation 50 Previously Passed a Referendum 50 Measures of Central Tendency 51 Trust and Credibility 55 Involvement of Stakeholders 55 Campaign Organization 61 Fiscal Responsibility 66 Other Factors 71 Chapter 5 Findings, Implications, Recommendations Introduction 79 Conclusions 80 Limitations 89 v
Recommendations 91 References 95 Appendices Survey 100 IRB Approval Letter 103 VI
LIST OF TABLES Table Page 1. Number of Surveys Sent to Each County 39 2. District Factor Group of School Districts 49 3. Dominant Political Affiliation of the Community 50 4. Previously Passed a Referendum 50 5. Descriptive Statistics for Factors Influencing the Successful Passage of a School Bond Referendum as Identified by New Jersey School Superintendents 52 6. Trust and Credibility in the School Board 55 7. Trust and Credibility in the District Administration 56 8. Trust and Credibility in the School District 57 9. Trust and Credibility in the District Teachers 57 10. The Personal Attributes of the Superintendent 58 11. Faculty Planning Committee 59 12. District Employee Participation in the Campaign 60 13. Parental Participation in the Campaign 60 14. Community Participation in the Campaign 61 15. Get Out the Vote Committee 62 16. Signs of Support in Yards 63 17. District Long Range Plan 64 18. District Activities Promoting the Referendum 64 vii
19. Informative Town Hall Meetings 65 20. Participation of a Youth Committee 66 21. Delegates Sent to Meet With Local Special Interest Groups 66 22. Money Available Through the Educational Facilities Finance Act 67 23. Past District Tax Cuts and Fiscal Responsibility 68 24. Detailed Information of Bond Referendum Plan 69 25. Information Comparing Surrounding District Tax Rates 70 26. Information on Tax Impact for the Average Home 70 27. Previous Cost Cutting Measures in the District 71 28. Voter Has Children in the District 72 29. Voter Formerly Had Children in the District 73 30. Early Voting Opportunities Through Absentee Ballots 74 31. Population Growth 74 32. Focus on the Needs of All Children in the District 75 33. Consequences of a Failed Bond Referendum 76 34. Government Compliance Issues (ADA, etc.) 77 35. Other Issues on Voting Day (i.e. Public Works Projects) 77 36. Opportunities to Vote on More Than One Question 78 vm
1 CHAPTERI INTRODUCTION Many of the nation's school buildings were built to accommodate the baby-boomers and are quickly decaying (Colgan, 2007). As a result, the average school building in the United States is 42 years old (Colgan, 2007). According to the American Society of Civil Engineers, about three-fourths of the nation's 86,000 schools need repairs, renovations, or modernizations to be in good condition (Joyner, 2004). Many of these needed renovations come with a rather significant cost. It is estimated the average need per school is roughly $2.2 million, or approximately $3,800 per student (Colgan, 2007). Despite the fact facilities needs remain great, more than one third of the states are moving to cut millions, in some cases, billions, of dollars from public school budgets (Karp, 2003). With 85% of district budgets tied up in salaries and benefits, cuts tend to fall heavily on the other 15% which consist of building maintenance and instruction (Karp, 2003). Furthermore, an unpredictable economy and the cumulative effects of years of state budget crises are squeezing school districts at a time when expectations and demands for improved school performances are at an all time high (Karp, 2003). Residents of New Jersey face some of the highest property taxes in the country (Hester, 2006). According to Hester, the average New Jersian pays roughly $6,000.00 in annual property taxes, which is twice the national average. Approximately 55% of the money collected in property taxes goes to fund the state's 616 school districts (Hester). In fact, Hunterdon County, N.J., won the dubious distinction of imposing the country's highest property taxes on its residents (Johnson, 2007). As a result, New Jersey school
2 districts average the highest per-pupil spending levels in the nation (Hester). It is more important than ever for school districts to be fiscally responsible and financially sensitive to the stakeholders. Each year, residents of New Jersey have to approve their local school districts' budgets. New Jersey school districts must justify their spending and gain community support to properly fund and support the schools. Failure of voters to pass school budgets cause school leaders to meet with community leaders to make budget cuts and present a scaled down budget (http://www.nj.gov/education/finance/br/sbb.shtml). The school funding process is further complicated by the fact that voters must also approve school construction and renovation projects (http://www.ni. gov/education/finance/br/sbb. shtml). These special school construction referendums may be held five times a year, during the months of September, December, January, March, and April. During these special elections, school districts must ask voters to approve and fund large building and renovation projects (http://www.nj.gov/education/finance/br/sbb.shtml). Statement of the Problem The passage of a school bond can determine the direction of a district for many years to come (Faltys, 2006). Upkeep of older facilities and the building of new facilities can have an impact on instruction, teacher job satisfaction, student achievement, and perceptions toward the district (Moore, 2004). Despite the fact there is often state money to assist with building and renovation projects, organizing and passing a referendum can prove to be a daunting task (Nagardeolekar & Merritt, 2006).
3 Passages of school construction bonds are difficult and property owners' resistance to tax increases remains strong (Nagardeolekar & Merritt, 2006). Senior citizens, childless adults, parents whose children attend private schools, and others, tend to see public school construction projects as unrelated to their own interests and it can be difficult to win them over (Nagardeolekar & Merritt, 2006). Purpose The purpose of this study was to investigate the factors that contribute to passing a successful school bond referendum as identified by selected New Jersey school superintendents. This study also includes a historical review of bond referenda across the nation and the creation of the Educational Facilities Construction and Financing Act in New Jersey. Research Questions This study was be guided by the following research questions. 1. According to the perceptions of school superintendents, what role did Credibility/Trust have in passing the school bond referendum? 2. According to the perceptions of school superintendents, what role did the Involvement of Stakeholders have in passing the school bond referendum? 3. According to the perceptions of school superintendents, what role did Campaign Organization have in passing the school bond referendum? 4. According to the perceptions of school superintendents, what role did Financial Factors have in passing the school bond referendum?
4 5. According to the perceptions of school superintendents, what role did Other Factors have in passing the school bond referendum? Significance This study is significant for a number of reasons. As more and more states are are turning toward voter approval and the referendum process to pass school budgets, and fund building projects, it is vital for school superintendents to understand how to properly plan and execute a school facilities bond referendum (Fairbank, 2006). Moreover, school leaders must also to be able to relate to the voting community stakeholders to successfully justify tax increases to fund building projects (Shorr, 2007). With the successful passage of a school bond referendum there will be an addition tax burden on the stakeholders (Schanuel, 1999). Nonetheless, the importance and necessity of these building projects are vital to improve the education of the youth of the nation (Public Schools of North Carolina, 2003). This study is also significant for the following reasons: 1. More and more states are looking to cut money from existing school budgets to ease the burden of property tax as well as reform property taxation (Karp, 2003). 2. There is a correlation between student learning/achievement and building age, building quality, building aesthetics, even school and class size (Moore, 2004). 3. Improved buildings contribute greatly to higher teacher job satisfaction, and lower staff turn-over (Moore, 2004).
5 4. Little research has been compiled on the subject of school construction via the bond referendum process. Definition of Terms Abbott Districts - Districts that receive 55% or more in state aid. The law provides for 100% state funding of eligible school construction costs. (New Jersey Educational Facilities Construction and Financing Act, 2000) Appeal of Eligible Costs - The district may apply for additional state aid if detailed plans and specifications completed by a design professional indicate the cost of the project will exceed eligible costs, as determined by the commissioner, by at least 10%. The additional state aid will be capped at 10%. (New Jersey Educational Facilities Construction and Financing Act, 2000). Approval Rate - The percentage of voters who voted in favor of the school bond referendum. (New Jersey Educational Facilities Construction and Financing Act, 2000). Construction Oversight/Coordination - Abbott districts and Non-Abbott districts eligible for 55% or more state aid, the New Jersey Economic development Authority will be responsible for construction and financing. All other districts have the option of using the Authority's services. (New Jersey Educational Facilities Construction and Financing Act, 2000). Facilities Efficiency Standards - Clearly define and represent instructional and administrative spaces that are educationally adequate to support achievement of the New Jersey Core Curriculum Content Standards. (New Jersey Educational Facilities Construction and Financing Act, 2000).
6 Failed Referendum - If a district fails to obtain voter approval for a particular project after two attempts, it may ask the commissioner to authorize funding for the project. Long Range Facilities Plan - A plan prepared by the school district with input from the community stakeholders that outlines the five-year vision and direction for a district's school facilities. (New Jersey Educational Facilities Construction and Financing Act, 2000). Non-Abbott Districts - School construction projects in non-Abbott districts will be funded at their state aid percentage multiplied by 1.15, or a minimum of 40 percent, whichever is greater (New Jersey Educational Facilities Construction and Financing Act, 2000). Project Costs - Projects eligible for state aid include: 1) Building renovation necessary for compliance with the Uniform Construction Code, health and safety, and/or educational adequacy as determined by facilities efficiency standards. The district is entitled to state aid on the estimated actual costs of the renovation project. 2) New construction to accommodate increased enrollment. The law provides a cost allowance of $138 per square foot. This figure covers construction and "soft costs" such as site acquisition and site development; services of design professionals, including architects, engineers and construction managers; legal fees; and the costs associated with financing the project. 3) Building space necessary to comply with state or federal law concerning students with disabilities.
7 4) Additional spaces the commissioner of education determines are necessary to meet the educational needs of the district. (New Jersey Educational Facilities Construction and Financing Act, 2000). Referendum - A vote that enables the public to have direct input into the passage of the proposed matter. School Bond Referendum - The presentation to the public of a proposed sale of bonds, by a school district, for which the tax payers would be financially responsible. Square footage Allowance - The square foot allowance per pupil for new construction is as follows: Preschool-grade 5=125 sq. ft. Grades 6-8=134 sq. ft. Grades 9-12=151 sq. ft. (New Jersey Educational Facilities Construction and Financing Act, 2000). State Bonding Caps - The state is authorized to borrow $6 billion for projects in the 30 special needs, or Abbott districts; $2.5 billion for non-Abbott projects; and $100 million for county vocational schools. (New Jersey Educational Facilities Construction and Financing Act, 2000). Uniform Commercial Code - is one of a number of uniform acts that have been promulgated in conjunction with efforts to harmonize the law of sales and other commercial transactions in 49 states (all except Louisiana) within the United States of America. (New Jersey Educational Facilities Construction and Financing Act, 2000).
8 CHAPTER II REVIEW OF THE LITERATURE Introduction The purpose of this chapter is to review the current literature related to the influential components of passing successful school bond referenda. Chapter II will include an overview of bond referenda and the need for school construction on a national level; a historical review of New Jersey's Educational Facilities and Financing Act, S-200; and a review of influential factors that must be in place to successfully pass a bond referendum. The Need for School Bond Referenda Much of the country is in a school construction boom the like of which has not been seen since the early 1950's (Coglan, 2003). Despite the recent building and construction boom, facility needs remain great (Coglan). According to the United States Department of Education, the baby boomlet increased enrollment by an average of almost 100 students in each elementary school from 1982 to 2000 (Coglan). The National Center for Educational Statistics (NCES, 1999) reports that about 75% of public schools do not have problems with overcrowding, but close to 10% have enrollments that are 25% greater than their capacity (Coglan). The severe overcrowding in those school districts has forced districts like Clark County, Nevada, Charlotte, North Carolina, and Howard County, Maryland to raise the maximum capacity of its students in each school (Coglan). In addition to the overcrowding of some schools nationwide, many of the nation's school buildings were built to accommodate the baby-boomers and are quickly decaying
9 (Colgan). According to the American Society of Civil Engineers, about three-fourths of the nation's 86,000 schools need repairs, renovations, or modernizations to be in good condition (Joyner, 2004). The average school building in America is 42 years old (Moore, 2004). Twenty eight percent of the nation's schools were built before 1950 and 45% were built between 1950 and 1969 (Moore). As the nation's schools increase in age, so does the significance of maintenance costs and repairs. In a 20 year old building maintenance repairs are generally minor (Moore). In buildings that are 20-30 years old, original equipment, roof, and electrical wiring will need to be replaced (Moore). Finally, buildings over 40 years old begin to rapidly deteriorate (Moore). In summary, across the nation, there is a great need for school construction, repair and renovation. According to Moore (2004) overcrowding and out-dated facilities can have a detrimental effect on the education and achievement of the youth of the nation. National Perspective of the Issue To promote educational equity, many states have adopted formulas that redistribute local property tax revenue evenly across school districts (Klein, 2006). Many districts have also attempted to pass local option levies to generate additional tax dollars to improve facilities and the quality of education in their buildings (Klein). In Oregon, local levies must be approved by a "supermajority" of voters (Klein). This means districts must meet both voter turnout and voter approval requirements. For example, a ballot measure with a 50-50 "supermajority" requirement would need 50% of active precinct voters to cast a ballot with more than 50% of these voters approving the
10 measure. Furthermore, this local option levy will expire in 3-5 years. As a result, the districts must renew these contracts with their communities continually (Klein). In North Carolina, bond referenda are essentially the only way for public school districts to fund massive renovation or new construction projects (Joyner, 2004). As a result, superintendents frequently find themselves asking tax payers to put their support behind new construction and bond packages (Joyner). Districts must prepare and organize a bond referendum campaign to bring to the voters for approval. If a majority of the voters vote in favor of the bond, local taxes will go up and bonds will be sold to cover the cost of the project. Georgian school districts also have to finance school construction projects much like other school districts. In Georgia, to be eligible for a bond referendum, school districts must have prepared a long range facilities plan that has to be adopted by the State Department of Education. The facilities plan must forecast enrollment, conditions of schools, growth patterns, and a prioritized list of projects over a five year period (Joyner). When a district goes to the voters with a referendum, the bond referendum cannot exceed more than 10% of the communities tax digest (Joyner). Due to the 10% tax constraint, sometimes school districts do not have enough money to pay for large scale projects. When this is the case, Georgian school districts have the authority to assess a local option sales tax that can only be used to fund public school construction (Joyner). This taxing system is most effective in commercial hubs with a lot of major regional shopping centers such as Atlanta because they tend to draw buyers from large areas in the south (Joyner, 2004). Since the inception of this amendment in 1996, 152 out of 159
11 Georgian counties and 172 out of 180 school districts have passed such taxes (Joyner). In fact, 121 school districts have passed the tax twice (Joyner). In 2002, California passed Proposition 47 to deal with school overcrowding and school renovation. The California Department of Education estimated it needed 46,000 addition classrooms over the next 10 years (Joyner). Proposition 47 provided $13 billion for modernization and construction of new schools. Ninety percent of the $13 billion, $11.4 billion, was designated for K-12 facilities. The remainder of the money was to be shared by community colleges and the state university system (Joyner). The funds were to eliminate overcrowding in school districts by building new and additional facilities. Additionally, the funds were earmarked to fix leaky roofs, repair broken bathrooms, install heating and air conditioning, upgrade college laboratories and research facilities, and give students access to technology (Joyner). Californian legislators believed this funding would improve facilities so the students could meet the State academic standards, improve test scores, and be prepared for the workforce (Joyner). To further the effects of proposition 47, the State of California allocated an additional $1.7 billion in 2003 (Joyner). In all, 17 school districts filed 438 applications for money from the Critically Overcrowded School Facilities Program (Joyner). However, only 303 of those applications could be financed; leaving $132.4 million in critical projects unfunded in 2003. The State then appropriated an additional $2.4 billion in 2004, but the need still remains great (Joyner).
12 Prior to 1994, Arizona's facilities were financed through property tax revenue and general obligation bonds. However, in 1994 the system was declared unconstitutional because the system favored wealthier, urban districts over poorer, rural districts (Joyner). As a result, in 1998, Arizona adopted Students FIRST (Fair and Immediate Resources for Students Today) (Joyner). Students FIRST is primarily funded by state sales tax and requires equal funding and resources for every school in the state. It also established a building renewal fund to provide state money for renovations, heating, cooling, plumbing, and other necessary repairs (Joyner). Moreover, the new law provided a pot of state money to build new schools in districts that needed facilities, but could not afford it on their own. Connecticut public school enrollment grew roughly 24% in 15 years (Joyner). In terms of school finance, Connecticut's system has local districts partner with the state in every construction project (Joyner). The state covers 20-80% of a district's construction costs, depending on the district's financial needs (Joyner). Despite the fact the state will fund percentages of the construction, the onus still remains on the local district to raise their portion of construction costs through local bonds and taxes (Joyner). The state of Washington is one of 22 states with a centralized school construction project (Joyner). Washington provides needs-based matching grants for construction. The state money can be used to build new schools in growing areas or renovate schools that are over 20 years old (Joyner). The state of Washington amasses money for its state construction coffers through timber sales, real estate development, the state lottery, and the sale of bonds (Joyner).
13 Despite its efforts, Washington still has more construction needs than it can address. Seventy percent of the schools in the state are over 30 years old and have not been renovated or modernized since (Joyner). In closing, all states have a system for funding school construction projects. In most cases, the voters must approve the measure and the money is appropriated and raised via a combination of taxes, bonds, and state assistance. Historical Review of New Jersey Educational Funding The following section will provide a historical overview of educational funding in the state of New Jersey. Particularly, influential court cases that influenced and enacted educational and facility funding in New Jersey will be summarized. In 1875 the New Jersey Constitution was amended requiring the legislature to establish a system of "thorough and efficient education" (http://www.edlawcenter.org/ELCPublic/AbbottvBurke/AbbottHistory.htm). It was not until 1970 that a lawsuit, Robinson v. Cahill, brought on behalf of urban school children, stated the state's system of funding education was discriminatory. Robinson v. Cahill claimed the New Jersey's school funding formula discriminated against poorer school districts and created disparities in education (http://www.edlawcenter.org/ELCPublic/AbbottvBurke/AbbottHistory.htm). As a result, in 1973 the New Jersey Supreme Court ruled that heavy reliance on property taxes for educational funding discriminates against poor districts (http://www.edlawcenter.org/ELCPublic/AbbottvBurke/AbbottHistory.htm). In order to address the issue, The Public School Education Act, Chapter 212 was created. Chapter
14 212 created a new state-funding formula for public school. Despite the new act, the state lawmakers failed to raise taxes to pay for it (http://www.edlawcenter.org/ELCPublic/AbbottvBurke/AbbottHistory.htm). In an effort to enforce its rule, the New Jersey Supreme Court shut down public schools in the state of New Jersey for eight days because the legislature failed to fund the new formula. In return, the state of New Jersey enacted the first state income tax to fund education (http://www.edlawcenter.org/ELCPublic/AbbottvBurke/AbbottHistory.htm). It was not until 1981 that the ELC filed Abbott v. Burke on behalf of urban children to challenge Chapter 212 as inadequate to fund "thorough and efficient education." From 1981 until 1988 the Abbott case filtered back and forth between the courts and administrative law judges until a verdict was finally rendered. In 1988 the court ruled in favor of Abbott and declared that complete overhaul of school funding must be imitated. However, in 1989, Education Commissioner Saul Cooperman rejected the decision and declared that New Jersey's funding system indeed provided equal education opportunities (http://www.edlawcenter.org/ELCPublic/AbbottvBurke/AbbottHistory.htm). In 1990 the Abbott II ruling again declared that New Jersey was not equally funding school education and facilities (http://www.edlawcenter.org/ELCPublic/AbbottvBurke/AbbottHistory.htm). In response, then Governor, Jim Florio, introduced the Quality in Education Act in an anticipated Supreme Court ruling in favor of Abbott. The Quality in Education Act introduced a $2.8 billion state tax increase to pay for the new law and the budget deficient he inherited
15 (http://www.edlawcenter.org/ELCPublic/AbbottvBurke/AbbottHistory.htm). In 1991 Governor Florio signed an amendment to the Quality in Education Act that provided $360 million to property tax relief. In 1992, the Education Law Center, (ELC) reactivates the Abbott case claiming the Quality in Education Act does not adequately fund education and facility construction (http://www.edlawcenter.org/ELCPublic/AbbottvBurke/AbbottHistory.htm). In 1995 the New Jersey Department of Education released a rough blueprint designed to achieve equalization in school funding. It was not until December 1996 that Governor Christie Whitman signed into law the Comprehensive Education Improvement and Financing Act (CEIFA). The CEIFA authorized spending in suburban districts at existing levels and limits spending in urban districts at $1200.00 per pupil below the suburban average. However, in 1997 the ELC returned to the Supreme Court to challenge the failure of CEIFA to comply with the earlier 1990 and 1994 Abbott rulings. As a result, the Supreme Court declared the CEIFA unconstitutional (http://www.edlawcenter.org/ELCPublic/AbbottvBurke/AbbottHistory.htm). The Court further extended it rule by declaring the New Jersey Department of Education must again address money needed for facility improvements, especially in urban school districts. In September 1997, in an attempt to comply, the State allocated $246 million for immediate facility renovations. This program was further extended in January 1998 to include an additional $312 million a year earmarked to renovate and replace school facilities. The program was again extended in 1998 when the NJ Supreme Court issued
16 the Abbott IV ruling. Abbott V ordered a comprehensive state managed and funded facilities program to correct code violations, to eliminate overcrowding, and to provide adequate space for all educational programs (http://www.edlawcenter.org/ELCPublic/AbbottvBurke/AbbottHistory.htm). The ELC again approached the New Jersey Supreme Court again in July 1999 to challenge to state's failure to implement the court's ruling. It was in March 2000 the New Jersey Supreme Court issued Abbott VI and ruled the State had failed to implement an appropriate plan to address school facility needs as directed. The Court then ordered the New Jersey Department of Education to overhaul the program for 2000-2001 (http://www.edlawcenter.org/ELCPublic/AbbottvBurke/AbbottHistory.htm). The final decree came as the New Jersey Supreme Court issued Abbott VII and declared the State must fully fund the Abbott school construction program and provide support for all school construction projects. In July 2000, the Legislature enacted the Educational Facilities Construction and Financing Act authorizing a school construction program for Abbott districts and districts statewide (www.njbsa.org). Educational Facilities and Financing Act, S-200 To help ease the tax burden on New Jersey residents and assist in school construction, the New Jersey Educational Facilities and Financing Act was created. On July 18, 2000, Governor Whitman signed the New Jersey Educational Facilities and Financing Act, S- 200 (P.L. 2000, c72) into law. The Educational Facilities and Financing Act created the New Jersey School Construction Initiative (NJSCI). The NJSCI is a "multi-faceted, comprehensive program for the design, renovation, repair, and new construction of
17 primary and secondary schools throughout the state of New Jersey" (http://www.nj.gov/education/facilities). This law was the largest and most comprehensive school construction program in the nation (Karp, 2003). The program was created with an anticipation of spending approximately $12 billion over a ten-year time period. Immediately, with its creation, the Educational Facilities and Financing Act authorized the state to borrow and bond $6 billion for projects in the 30 special needs, or Abbott districts; $2.5 billion for non-Abbott projects; and $100 million for county vocational schools. The money for S-200 was issued by and governed through the New Jersey Economic Development Authority The New Jersey School Construction Initiative provides 100% state funding of approved projects in the 30 Abbott districts, at least 40% in all districts that approve projects, and more than 40% in less affluent communities (Sammons, 2003). To assist in the administration of the New Jersey School Construction Initiative there are many government agencies. The following will provide a brief analysis of the roles that each government agency plays in the execution of the program. First, there is the New Jersey Department of Education (NJDOE). The Department of Education is responsible for reviewing and approving each school district's construction plans to ensure they are in compliance with the district's five-year Long Range Facilities Plan (LRFP), state building standards (referred to as the "facilities efficiency standards") and other educational requirements (New Jersey Department of Education, 2001). The New Jersey Economic Development Authority (EDA) has a significant role in the school construction process (New Jersey Department of Education, 2001). The EDA is