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Showing posts with label Center for Investigative Reporting. Show all posts
Showing posts with label Center for Investigative Reporting. Show all posts

Thursday, June 20, 2013

Community Schools Concept: Hopes & Challenges

From the Center for Investigative Reporting comes a story about 'community schools', a new idea among the educational elite to replace the former and polar opposite 'small schools' idea.  Emeryville has delved into the community schools idea headfirst with the soon to be built Center of Community Life and now Oakland will be testing the new model.

Oakland district embraces community schools model in ambitious reform plan  

Jun 17, 2013
Sitting behind his desk at Fremont High School in Oakland, Calif., Principal Daniel Hurst fiddled with a plastic cigar wrapper he had confiscated from a student.“They take the cigar paper and fill it with weed,” he said.  Hurst knows Fremont’s problems well: He joined the school 28 years ago as a teacher. Two years ago, he said, a teacher was robbed at gunpoint before the first bell. “The school gets regularly burglarized,” he added. “Teachers’ cars get broken into. Laptops and cellphones get stolen.”
Fremont’s campus in gang-entrenched East Oakland is three blocks away from International Boulevard, famous for its booming sex trade. The school is known for abysmal test scores and low graduation rates. In the 2011-12 school year, it had the most suspensions of any school in Oakland, according to school officials. Many local families have had enough. Of roughly 600 possible freshmen living in the neighborhood this year, about 200 chose to attend Fremont. Even those who do register often leave.
“There’s a perception of violence and safety issues and marijuana use,” said Nidya Baez, a Fremont graduate who is now an administrator at the school. “We constantly have kids transferring out.”
Fremont’s problems might be extreme, but other schools in the Oakland Unified School District are suffering as well. Enrollment in traditional Oakland public schools has plummeted by more than 16,000 students since 2000, according to district officials, as foreclosures have forced families out of the city and charter schools have siphoned off students. During the same period, the district has cycled through six superintendents and narrowly avoided bankruptcy only through a state takeover that ended in 2009.
Now, under growing public pressure to improve student safety and achievement, the district is attempting to reinvent itself by turning its 87 schools – including Fremont – into what are known as “full-service community schools,” equipped with staff trained to support students’ social, emotional and health needs, as well as their academic growth.
The concept is one that has been around for decades but is now gaining traction in districts across the U.S. as other reform efforts run up against problems related to poverty. The embracing of community schools is a stark shift from the “no-excuses” movement, which held that schools should be able to push all students to success no matter what their background. That idea dominated education reform for much of the past decade.
Community schools are just the opposite. At its core, the concept represents an explicit acknowledgement that problems with a child’s home life must be addressed to help the student succeed academically.
“There’s actually a lot of agreement that we need to work on both improving schools and addressing poverty,” said Michael Petrilli, executive vice president of the Thomas B. Fordham Institute, a conservative education think tank based in Ohio and Washington, D.C. “Particularly, as reformers get into the work of trying to run schools and make the system work better, they see in black and white just how important addressing the larger social problems is.”
Marty Blank, director of the nonprofit Coalition for Community Schools, which connects organizations and school districts doing community school work, estimates that at least 50 school districts around the country are launching similar initiatives. Chicago is home to more than 175 community schools. Portland, Ore., has 67 and Tulsa, Okla., 31. New York City, with the nation’s largest school system, has 21 community schools, and that number might grow soon, depending on this year’s mayoral election; the United Federation of Teachers is pushing for the city’s next mayor to adopt the strategy.
Students gather during the lunch period at Fremont High School. To combat fighting on campus, the school has started a program called Upstanders Challenge. When students stop a fight from occurring, the whole campus gets an extra 20 minutes for lunch the following Friday.
Credit: Noah Berger/For The Center for Investigative Reporting
There’s no one model for community schools. Advocates say each school reflects the particular needs of its students and parents. The goal is to handle whatever issues students bring to school that might affect learning: trauma, abuse, neglect, violence, gang tensions, immigration problems and a wide range of other physical, sexual and mental health issues.
“It’s so daunting,” said former Oakland Superintendent Tony Smith, who pushed for community schools when he took over the district four years ago, just as the state takeover was ending. He saw community schools as the most promising model for grappling with the intergenerational problems students face in a city that had an 11.8 percent unemployment rate in March and the highest violent crime rate in California.
In most places, individual schools adopt the model. Smith’s goal of transforming the entire district makes it among the nation’s most ambitious efforts. (Smith unexpectedly resigned his post in April to help care for an ailing family member in Chicago. The district has named Gary Yee, a veteran Oakland school board member, as Smith’s interim replacement. Officials say they plan to continue developing community schools throughout the district over the next three years.)
District officials say that 27 schools have a designated employee to coordinate the implementation of the community schools initiative and that the goal is to turn every school in the district into a community school. Some schools say they haven’t seen any changes yet.
Despite the district’s ambitions, the community schools efforts seem, at times, like a piecemeal attempt to increase services without any dedicated funding. With little federal or state money available specifically for community schools, Oakland has spent much of the $40 million it has won in competitive public grants during the past five years on services to help students with nonacademic problems.
Money to support community schools now comes from a combination of private fundraising and collaborations between individual schools and Bay Area nonprofits that provide services to students. These partnerships vary; sometimes nonprofits foot the bill, and other times, the school does. The district also has reworked its budget, in part by consolidating and closing schools, to have an administrator, like Fremont High’s Baez, at many schools to coordinate these efforts.
“There will never be enough money coming into public schools to accomplish this,” said Curtiss Sarikey, Oakland’s associate superintendent for family, school and community partnerships. “We don’t have any illusions that we’re going to wait for any grant funding to make this real.”
Providing student resources
At the heart of many community school efforts are campus resource centers. Unlike traditional guidance offices, the centers are one-stop shops for any social, emotional or health need. Students can get confidential counseling from nurses, therapists and social workers or get referred to other organizations for help. Fremont’s center, which opened this school year, is called ASAP – for Academic Excellence, Social Responsibility, Accountability and Proactiveness. Students choose to drop in, or teachers can refer them when they’re having trouble in class. Fremont pays for two full-time employees at a total cost of about $75,000. Other mental health providers work in the center but are funded by Alameda County.
Hurst, who stepped down as principal at the end of this school year, said these new services have reduced suspensions, including a two-thirds drop in the number of ninth-graders kept out of class. But teachers give it mixed reviews. Some have complained that they send students to ASAP just to see them return quickly, along with their disruptive behavior. Many teachers are concerned – even angry – about their diminished power to suspend kids who keep other students from learning.
“That sentiment is going on, no question, to varying degrees with everybody,” Hurst said. “There’s a sense that punishment is needed.”
Inside the center on a school day last fall, an 18-year-old named Darrell checked in with counselors. Darrell said he did not want his last name to be used because he doesn’t want people to know he is seeking counseling. He has been a chronic truant, and it was his last day at Fremont. He didn’t want to leave but said he had no choice because he wouldn’t graduate on time unless he transferred to one of the district’s continuation schools, designed to help older students make up missing credits. Darrell said he would miss ASAP; there isn’t a similar center at his next school.
“If I’m having a rough day, I come through,” he said. “I’ve been trying to change my bad habits and be a better student.”
Darrell had some success in his English class at Fremont, which was based on community school principles and used literature to explore social and cultural differences. “It’s less like an academic situation and more like a family,” he said. “If we could get the whole school on that program, the whole community, it would be great.”
Some studies have shown that community schools can improve student performance. Cincinnati, one of the pioneers of the current community schools push, has seen higher test scores and graduation rates since beginning its Strive Together initiative in 2006.  Community schools in New York, Chicago and some California cities demonstrated improvement on test scores, better attendance and reduced dropout rates compared with traditional schools, according to the Coalition for Community Schools.
But the Fordham Institute’s Petrilli cautioned that the body of evidence supporting community schools is not yet conclusive.
“I think it’s worth trying,” he said. “But we certainly don’t have evidence that this is going to make a huge impact on student learning.”
Experimenting with new strategies
Oakland has a history of trying trendy strategies to cope with inner-city problems that spill into the classroom. In 2000, the district was one of many across the country to embrace the idea of breaking down large schools into smaller ones in order to nurture closer relationships between students and faculty, which would, in theory at least, improve academic performance.
Early signs of success – parent satisfaction and better test scores – led the district to extend the small-schools model into a citywide reform effort. Backed in part by a $9.5 million grant in 2004 from the Bill & Melinda Gates Foundation, a major supporter of small schools, the district closed a dozen large schools and opened 48 small ones in their place. (Disclosure: The Gates Foundation is among the supporters of The Hechinger Report.)
Nidya Baez is the community school coordinator at Fremont High School. Her job is to help recruit and coordinate the work of community-based organizations to provide the help that students need.
Credit: Noah Berger/For The Center for Investigative Reporting
Fremont, with 1,862 students, was broken into five high schools. Nidya Baez, the Fremont administrator, who was a student at the time, was skeptical that small schools would help. “It doesn’t really matter how many schools there are if we’re still doing school wrong,” she said.
When Baez returned to Fremont to teach in 2007 after graduating from the University of California, Berkeley, her fears were proven. She found a campus full of disengaged students, an excess of administrators and a cumbersome bureaucracy.
Elsewhere in the district, there was some improvement. Oakland students in small schools had higher standardized test scores than those at large schools, and parents rated them as safer. But middle school and high school performance was still far below statewide goals.
Around the same time, national fervor for the small-school movement began to diminish as national studies showed mixed results. The Gates Foundation, which spent $2 billion from 2000 to 2009 to create small schools, stopped funding the movement in 2009 after admitting the strategy essentially had failed.
The Gates Foundation’s decision left Oakland with too many schools to run and not enough students to fill them. Last fall, the small high schools on Fremont’s campus were consolidated back into one large school. Schools at another high school campus also were merged into one, and five elementary schools were shut down, according to district officials.
When Smith, the superintendent, first began selling the community schools concept around the district in 2009, not everyone embraced his pitch. Hurst and two other principals went to Smith and spent hours arguing against the plan, fearing it would distract teachers from academics by placing such an emphasis on problems outside of school.
“They argued from a place of deep care and concern for kids,” Smith said. “But I said, ‘Is what we’re doing good enough?’ We had to figure out a way to make it better and do it for everyone.”
Hurst eventually agreed that the community schools concept was worth trying. Providing intensive services, he said, is more likely to improve learning than merely punishing bad behavior. 
“In the past, we just dealt with behavior,” he said. “But when you do that, it will happen again and again.” Still, he understands that it’s not reasonable to expect quick results. “If you’re dealing with the fundamental cause behind the behavior, it’s going to take some time to see movement on that,” he said.
Baez is hopeful. She said she managed to get a decent education at Fremont, but she remembered that many top students transferred to better high schools. Her job at Fremont now is to help recruit and coordinate the work of community-based organizations to provide the help that students need. “A lot of the services were not here last year, so we just suspended students,” she said. “We needed a way to triage students and figure out what’s up with them.”
Safety on campus
One of the biggest problems is that students don’t feel safe at the school. Even if they are not directly involved in violence, they often are witnesses to it. Baez remembers a morning last year when a group of students from another high school showed up with baseball bats to face off against some students at Fremont. Although no one was seriously injured, she said, punches were thrown and campus staff had to break it up.
Sandra Muniz, Fremont’s 17-year-old student body vice president, said young people in East Oakland are inundated with violence and gang culture from an early age. It’s a culture that breeds distrust of authority figures, even those who just want to help, she said. “Kids in Oakland have that mentality – don’t ask questions, don’t get so close,” she said. “With family and friends, I can let my guard down. In the streets, it’s always up.” 
Fighting on campus has been a major problem. To combat it, the school this year started a program called Upstanders Challenge. When students stop a fight from occurring, the whole campus gets an extra 20 minutes for lunch the following Friday. This happened at least a dozen times in this past semester, Baez said.
“Last year, there was a carnival atmosphere around fights with kids standing around and cheering,” Hurst said. “We still have these fights, but the kids are breaking them up before the adults even get there.”
While Fremont’s community school rollout is well underway, other schools have yet to see any changes. Those involved with community school efforts around the country stressed that communication and collaboration are crucial to launching a successful initiative. While Oakland is attempting to roll out the program across the whole district, many started in a small number of schools before expanding.
“You just have to go slowly. You can’t do it all in a day,” said Ellen Pais, president and CEO of the Los Angeles Education Partnership, which helps run several community schools. But she praised Oakland’s ambition, adding that it “sends a great message about the vision that they have.”
At Oakland’s Cleveland Elementary School, in a quiet neighborhood near Lake Merritt, teacher Mary Loeser didn’t think the community schools concept changed much for her students; the school worked to fill in gaps on its own.
“Our PTA paid for a retired psychologist to work part time with our kids,” she said. “We have so many troubled children at this school – and this is a high-performing school. These children are in transition: divorce, immigrating, people moving around because of the economy.”
Abigail Griffin, the mother of three former Cleveland students and former president of the school’s PTA, also was frustrated. In April, Griffin and her family moved out of the district, in part because she was concerned about the quality of education in Oakland.
“No one (from the district) has come to do a needs assessment with us about what our families could use,” she said. “When I try to talk to anybody at OUSD and say, ‘Please meet with us and let’s discuss ways we can fix this,’ no one returns our calls.”
Curtiss Sarikey, the assistant superintendent, acknowledged the challenges of reaching every school and getting staff across the district to take part in the new approach. “We have a lot of work to do with communication,” he said, adding that posters have been put up in every school in the district advertising the initiative.
Sarikey came to Oakland in 2011 from the San Francisco Unified School District, where he worked on comprehensive student health programs. A former social worker, he moved to Oakland after hearing Smith talk about his plans for Oakland.
“Just halfway through the second year of implementation, we’ve actually exceeded some of our goals,” he said.
Principal reaches out
Sankofa Academy is one school that has managed to offer a range of crucial services without much help from the district and without dipping deeply into its own funds. A pre-K-8 school in North Oakland, Sankofa was almost closed four years ago before Principal Monique Brinson took over and began writing her own grant proposals and reaching out to nonprofits around the Bay Area for help. As a result, her school has two full-time mental health professionals from a neighboring children’s agency and two organizations running after-school tutoring and enrichment programs five days a week.
“We were doing this before it became the initiative of the district,” Brinson said. “And if you’re consistent, people want to work with you. There’s really no magic to it.”
Teacher and resource specialist Jonathan Hasak came to Sankofa three years ago. He also has worked at Peralta Elementary School, just five minutes away. While Peralta is one of the top-performing schools in the district, Sankofa has long struggled with high absenteeism and low test scores.
“The conversation at Peralta is, ‘What’s your favorite state?’ ” he said. “Here, you’re talking to kids who, what they’re sharing is, ‘I don’t know who my father is.’ ”
Hasak credits Brinson with wrangling the community organizations that now provide on-campus student services. “Otherwise, we wouldn’t have tutors, we wouldn’t have intervention people after school or a science program,” he said. “We just don’t have the money for it.”
Hasak, like many of his colleagues, says he believes progress will come from individual school sites. Despite a shoestring budget for support and enrichment programs, Sankofa’s Academic Performance Index, a statewide measure based on standardized test scores, has risen from 691 to 773 since 2009, according to state data. The index ranges from 200 to 1,000, with 800 as the state goal for schools.
Others in Oakland hope he’s right, especially now that Smith, the primary advocate for community schools, has stepped down. District spokesman Troy Flint called Smith a visionary, adding that he was leaving the district in good shape to see the community schools initiative through.
“I feel the staff at this point has a clear vision of what needs to be done,” he said. “I don’t think we feel adrift.”
Because of the financial crisis in California’s public schools, Hasak said, the administration ultimately has little power to turn around every school. “I don’t know what the district can do besides offer a vision for what type of school district we want to be.”
This story was produced by The Hechinger Report, a nonprofit, nonpartisan education-news outlet based at Teachers College, Columbia University. Bundy is a reporter for the independent, nonprofit Center for Investigative Reporting, the country’s largest investigative reporting team.

Thursday, January 31, 2013

School Districts Reeling From Bad Press Over Bond Funding

The bad press keeps hammering away on a reckless form of school construction bond borrowing some California school districts have turned to called Capital Appreciation Bonds.  Here at Emery Unified School District, the School Board recently voted to saddle us with our own CAB to pay for the new school facilities at the Center of Community Life and a debt we'll be paying back for 34 years, a usurious loan according to State Treasurer Bill Lockyer.  Emery's newly approved CAB hasn't been sold yet and actual amount Emeryville taxpayers will have to pay for the newly released CAB has not yet been released by Emery.  
The video at the top of the story below has an ominous quote that may be portentous for Emery: "The [Alvord] District is bankrupt already, they just don't know it yet."

Warning to readers: the interactive graphic in the story doesn't show Emery Unified School District's new CAB loan yet.  The amount shown is only what the District owed from before the latest round of borrowing.

From California Watch and the Center for Investigative Reporting:

Controversial school bonds create ‘debt for the next generation’


Decade of Debt: Capital Appreciation Bonds

Uncover how much high-interest debt school districts, community colleges and government agencies have issued. Each circle represents a public entity. The larger the circle, the greater the debt. The redder the circle, the higher the interest that entity will pay.

Herb Calderon stood on the campus of Hillcrest High School, staring at a wall that cost $10 million to build.
The mile-long barrier was constructed to prevent the hillside above from sliding into the new school during a heavy storm. The state-of-the-art campus with its extravagant sculpted concrete wall, he said, has helped upgrade the image of the downtrodden district.
“They wanted a beautiful high school, and we gave them a beautiful high school,” said Calderon, assistant superintendent for business services of the Alvord Unified School District in Riverside. “If people knew how much it cost, I’m sure we’d get some flak.”
The school, including the wall, cost $110 million to build, but by 2046, when it is finally paid for, it will have cost taxpayers at least $485 million.
Alvord is one of at least 1,350 school districts and government agencies across the nation that have turned to a controversialform of borrowing called capital appreciation bonds to finance major projects, a California Watch analysis of bond financing data in the U.S. shows. Relying on these bonds has allowed districts to borrow billions of dollars while postponing payments in some cases for decades.
This form of borrowing has created billions of dollars in debt for taxpayers and hundreds of millions of dollars in revenue for financial advisers and underwriters. Voters are usually unaware of the bonds’ high interest. At least one state, Michigan, has banned their use.
In California, where rules governing the loans are among the loosest, more than 400 school districts and other agencies have racked up greater capital appreciation bond debt in the past six years than in any other state.
They have borrowed $9 billion that will cost taxpayers $36 billion to repay over the next 40 years, according to data compiled by California Treasurer Bill Lockyer. He called it “debt for the next generation.”
“The average tenure of a school superintendent is about three and a half years, so they aren’t going to be around in most instances to worry about paying that off,” Lockyer said in an interview.“Nor will the voters, probably, that enacted it in the first place.”
The capital appreciation bondbusiness in California has been lucrative for dozens of private financial advisers, banks and credit rating firms that have charged government entities nearly $400 million for financial services since 2007, state data show.
The bonds are unusual in public finance because they postpone debt far into the future. Typical school bonds require borrowers to begin making payments immediately and cost two to three times the principal amount to repay. But with deferred payments, districts have ended up paying as much as 23 times the amount borrowed.
The decision to issue these bonds instead of traditional bonds typically is made by district officials after voters have approved bond measures, and the public usually has no knowledge of how much they will cost to repay.
Earlier this month, Lockyer and Tom Torlakson, the state superintendent of public instruction, called for a statewide moratorium on capital appreciation bonds until new legislation limiting their use is in place.
The issue first came to light last year after the Voice of San Diego and a Michigan bloggerreported on a questionable capital appreciation bond issued by the Poway Unified School District.
But a California Watch analysis shows that the issue is not unique to California.
Since 2007, school districts and government agencies in at least 27 states and Puerto Rico have financed projects with capital appreciation bonds.
In Texas, 590 districts and other government entities have issued these bonds over the past six years – more than any other state, according to a California Watch review of a database maintained by the Municipal Securities Rulemaking Board, a federal regulatory agency that oversees the municipal bond market. California was second, with 404, followed by Ohio, with 202.
Nationally, the total amount of debt generated by these bonds is unclear. States rely on varying methods for reporting, and in some cases the data is incomplete. Many capital appreciation bonds were issued in packages with other types of bonds, and national databases do not tally their independent values. 
In California, some of the most dubious deals occurred in San Diego County, where the Poway Unified School District in 2011 used the bonds to borrow $105 million that will cost $982 million to pay back, a repayment rate of about 9.4 to 1. The same year, the Santee School District borrowed $3.5 million that must be repaid at $58.6 million, or 16.6 times the principal.
Besides school districts, four agencies that receive tobacco-company payments from a court settlement have issued these bonds to construct health care facilities and operate programs. The largest was issued by the Inland Empire Tobacco Securitization Authority – a $206.4 million bond that will cost $3.8 billion to pay back, or more than 18 times the principal.
To finish building Hillcrest High School, the Alvord district issued a $57 million bond in 2011. By 2046, when the loan is paid off, Calderon said, it will have cost taxpayers $375 million – 6.6 times the principal.
Calderon, who joined the Alvord district as chief business officer in July, called the deal “a necessary evil” and said falling property tax revenue and dwindling state funding had left districts with no choice but to engage in risky borrowing.
“If this was a mortgage, you would run,” he said. “But this type of creative financing is what we’re forced to do.”
David Bauman/The Press-EnterpriseHerb Calderon, Alvord Unified School District’s assistant superintendent, walks the football field at Hillcrest High School in Riverside. The district issued a controversial $57 million capital appreciation bond but ran out of money to build bleachers.
Bypassing state tax cap
Some California districts, including Alvord, have used the bonds to get around a state limit on property taxes. To pay off bonds, unified school districts are allowed to tax residents no more than $60 per $100,000 of their assessed property valueeach year. By issuing capital appreciation bonds, districts that have reached that limit can push the tax burdens of new bonds far into the future.
When districts issue these bonds, they are betting that property values will increase enough over time to pay their debts. They often hire private firms to calculate property value projections and structure the deals.
The private firms are paid to determine how much money is safe for districts to borrow, but Lockyer said some financial advisers appear to have exaggerated property value growth projections to get the deals approved.
Although private firms are not obligated to report their fees to state regulators, the state treasurer’s office has compiled some fee information found in official bond statements. At least 42 financial firms have charged school districts and other agencies in California a total of $389 million since 2007, Lockyer’s office reported.
According to data available to the treasurer, Caldwell Flores Winters, a California-based company specializing in public finance, made the most money advising on California’s capital appreciation bonds – $6.8 million on 84 deals. Second was Dale Scott & Co. in San Francisco, with 55 deals worth $4.6 million. California Financial Services, a financial planning firm, was third with $3.5 million on 28 deals.
Financial advisers have been meeting with Lockyer and state legislators to discuss a measure that would limit repayment rates to as little as four times the amount borrowed with capital appreciation bonds, also known as CABs.
“Even though CABs can be a useful tool in managing a district's debt, it appears there have been a number of abuses,” said Dale Scott, whose firm was hired by Alvord last year to help manage the district’s debt. “That's why we strongly support the proposed legislation that would provide significant taxpayer protections.”
While financial advisers help districts structure the bonds, underwriters – typically large banks and investment firms – broker the deals for a commission, selling the bonds whole or breaking them into smaller pieces and selling them to multiple investors.
According to state records, Piper Jaffray was the busiest underwriter since 2007, brokering 165 capital appreciation bondsfor a price of $638,045. Goldman Sachs made the most money as an underwriter during the same time period – $1.6 million on a single deal with the San Diego Unified School District.
Both firms declined to comment for this story.
Highly leveraged deals
Nationwide, falling property values have hurt districts’ tax revenues, prompting some to turn to long-term bonds. Outside California, however, tighter regulations helped curb their use.
Ohio, for instance, prohibits the type of ballooning debt structures found in many California deals by requiring bonds to maintain a flat debt service. That means the annual payment must remain roughly the same each year.
California removed its flat debt service requirement on long-term bonds in 2009 with the passage of AB 1388. The bill was sponsored by the California Public Securities Association, which lobbies state lawmakers on behalf of financial consultants and underwriters. An association official declined to comment.
While districts have been relying on capital appreciation bonds for more than a decade, there was a slight increase in their use after the bill took effect, state data shows.
“Looking back, the Legislature's decision to eliminate the flat debt service requirement in 2009 is what led to a lot of these highly leveraged deals,” said Scott, the financial adviser.
School districts that issued these bonds fall into two categories: those that could not issue standard bonds because they had reached the $60 state tax cap, like Alvord, and others, like the Napa Valley Unified School District, that simply promised voters they would keep their tax rates low.
Napa issued its bonds in 2009 and 2010, in part, because officials had pledged to keep the tax rate well below the state limit.
“Our promise to the voters of Napa was to keep their tax bill at or below $36, and we were able to accomplish that,” said Jose Hurtado, a Napa school board member.
In 2006, Napa voters authorized $183 million to repair old school buildings and build a new high school in American Canyon, a rapidly growing area in southern Napa County.
By 2009, when the high school was nearly completed, property values had dropped and the district suddenly found itself short of cash.
On the advice of KNN Public Finance, an Oakland firm, Napa issued a nearly $22 million capital appreciation bond. The loan will cost $154 million – seven times the principal – when it is paid off in 2049.  
Three months later, the district issued another bond for $7 million that will have cost $28 million by 2033.
Hurtado said the board did not explain to voters the high cost of repaying the bonds, as far as he knows.
“I don’t recall any of those conversations going on,” he said. “It doesn’t mean they didn’t happen, I just don’t recall.”
KNN charged the district $156,000 for advising on the deals, according to state records.Advisers at KNN declined to be interviewed, but Dave Olson, a managing director for the firm, said in a statement to California Watch that, ultimately, districts set their own fiscal policies.
“The role of the financial advisor is to present the full range of reasonable alternatives to implement that policy,” the statement said. “We hope that the district feels we did so in this case.”
Some officials have criticized districts like Napa for shifting debt to future taxpayers instead of asking voters to pay now.
“If they’re trying to stay under a tax rate promised to the voters, that’s completely egregious,” said Glenn Byers, assistant treasurer of Los Angeles County, who has been critical of capital appreciation bonds that take longer than 25 years to repay.“If they’re not at the tax rate’s legal limit, it’s a slam dunk: They shouldn’t be doing (it).”
Complex finance plans
Whether Napa’s school board understood the long-term implications when it approved the dealremains unclear. When California Watchfirst asked school board member Joe Schunk about the deal in November, he said Napa had not issued any capital appreciation bonds.
A week later, he called backand said he had been mistaken.
Fellow board member Hurtado said that KNN had explained the deal but that “it was hard to understand.”
“When you’re trying to have discussions about CABs versus traditional (bonds) and tax rates, occasionally it all runs together,” he said.
Lockyer said the inability of district leaders to grasp complex municipal finance is a problem around the state.
“I’ve seen materials that went to a school board when they authorized the original issuance and there were blanks where the interest rate amount was to be determined someday,” he said. “But that’s what they saw when they agreed to a deal.”
Ben Johnson, a longtime school board member in Alvord, said he could not remember how the district’s $57 million deal was explained to the board when members approved it 2011.
“I think the thought process was that housing prices would increase,” he said. “If you’re asking me if I would do it in the future, I would not, but you can’t go back in time.”
Piper Jaffray charged the district $569,416 to underwrite the bond, according to state data.
Calderon, Alvord’s chief business officer, lamented the lack of financial expertise that leaves many districts unqualified to navigate complex bond deals – or to do business with high-powered financial advisers and Wall Street investors.
“They’re swimming with the big sharks,” said Calderon, who likened running a school district to heading up a large corporation. “These are principals and assistant superintendents of curriculum, and they’re being promoted in the role of a chief business officer.”
Unlike Napa, Alvord had reached the $60 tax cap at the time it decided to issueits capital appreciation bond.
Before Hillcrest High School opened in 2012, Calderon said, Alvord’s other two high schools were bursting at the seams. Postponing construction on the new school would have meant holding classes in portable structures, “like a tent city.”
With the district unable to borrow more money with traditional bonds and voters demanding a new school, district leaders began to feel the political heat.
“It’s one of those situations that people are forced into when there’s a lot of pressure put on by either boards or superintendents, that they want this building finished and they want it today,” Calderon said.
David Bauman/The Press-EnterpriseHillcrest High School was supposed to have an Olympic-size pool, but it was halved to 25 meters when construction funds ran short. A large concrete deck fills the space where the rest of the pool was meant to be.
Cycle of borrowing
Alvord’s financial troubles date back at least five years, when the district got stuck in a cycle of borrowing money to pay off previous loans.
“Our whole issue is that, technically, the district is bankrupt,” said Scott Andrews, an Alvord district resident who has led opposition to the district’s borrowing practices, which according to district officials have left taxpayers $500 million in debt. “No one has been able to explain to me how they’re going to pay this back in the future.”
Johnson brushed off criticism that the district had dug a hole for itself by spending more than it could afford.
“Alvord at times has been secondary in some people’s minds in the county of Riverside,” Johnson said. “We want to make sure our students don’t go without any opportunities, not just educational but in terms of facilities.”
Hence the extravagant design of Hillcrest High School.
Built into the side of a hill, the campus features state-of-the-art facilities, including a stadium, aquatic center and air-conditioned gym. But even after issuing the $57 million bond to complete the school’s construction, parts of the campus remain unfinished because the district ran out of money.
For starters, the stadium has no seats. The district could not afford them, so families bring lawn chairs to watch the school’s football games.
What was supposed to be an Olympic-size swimming pool was scaled down by half to 25 meters when construction money ran out, leaving a large concrete deck where the rest of the pool was meant to be.
When Calderon first toured the aquatic center after joining the district last summer, he was shocked. “The first words out of my mouth were, ‘Where is the rest of the pool?’ ” he recalled.
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Although Hillcrest originally was designed to serve 2,500 students, the district had to scratch an entire wing of classrooms from the building plans due to budget shortages. The school now has space for 1,600 students.
Each classroom cost $10,000 to furnish with hardware and technology, including digital blackboards that likely will be obsolete when the district’s first bondpayment comes due in 2026.
The school sat empty for a year after it was built because the district did not have enough money to operate it.
Still, Calderon insists that Alvord didn’t overreach. Although the district is $500 million in debt, he said, it’s “good debt” put toward facilities that will enhance learning for generations of students.
“Maybe one of these years or one of these decades,” he said, “if we ever get to sell another bond or do fundraising, maybe we can break open that concrete and build ourselves a true 50-meter, Olympic-size pool.”