3… How the Public Trust Can Save the School Construction Fund

On January 31, 2017, the House Capital Budget Committee held a hearing on the School Construction Budget. There were several important topics reviewed at this meeting.

#1. Report of the School Construction Technical Work Group.

#2. Overview of the School Construction Assistance Program.

#3. Pre-Disaster Mitigation Plan.

#4. Washington State University Inventory and Condition of Schools Report.

#1. Report of the School Construction Technical Work Group.
Here is a link to the first slide presentation:

The current Governor’s proposal is $800 million in new General Obligation (GO) bonds plus another $200 million in existing bonds:


Thus, the proposal is to only spend about $400 million per year on school construction and repair. This is about one percent of what is actually needed. Given that our State has a $40 billion school construction backlog, it would take 100 years to address just the current backlog of more than 1000 crumbling schools – schools that do not meet the health code or earthquake code standards including hundreds of schools with lead in the water. Thus, this proposal is simply a crime against our children by forcing them to spend their school days in unsafe and unhealthy schools – all so our legislature can continue to pay Boeing and other wealthy corporations billions of dollars per year in tax breaks.

The following table shows that there is about $200 million in cash sitting in the School Construction Match Account:


The following chart shows that the legislature used to actual provide funds from the General Fund (basically lottery funds) to fund school construction. But the new plan is to pay for school construction exclusively with bonds to Wall Street banks:


The problem with this plan is that smaller school districts do not have the tax base to pass a school construction bond. They there can not qualify for state matching funds as there is nothing to match. This is contrary to several sections of our State Constitution including Article 9, Section 2 which calls for a uniform system of public schools without regard the zip code that the child lives in.

#2. Overview of the School Construction Assistance Program (SCAP).
This report confirms that the state only pays for a small fraction (about 10% of actual school construction costs. It does this first by underpaying the square foot costs:


It then only pays for a small part of the actual square footage and ignores minor details like the halls needed between classes and the cafeteria needed to eat lunch:


There were other slides. But they were not even remotely accurate.

#3. Pre-Disaster Mitigation Plan.
Here is the link to this presentation:

This presentation was about a FEMA grant of $800K to study school hazards in Washington State. Apparently, lead in the water is not considered a school hazard. Here are the school districts that participated in the pilot study:


The schools are all evaluated for a series of hazards:

An Emergency Disaster plan is then generated in order to deal with the hazard. Only 5 school districts managed to complete their FEMA disaster plan. For example, the Ocosta School District has a Tsunami Hazard due to the Cascadia Subduction Zone Mega Quake which is actually overdue and can strike at any moment:


Apparently, the kids are supposed to walk out of their classrooms and climb up onto the roof of the new gym. Here is a picture of the “Tsunami -proof” roof of the new gym which can hold up to 2,000 people:


Here is a quote from an article about this building: “The roof sits 53 feet above sea level. That’s well above the 40-foot surges predicted in the vicinity by worst-case tsunami models.” The article notes that the cost of the new roof was only an additional $2 million.”

The problem here is that the school itself is not quake proof so the kids will not be able to get out the front door of their class. Even if they manage to make it to the roof of the gym, it will not help because the roof is only 53 feet above the ground and the Tsunami will likely be over 100 feet high – with an actual “worst case” of 150 feet. In addition, the ground is expected to drop about 6 to 10 feet. Why the difference? FEMA is giving the “best case” model. Not the “worst case” model. See the Cascadia Mega Event Model movie at this link:

FEMA absurdly claims that the Tsunami will only be 22 feet high. The provide no evidence to support this assumption. The 2004 Indian Ocean Tsunami was 100 feet high. The Alaska 1964 Tsunami was 220 feet high.


Sadly, the FEMA report on the history of 10 major Tsunamis failed to even mention the most important fact of these Tsunamis – which was their height! Thankfully, you can look these up on Wikipedia. A cheaper and more honest plan would be to give each child a life jacket and a rubber raft and hope for the best. This study is beyond dishonest. It is another crime against our kids. While the Washington legislature is doing absolutely nothing to protect our kids from the coming Cascadia Mega Quake, the State of Oregon is spending $200 million on earthquake proofing their schools and British Columbia is spending $3 billion.

#4. Washington State University Inventory and Condition of Schools Report.
Here is the link to this presentation:

This study looked at 650 schools in 90 districts. For reference, our state has about 2,200 schools in 295 school districts with 4,500 permanent buildings. So the study looked at about one third of our schools. The study found that about half of the schools are more than 30 years old (in fact more than half are more than 50 years old). They also found that there are 4,500 portable buildings being used and 1,500 of them are more than 24 years old.

On February 7 2017, the House Capital Budget committee held a hearing on House Bill 1694 Public School Construction. House Bill 1694 is basically a shell game robbing $250 million from the Opportunities Pathway Account and another $290 million from the Budget Stabilization Account (also known as the Rainy Day Fund). Thus, this bandaid bill robs $540 million over two years or $270 million per year to pay for school construction when we actually need $40 billion. This is disgraceful.

History of our $40 billion school construction backlog
For more than two decades, our legislature has refused to pay more than a small fraction of the actual cost of building and repairing schools. Whereas our State legislature historically provided more than 66% of the actual construction costs of public schools, State funding for school construction has fallen to below 10% of actual costs during the past 20 years.


Sadly, not only has our legislature failed to provide adequate funds for operating schools, but they have also failed to supply funds for the repair and building of schools.


Half of our schools have water damage (which leads to mold and other toxins). Half have poor air quality. Thirty percent of our schools are estimated to have excessive lead in the water (which causes brain damage in children). Most of these problems are related to older schools. Half of our schools are more than 50 years old.


School Construction Backlog Analysis
Now that we understand the history and underlying cause of the school construction funding shortfall in Washington state, we will take a closer look at how to calculate the total school construction backlog. We mentioned earlier that school construction funding has been under-funded by an average of $2 billion per year for the past 20 years leading to a $40 billion backlog. But it is actually a little more complex than this. There are several problems all of which have gotten worse over time. These include:

#1 Failure to build Permanent School Building – leading to an unhoused student rate of 10% - among the highest in the nation and double the national average.

#2 Classrooms needed for Full Day Kindergarten

#3 Cutting Class Sizes in Grades K through 3

#4 Cutting Class Sizes in Grades 4 through 12

#5 Old Unhealthy Schools do not meet the State Health Code

#6 Old Crumbling Schools do not meet the State Earthquake Safety Code

Over half of the schools in Washington state are more than 50 years old. These are the schools that do not meet the health code or the earthquake code. There are more than 2000 schools in Washington state. So there are more than 1000 schools that are dangerous and need to be replaced. We will now take a look at how much each of these problems will cost to get fixed. The only good news is that when we fix problem #6, we will also fix problem #5.

#1 Failure to build Permanent School Building – Providing Real Permanent Schools for 100,000 Currently Un-housed Students in Washington State would cost $6 Billion Dollars
When billions of dollars in school bonds go down to defeat, school districts are forced to buy temporary portable boxes to use as classrooms. According to a 2008 report by the Washington State Auditor, these portable classrooms cost more than twice as much to heat and maintain as real classrooms. The most energy-efficient portables cost about 2.5 times as much to heat, cool and light compared to permanent school buildings.” Performance Audit Report 1000013 Page 21.

Despite the huge long term cost of portables, the number of permanent school buildings has plunged while the number of portable school buildings has skyrocketed. Fewer permanent classrooms were built in 2005 to 2014 than at any point in the past 30 years. Currently for every permanent new school building in our state, there are two to three temporary particle board boxes added to our schools. These boxes may cost a little less initially. But they cost much more over the long run and are not good learning environments for our students.


These temporary buildings are not only very expensive in the long run, but they also cause health problems in students and teachers. According to the 2008 Auditor report, one in ten of our children – or more than 100,000 children in our State - are attending school in inefficient and unhealthy particle board boxes. This unhoused student rate of 10% is double the national average which is only 5%. As a consequence the average age of permanent school buildings in Washington state is now more than 50 years old!

#2 Classrooms needed for Full Day Kindergarten… Cost for Full Day Kindergarten Classrooms is $1.6 Billion Dollars
Washington state is moving from half day to full day Kindergarten in the next two years. This is the equivalent of increasing Kindergarten students from 40,000 to 80,000 students. Yet with classrooms already exploding at the seams, there are no classrooms available for these additional 40,000 students. At 500 students per school, it will take building 1600 additional classrooms or 80 additional elementary schools. 80 schools times $20 million per school would require $1.6 billion. True to their pattern of only providing a small fraction of the actual cost, the legislature has proposed providing only $280 million or less than $200,000 per classroom – less than one fifth the actual cost!

#3 Reducing Class Sizes in Grades K through 3 will cost $4 billion dollars
Another change scheduled for the next three years is reducing class sizes 320,000 students in Grades K through 3 from the current 24 students to 17 students. This will require not only hiring another 5,400 teachers but also building another 5,400 classrooms. At 27 classrooms per new school, this is another 200 elementary schools. Multiple 200 more schools times $20 million per school and the total cost is $4 billion dollars. The capital budget bill, House Bill 115, had $4 billion in funding. However, only one tenth of this or $400 million was for public schools. This was only $200 million per year or $200 per student.

#4 Reducing Class Sizes in Grades 4 through 12 to Support Initiative 1351 will cost $12 Billion Dollars
One of the excuses used to delay Initiative 1351 for four more years was the claim that there are not enough classrooms to support smaller class sizes and it will take years to build all of the classrooms. But while Initiative 1351 was delayed four more years until the 2020 -2021 school year, nothing was done to actually build the classrooms! The average class size in Grades 4 through 12 in Washington state is more than 30 students versus a national average of less than 27 students. Initiative 1351 approved by the voters in 2014 mandates lowering class sizes in Grades 4 through 12 to 25 students. 8 Grades times a grade cohort of 80,000 students is 640,000 students. It would take another 5000 teachers and another 200 schools to lower class sizes down to 25 students. Middle schools cost $40 million each and high schools cost $80 million each. So we need $4 billion for 100 middle schools and $8 billion for 100 high schools. The total is $12 billion. Add $12 billion to $4 billion for K3 classrooms plus $1.6 for full day kindergarten plus $5.6 for 100,000 unhoused students comes to $23.2 billion.

#5 Public School Building Health... A Hidden Crisis!
In addition to building new schools, we should also insure the health and safety of existing public schools. Sadly, our state faces a school repair backlog that exceeds more than $10 billion and is certain to be endangering the health of our students. Nearly all buildings are subject to building codes which are regulations intended to insure the safety of occupants. Building codes are revised about every three years. The only buildings exempt from these rules are public schools. In order to keep the construction and repair cost of school buildings down, safety codes for public schools have not been revised in nearly 40 years (since 1971). While an updated school health rule was proposed by the Washington State Board of Health in 2009, the State Legislature has refused to allow the Board of Health to implement the new school health rule. This means that the buildings school children are required to spend their days in are the least safe buildings in our State.

#6 Replacing Very Old Crumbling Schools that do not meet the State Earthquake Safety Code will cost about $40 billion
When we add the $10 billion school health problem to the $23 billion school construction backlog, the total school construction and repair backlog appears to be over $30 billion. This does not include the biggest cost of all – rebuilding over half of our dangerous 50 year old schools to prepare for the next major earthquake. This will cost more than $28 billion. However, since it is the older schools that suffer from both health problems and structural problems, the total bill to upgrade every school in our state to the current building and health codes is about $40 billion.

Adding it all up... The total cost for these 1,650 schools is $51.2 Billion DollarsReal Schools for 100,000 Currently Unhoused Students.... $5.6 Billion Dollars
Full Day Kindergarten Classrooms...........................................$1.6 Billion Dollars
Reduce Class Sizes in Grades K through 3............……............$4 Billion Dollars
Reduce Class Sizes to Support Initiative 1351......……............$12 Billion Dollars
Replace Unsafe Crumbling Schools for 500,000 students…... $18 Billion Dollars
Total School Construction Needs …....................................$41.2 Billion Dollars

Total School Construction budget for the next two years is only $440 million per year – only one percent of what is actually needed! Here is a chart of Washington School Construction funding for the past 10 years.


McCleary Requires Funding Not Only School Operation But Also School Construction
Our Supreme Court has stated that the State Constitution requires the legislature to pay the full cost of school construction. In its January 9 2014 order the Court wrote that “the State must account for the actual cost to schools by providing these components (the cost of classrooms associated with class size reductions through additional capital expenditures).” http://www.courts.wa.gov/content/publicUpload/Supreme%20Court%20News/20140109_843627_McClearyOrder.pdf

How the Washington Public Trust Can Solve the School Construction Crisis
As we have shown above, our state is facing a $40 billion school construction crisis. But the legislature is proposing between $300 million to $400 million per year in school construction bonds. This revenue is currently placed in the school construction fund where it is held in limbo for school districts that have passed local school bonds. This system is not based on need for new schools. It is simply based on the ability to pass a school bond.

Once a school district passes a bond, they then pay “bond attorneys” huge fees to draw up legal bond papers. These bond papers then are sent to bond traders who chargeg another huge fee. The bond traders then sell the bonds to big Wall Street banks who charge the school district a very high rate of interest depending on their “bond rating.” Smaller school districts are charged higher fees even though they are required by law to pay the bond payments and even though no school district in our state has ever defaulted on a school bond. The school district then gets the money transferred from the Wall Street bank and put into their School Construction Account. Only AFTER paying for the school are they able to get a small “re-imbursement” of about 10% of the actual cost from the State School Construction -with a complex and inaccurate formula used to hide the real actual cost. Here is a graph of the current School Construction Funding Process.


The Washington Public Trust would create a much more efficient and less costly school funding system (similar to the system used by the Public Bank of North Dakota).


Local homeowners would pay much less in property taxes because the actual bond amount has been cut in half. More school districts would be able to pass school bonds because the amount of the school bond would be cut in half.


Continuing School Construction Grants to Poor Communities that Can Not Even Afford a One Percent School Bond
Just as important, poor school districts, who currently are unable to pass a school bond, can apply to have a school built for free if they can prove they actually need a new school. Here is how this would work:

The State would continue to put $400 million per year into the School Construction Matching fund just as they do now. Some of this money would be retained by OSPI to pay for the ongoing school construction program. But most of it would be transferred to the Washington Public Trust where half of it or $200 million could be leveraged into up to $2 billion in school construction contracts. The other half or $200 million could be set aside as full grants to pay for urgently needed new schools in poor school districts using the same process currently being used by the Public Works Trust Fund to rank public works projects based on need.

This new and more efficient school construction funding system would be completely safe because every school district has always made every contract payment.

Within just a few years, the legislature could reduce and then end the $400 million per year in payments to the School Construction Fund because the “service fees” from existing school construction contracts would generate enough revenue to pay for new school construction contracts (just like the Public Works Trust Fund Revolving Account).

There are some communities that have such low property valuations that they cannot even afford a one percent school bond. Because Public are essential and benefit everyone in the state, the Public School Construction Fund has provided grants to these communities. The Washington Public Trust would continue this program by offering up to half of the revenue from State funding of school construction in any given year in the form of grants to poor communities to replace unsafe and unhealthy crumbling schools. The ranking process for giving these grants must include consideration for the property valuations in the community and current tax rate per thousand of assessed valuation as well as the age of the school being replaced. Therefore wealthy communities like Seattle and Bellevue would never qualify for a grant. But extremely poor rural communities with the oldest schools would always be at the top of the list.

In about 20 to 30 years, our current $40 billion school construction backlog would be completely eliminated. Every student in our state would be attending a safe and healthy school!