COPs and Robbers: A Tale of Two Jeffco Schools
It’s been a little while since we talked about Jeffco, but I couldn’t resist chiming in on a CBS 4 story proudly declaring that the district has broken ground on a “brand-new K-8 school” in Arvada’s Candelas development. The construction of a new school wouldn’t normally merit a blog post, but this particular school carries such political baggage and symbolic value that it’s impossible to ignore.
If you dig deep into the locked container in your head labeled “Jeffco Recall 2015,” you’ll probably remember a bit of a kerfuffle last year about the proposed use of certificates of participation to finance new school construction in Jefferson County. COPs, as they’re colloquially known, exist mostly as an end-run around TABOR in that they allow governments to incur long-term debt without voter approval. The Independence Institute’s Josh Sharf explains it like this:
The government, in this case a school district, transfers some asset, usually a building or set of buildings, to a special-purpose entity set up specifically to administer the COP. That entity – not the school district itself – then floats the bond on the municipal bond market. It then leases the buildings back to the school district for lease payments that match the bond payments. It is those lease payments that secure the debt. In addition, the lease comes up for annual review by the school board which, in theory, could refuse to renew.
If that sounds a little shady to you, you’re not alone. The questionable nature of COPs and a sense of basic fiscal responsibility led the previous conservative majority to reject the numerous COP-based proposals thrown its way during 2015, including a $25 million proposal for the new school in Candelas.
But COPs or no COPs, there was no question on either “side” of the board that the fast-growing Candelas development needed a school to serve its incoming children. So the board majority, in a stroke of obvious governmental insanity, decided to build the school using money that it, you know, actually had in the bank. That money—about $18 million—came from a $15 million “underspend” in the district’s general fund and an available $3 million in its capital transfer fund. The end result? New school, no debt.
Why the discrepancy in price between the two proposals? First, because the board majority believed it could build a school for far less than was initially estimated by the district. Second, the $18 million school would be a K-6 rather than a K-8, the thinking being that such an arrangement would allow the district to meet immediate needs in Candelas while buying itself some time to plan for the future.
Given the choice, I think most folks would rather pay for projects using existing money rather than incurring long-term and potentially risky debt. And sure enough, the Candelas school decision proved to be one of the majority’s more popular moves. But before the project could ever get rolling, the disingenuous display of naked politics known as the Jeffco recall happened. We all know how that story ended.
Fast forward a month, and Jeffco’s leaders, including the new board members, had begun to think they’d really rather have their cake and eat it too. Roughly $10 million of the $15 million underspend would go back into reserves, with the other $5 million going to one-time “stipends” for teachers—a move that drew well-deserved criticism for looking an awful lot like a thank you payment to the union for helping recall the previous majority and elect their successors. The district would then take on between $40 and $60 million in COPs to finance its capital projects, including the Candelas school, and use the $3 million from the capital transfer fund to cover the resulting debt service payments—assuming, of course, that the fund didn’t fall victim to budget cuts. To top it all off, the district would ask voters for tens of millions more in a bond package.
The $5 million dollar teacher payoff… erm, “stipend”… was eventually nixed after it became clear that it created some pretty ugly optics. But the COP-backed, $25 million Candelas K-8 was approved, as was a separate $15 million in COPs for work at Seirra Elementary School. That $40 million package was then increased by the district to $48 million thanks to “changes in construction costs.” Factoring in interest, the actual cost of the package to the district is about $78 million.
And so it is that I find myself reading an article about breaking ground on a $25 million school built with debt that could have been built for $7 million less using existing money. Meanwhile, the district has proposed an additional, flabbergastingly enormous spending package that totals in the neighborhood of $800 million—much of which will have to be shouldered by Jeffco taxpayers should voters approve whatever request the district makes in November 2016. Just to put that number in perspective, the district’s entire annual budget in 2015-16 was about $1 billion.
I’m happy the kiddos moving to Candelas will have somewhere to go to school. We’re constitutionally required to provide public education for every student in Colorado, and that sometimes necessitates building new schools. But I can’t help but feel like this whole situation offers a compelling fork-in-the-road case study of why school board elections matter. I don’t know what the conservative majority would have done in 2016 had they maintained their seats, but I’m pretty confident it wouldn’t have looked like this.
People like to say that you get what you pay for. When it comes to Jefferson County, it looks like residents will now have to pay for what they got.