On Wednesday, February 26th, the Contra Costa Community College District Board of Directors will consider placing a $450 million bond measure before voters on the June 3, 2014 election ballot (see agenda item 57-D on page 174 here). For more than a year the District has explored ways to finance the expansion and modernization of its facilities, called for by its Master Plan, at an estimated cost of $700 million.
Based upon polling results presented in December, the Board decided to place a $450 million bond on the June ballot and directed staff to make preparations accordingly. The last day for the District to file county election paperwork for the June ballot is March 7th. School bond debt requires approval from at least 55% of voters.
Taxpayer organizations have expressed concerns about this large amount of debt, particularly given the weak financial condition of the Community College District. The Contra Costa Community College District expenses continue to exceed income and the annual revenue shortfall is expected to exceed $2.2 million by the end of the 2015-16 budget year. Pension and benefits costs are continuing to increase, even as student enrollment trends are in decline.
Fair and open competitive bidding for District construction contracts has also been a point of disagreement between concerned taxpayers and the District. Since 2011 the Community College District has allowed only union contractors to bid on its construction contracts. By prohibiting free market competition, taxpayers pay an estimated 13-15% more for construction services, according to a 2011 study conducted by the National University Institute for Policy Research. It remains to be seen whether the Board will continue its controversial policy that shuts out local small businesses from the competitive bidding process and considerably drives up construction costs unnecessarily to taxpayers.
The Community College District faces numerous challenges including declining student enrollment, rising costs for employee health insurance, anticipated increases in CalSTRS pension rates, over $188 million in unfunded liability for retiree health/dental benefits and growing costs for deferred facilities maintenance.
Simple arithmetic alone makes it questionable whether the Community College District can afford to incur new bond debt and cover expenses for scheduled maintenance of new expanded facilities.
A new building campaign is certain to aggravate the District’s budget difficulties. In light of the shaky finances of the Community College District and numerous other tax measures on upcoming election ballots throughout Contra Costa, it is doubtful that residents will support adding $450 million in costly new debt to the taxpayers’ tab.