Transcription:
Moderator (00:06):
Okay, well thank you guys for being here. We're going to go ahead and get started since it's about 2:15 anyway, so appreciate you joining our panel. This is the K-12 school districts panel facing the challenges for TK-12 education, and I'm your moderator, (Inaudible). I'm an associate at Nixon Peabody and I'm going to go ahead and introduce our panelist. We have Alexandra Cimmiyoti, she's Vice President, Senior Credit Officer at Moody's in their San Francisco office. She covers local government credits, primarily in California and manages her team's surveillance process and serves as a rating committee chair on credits nationally for local governments. She has a dedicated role of training and mentoring analyst on her team. She's an executive council board member of the Women in Public Finance Northern California chapter and the immediate past chair of the California Municipal Society of Analysts, and she serves as a National Federation of Municipal Analyst Board of Governors.
(01:11)
Alex enjoys working in public finance because he enjoys credit analysis as well as the opportunities to build relationships with various stakeholders. Thanks for being here, Alex. Next we have Dale Scott and he's the president of DSNC in San Francisco. That's Dale Scott and Company, which has provided municipal advisory and election consulting services for California schools and community colleges for over 35 years. In partnership with Jefferson Union High School District in San Mateo County, he's credited with the nation's first voter approved general obligation bond to construct below market rental housing for teachers and staff. His unique approach went on to receive Bond Buyer small issuer deal of the year award back in 2018 and in 2002, Inc. Magazine named DSNC, one of the 5,000 fastest growing private businesses in the United States. Thanks for being here, Dale. Next we have Robert Larkins. Rob Larkins, heads up Loop Capital Markets, California public housing banking team out of their San Francisco office.
(02:22)
He is a 38 year veteran of the California public finance sector and highly regarded for his structuring, creativity, credit expertise, and thorough and timely document review. In addition to covering the state of California and related entities, Rob covers a wide spectrum of California local agencies. He's well-versed in the pension space and has completed over 17.9 billion in pension obligation bonds, which share a commonality with judgment obligation bonds and has extensive experience with legal architecture and with judgment obligation bonds, solid waste water sewer credits, and K through 12 school district GEOs, including issues for a variety of school districts across the state. He graduated PHI Beta Kappa from Stanford where he majored in political science and he holds a number of licenses including series 752, 53 and 63. Thanks for being here, Rob. We're going to kick off with our first question, which deals with from a rating agency perspective, and we're going to ask Alex to please provide an overview of the school district sector during our most recent economic life cycle.
Alexandra Cimmiyoti (03:36):
Sure thing. So we actually saw an improved funding environment for school districts under the local control funding formula LCFF, and then coupled with that, right? The state was doing great. We had the economy, you had significant one-time revenues that were awarded to school districts in the years coming up to the pandemic. So they were really with a strong balance sheet and then the pandemic happened and there was just uncertainty on so many levels and just putting on your credit analyst hat, you're like, all right, what's the stake going to do? Are they going to go ahead and cut funding or deferrals? Something's going to happen. So we're talking to issuers. They are preparing for the worst, hoping for the best, and the latter happened, right? Got to find some positives out of the pandemic and they were just flush with cash, right? Everyone was local governments.
(04:25)
We got increased funding from Essers, funding from cares as well as with the state awarding these super colas, right? In 2023, it was close to 13% current year, 8.2%. So when we're talking to issuers, they were actually like, Alex, we're getting money quicker than we can actually spend it. So then you just saw year over year as far as surpluses carry over funds. So they're at a point right now where they are at really strong balance sheets. We see liquidity at an all time high, and they've been able to preserve the reserves as well. And then just also with that on the expenditure side, they had savings from changing to distance learning and not having to pay for transportation or for utility costs. So for all of that as well as the prudent management practices that we see, California school districts right now are in a very well position to manage through the challenges that we see moving forward.
Moderator (05:25):
Thanks, Alex. And looking at that, when you think about going forward, what do you believe will be the major challenges for our state school districts?
Alexandra Cimmiyoti (05:34):
Well, I'm glad you asked that question. We actually put out some timely research on this topic. If you can go ahead there. Oh, all right. There's our slide. We think that school districts are poised to manage through the increasing challenges. So this is a research that my colleague Helen Craiger and I published last week. I'll put a plug in here. You can go to the Moody's booth, there's a QR code scan it, and you can have a copy of our wonderful research. But here we outline the challenges, and so what we see is revenue growth is going to slow down, right? Because you have the one winding down of the one-time, COVID related funds coupled with slow down in growth in LCFF funding, so you're going to have to adjust to that. Cola's projected moving forward are around 3.5%, which is significantly lower right than what I just spoke about.
(06:26)
The Super Colas that we had in the previous years, also declining enrollment. It was a trend that we saw prior to the pandemic and it's projected to continue. So that's the graphic that you see there. With the map we have the past 10 years, the red mostly, you can see we've seen enrollment losses for most school districts, but you also have some that have been growing. We see that a lot in the central California. As an example, Kern Unified High School District, the largest high school district in California actually had growing population prior to the pandemic and through. But if you look at the next map, looking at the next 10 years, actually the growth is projected to slow down and actually have declining enrollment. So while some areas will be growing, you kind of see smaller and smaller pockets of that. And the growth there that we're seeing in Kern partly is related to affordable housing.
(07:24)
Then we also see that leverage will remain elevated and continue to be a challenge, and leverage is really being pushed and elevated by unfunded pension liabilities. So very generous benefits over the years, and at that same time, many years of underfunding have led to these large unfunded liabilities. And so we look at credits nationally, California school districts compared to their peers. This is definitely a credit factor that stands out and remains a challenge for school districts. But with all that said, we do think that districts are well positioned to manage through these challenges. So management teams have about the next two years to go ahead and align their spending with our projected revenue growth in LCFF revenue, which will likely parallel the cost of living adjustments. They've had significant receipt of one-time COVID related funds, as well as generous state funding. That has allowed some times where you had to make those budget cuts, but now is the time. So districts, especially those with declining enrollment are going to have to consider cost cutting measures such as reducing staff and school closures or consolidations.
Moderator (08:46):
Thanks all that makes a lot of sense. I have some statistics from the California Department of Education on this issue. We know that they put out back in April that for the 2022, 23 academic year preliminary enrollment figures, so statewide total of about 5.8 million students, which was down about 40,000 or 0.67% from the previous year, and in comparison in the academic year in 2021, 22 showed a statewide decline of 1.8%. So like you said, while you're seeing those trends, it is possible for the districts to manage those trends and to see enrollment hopefully level out to some degree going forward. Rob, do you have something that you'd like to share in regard to what you have seen and the difference between enrollment and potentially ADA figures?
Robert Larkins (09:39):
Yeah, the more I think about it, I'm wondering if we're using the right metric in terms of kids showing up versus enrollment and on the premise that education is a public good to maybe rethink about it in terms of an availability payment. I'm not suggesting that I'm using that as an example, that the state would pay to have spaces rather than for whom shows up to fill the space just because that doesn't seem to be perhaps the right metric to be focusing on. The other thing I was struck, and you mentioned cost cutting and all, and it's obviously very politically unpopular. It's tough, but there was a story in Wall Street Journal today, I guess there was a big AI conference down on Laguna Beach and, who was I think a partner at Sequoia, one of the large VC firms, said that within 10 years, AI will do 80% of 80% of all jobs. And if you think about one of the big issues in the Writer's Guild strike was AI replacing writing and query as we saw with remote learning. There is certainly room there to sort of automate teaching. Now, I think we'd all agree that there's a lot more than just the three Rs, right? There's socialization and important things, but there's a realignment coming in terms of I think how those services will be delivered.
Moderator (11:12):
That's terrifying. But yes, it's possible.
Robert Larkins (11:15):
And I do think again that it's not just the three. I think what we certainly learned from distance learning and all was the social impacts on children of being isolated and remote and not learning how to socialize properly and resolve conflicts without resorting to punching out in the parking lot.
Moderator (11:39):
That's true. Yeah, and it's important to think about how that will influence children. Their development education is beyond just what's in the classroom, but how to manage interactions socially and otherwise. So that's an important point. I know that in California, governor Newsom, the state superintendent of public instruction, Tony Thurman and the legislator have worked together to secure about 23.8 billion in programs and initiatives to engage families and students in public schools. But we're still going to have to think about how to manage some of these issues as the demographics across California adjust. So moving on a little bit from that topic, I'd like to ask both Dale and Rob, given the overall lack of affordability in the housing market in California, the resulting attrition rate for teachers and other school district employees, are there market-based solutions available to assist school districts with workforce housing? We had some great statistics during the lunch session about how folks are leaving the state or have left the state and the ability for schools to maybe manage some of the affordability issues that arise, which is one of the reasons why we did see individuals departing California. So Dale, would you like to chime in?
Dale Scott (12:55):
Sure. I respectfully decline to answer that question on the, oh, I'm sorry. It's the wrong hearing. Let me talk just a little bit what I see of housing, affordable housing, teacher staff housing in California. I think some of you have heard this story before, but I'll tell it again to those you have. About four years ago, a school district board here in the Bay Area, Jefferson Union High School District in Daley City came to me, a longtime client of ours and said, we have a major problem here in this district. We have 25% of our staff leaving this district every year, 20 to 25%. And the reason was that that was not a very wealthy district, even though San Mateo County is a very wealthy county. This was one of the less wealthier districts within that county, and they couldn't pay the same amount to their staff.
(14:04)
So they would come in, they would get trained, and then they get picked off by the other districts. So they said, we want to build teacher staff housing in this district because we think if we do that we can retain our employees. So we worked on the problem for a while, came back to them and said, it doesn't work. It simply doesn't work to be able to use market rate, cost of financing, build housing, rent it at a below market rate and the math just doesn't work. So they looked at me and they said, what do we do? And I said, well, school districts, having worked with school district for many years, they have a tendency to want to take on social problems, to want to deal with the problems, but in fact, this is not your problem. This is a community problem. You have teachers and staff members that simply can't afford to live in this community.
(15:04)
They're living in cramped conditions or they're commuting three, four hours a day. So why don't we go to the community and ask the community if they would help support the construction of teacher staff housing board looked at me and said, can you do that? And I said, I don't know. I have no idea. So we began to work with council. We found a path, and in the process we realized that this had never been done before in the United States in terms of the actual construction of teacher staff, housing using voter approved debt. So in the end we did a mixture of voter approved debt and COPs. So the answer to the question, where is it going? That being the first it has, I wouldn't say it's actually taken off, but it's been a pretty solid start. We're working on these projects across the state, San Diego, Los Angeles, San Jose.
(16:09)
We're actually working on one in Mammoth, which is really not a problem to have so much of affordability as it is just supply. However, having said that, and then I'll turn it over to Rob for his comments. They are extraordinarily difficult projects to put together, and it's not the financing, the financing is actually pretty straightforward once you can get all the pieces of the puzzle together. The problem is they're building housing in California is hard period. But then starting to put in that political piece of having a school district and a school district board and teachers unions and the play between cities and school districts, they are complicated projects. So I can't say I'm overly optimistic about this huge amount of teacher staff housing coming online across the state. I think there'll be pockets. I think there'll be projects I'll end by saying the Jefferson project, which is now up and running gorgeous building 122 units, and their problem now is exactly the opposite. They have no staff leaving. All of the other districts are losing staff to them. And even when people get a better offer, they don't want to leave because they love this community that they've built together in this teacher staff housing project, Rob.
Robert Larkins (17:34):
So I like the way that we were not involved that Dale did it with Jefferson. There's this shiny object in our industry of non-recourse off balance sheet financing, and everybody always wants to have it off balance sheet. If you're doing workforce housing, teacher housing, you want the lowest cost of capital because that's going to get you the lowest required rents and the greatest free cashflow back to the district. So if you have a district that ground leases the land to the developer, developer builds the apartments, runs it, and then whatever the deal is, and they're all bespoke between the developer and the district, if you're doing that at four and a half percent cost of capital, it's a lot better than at nine. And so it's always mystifying to me where, and it's not just in the school land that there's this desire to have off balance sheet financing, which query, if it was affiliated and it went south, would the district really let it go south?
(18:38)
So that our thought is to do it the way Jefferson did. You obviously want the project to be self-supporting so that the developer needs to provide and develop performance that show that it can generally cover our debt service. But you keep all that away from investors. What investors see is a garden variety, general fund lease, revenue bond, absolute lowest cost of capital, or if you do it with the geo, and if you think about it, and it's funny you're talking about the commuting years ago, my son's now 22, but when he's going back to school night, when he was in middle school, he was talking to his teacher and it was the same thing. The teacher was commuting 90 minutes each way every day and the light bulb went off, which is what do schools have very often land, and I think Dale and Jefferson have proven that having a teacher community on district owned land or ground lease land can work, but the key is use your lowest cost of capital because that's going to improve the chances of success.
Moderator (19:45):
Thanks Rob. Dale, do you think in areas that are beyond Jefferson that it might be difficult with the community perhaps wondering why school districts are in the business of trying to get housing established for focusing solely on education or committing to just teaching the students? Do you see that as a potential challenge? And if not, what do you, do you see as the biggest challenges for subsidized housing financings?
Dale Scott (20:16):
No, I don't see the first item as a challenge, frankly. You hear that a little bit, but it kind of comes down to this, the firm that we've worked with closely in developing both the Jefferson and Nelson projects across the state, Bruce Dorfman, we sat down together one time and came up with a list of the three critical items that school districts need to succeed in these projects. Number one is land. Well, most districts have a fair amount of land laying around, not all of them, but you have to have land. That actually though, becomes a problem because a problem that I think many of us didn't foresee, not so much having the land, but what is around the land? Who is living around the land? What is the community like that's around the land? So that produces a great deal of pushback in some of these projects.
(21:08)
Not all of them, but some of them, oddly enough, less pushback in financially challenged areas and a lot of pushback in more affluent areas. The second thing you need is capital and funding. Rob's talking about the lowest cost of capital. Well, when you do it with general obligation bonds, you can't get much lower than that because it doesn't cost you anything. I mean, it costs the taxpayer or something, but it doesn't cost the project, it doesn't cost the district anything. Principal or interest is free. So it's a pretty good deal. But there's one board member said to me one time in a meeting when I was describing these projects, he said, yeah, this is a great idea. This was at a school district down in San Jose. Great idea. This is a big problem. We love it, but we got a lot of problems. We have a lot of problems with our facilities and this is only, this doesn't really come up to the top in my book.
(22:01)
So you get that kind of pushback. The third, and it's a critical one, is you need money land, and you need a champion. You need somebody that really at the local level that really believes in this project and is really willing to put it continually at the top of the list. Unfortunately, the average tenure of a superintendent in California is somewhere around two or three years. So unless they are very well established or unless they're moving very quickly, a lot of times those projects, they start out strong, everybody's excited about them, and then they just kind of fall to the bottom. So those are the pieces of the puzzle.
Moderator (22:47):
Thanks Dale. Alex, are workforce housing bonds viewed in a different light and is there any material impact on a school district's credit worthiness when you're seeing these kinds of deals come up?
Alexandra Cimmiyoti (23:00):
Yeah, so starting at credit, we really under our K 12 methodology, we start with our issuer rating. So what we would look at is our economic factors as well as financial and debt. So we assign an issuer rating absent any of what's securing the debt. So the economic factors are enrollment. We look at property wealth, we look at resident income for example. And so then there we assign a rating and then what's securing the debt? Is it geo bonds or the lease revenue bonds? And that's how we would place the rating. As far as the credit worthiness, it would be, okay, how much is this adding to your leverage? That's going to be the factor that could impact the issuer rating. And then that could impact where you place the debt instrument rating. So it would be poor of what you had pointed out, right? You're getting into a business that's not your expertise. So that would be something that we would want to know, right? What's the other risks operationally as well as is there a third party managing this? Is it going to be self-supporting? Are the reserves If there's not, so we'd want to know what your contingency plans would be as well when looking at getting into something that is complex. And again, that's not part of what their expertise is.
Moderator (24:13):
Thanks, Alex. On a sort of separate topic, we've also been looking at the optics of these different avenues and these transactions and how the optic impact the outcome. I know that when you're doing a issuance where you're going to put a measure before voters, there's a lot of different considerations that have to be made to consider whether or not you'd get the voter support you're looking for. So I'll mention two new things that impact voter approvals. That might be something that comes up when you're thinking about bonds as well. And we have the Ballot Disclose Act, which is a new state law that became effective in January of this year, and it requires opponents and supporters of statewide and local ballot measures to be listed on the ballots. And the list of supporters and opponents is limited to about 125 characters, and they can include among other things, the signers of the text of the ballot arguments.
(25:12)
Then those get printed in the voter information guides. So that's something that is another consideration that we'll have to make when school districts are considering putting different measures out for the voting public. Then we also have the Levine Act, which became effective in January as well, and that has a set of regulations that are implementing the act, which became effective in June. And in that case, an officer of a district, like a superintendent or an associate superintendent could trigger this act if he or she successfully solicits a contribution to a bond campaign and an amount in excess of $250 by a company or representative of a company seeking to do business with the district. And so these are just some things to consider that we have to keep in mind when school districts are thinking about their measures. They're thinking about financial structures that they want to pursue and how they want to meet their goals when going out to voters as well. So that's just another aspect to mention. Moving from there, I'd like to ask both Dale and Rob on a separate topic, which involves escalating interest rates and with interest rates escalating rather rapidly over the past year, can you tell us what you think the main impacts that's had on school districts?
Dale Scott (26:33):
Well, when you say what are the main impacts on school districts, I mean school districts, I'm a ex officio member of the San Diego County Taxpayers Association. We were having a meeting and one of them said, and the San Diego Taxpayers Association looks at all the bond issues that the school districts in San Diego County did. And one of the members said, I think we should look at more than just bond issues. I think we should look at the operations of the districts and we should really get deeply into how these budgets work. And I said, well, look, lemme tell you something. Bonds occupy about 2% of a brain of a school business official. I mean, it's just a very small piece. And so what do you want to get into? Do you want to look at at special education, you want to look at facilities, you want to look at their cafeteria.
(27:20)
Do you want to look at their healthcare? Do you want to look at their contracts? Do you want to look at the negotiations? I mean, this is a huge issue. So to your question, what does the effect of interest rates on school districts in general pretty much zero except to the extent that it affects the state. What is its effect on their borrowing power was with bonds? I don't think it's that much, frankly. I think the big impact on bonds is the assessed valuation and the increase in assessed valuation or decrease of assessed valuation in a school district. That's the real driver under this weird system we have of Prop 39, but I'll turn it over to the financial guru to pine.
Robert Larkins (28:03):
Well, I think, and it's been interesting the past couple of days, people talking about what are you doing in higher rates? I've been doing this for almost 40 years. We had a sectoral bond market rally that began in the early eighties and for basically all of our careers rates came down. There were intermittent blips along the way, but I remember people talking about the 10 year's going to get to 5%, not the 10 year's going to get up to 5%, the 10 year's going to get down to 5%. And people are like, you're nuts. It's never going to happen. So if you look in a longer period before, really the 708 fiscal crisis, 30 year muni rates were generally about 5% like forever. And so we're now getting back to that. We all hope that it's only temporary, but we've all been living in LA land since oh eight when the Fed took rates to zero and quantitative easing all that.
(29:06)
So I think whether higher for longer is through the end of 24 or 25, who knows, but I don't think we're going back to two. The bigger issue is construction cost inflation and wage inflation. So whether you're borrowing at four or five, whatever is irrelevant when your cement costs are going up 26% and your steel costs are going up 25%. So I think we got to keep our eye on the ball, which is inflation is the gift that keeps on giving for that to work itself through the system. Who knows? And the others, obviously the impact on pension and opeb costs by virtue of sort of embedded inflation that gets factored into final compensation and all that. So I don't think that whether we're at four and a half or five is really the driver.
Moderator (30:02):
Thanks, Rob. In talking about challenges that K through 12 districts face, something that has been brought up recently has been assembly bill two 18 and the potential impact on school districts. So AB two 18 became effective in 2020 and certain changes were made as a result of it to the claim prerequisites and the statute limitation periods for claims of childhood sexual assault. And we know that for some of the larger districts across California, this has been something that has led them to have a lot of claims as a result. And thinking about how school districts would manage those claims, Alex and Rob, do you each have commentary on the potential impact on school districts as a result of AB 218?
Alexandra Cimmiyoti (30:50):
Yeah, sure. So we definitely seen more disclosure in official documents and seeing some pretty large numbers out there where you're seeing your potential lawsuits for this and a unknown of what the actual settlements will be, but what could be the potential financial impact for the district? One district that I worked with actually had good disclosure and said, okay, for these potential claims would be covered by insurance and then we have X amount of reserves that could cover the rest of the claims, and that was their plan. So you can also have the option of issuing debt judgment obligation bonds and have that 10 year period as well. So what is the plan? What is that? What could be the potential impact? But I think beyond being able to afford any lawsuit really, right, for this one, it could trickle down to other factors that we look at. You look at governance of how this happened, you can also look at just your reputation, you are able to continue to attract and retain students, could be an additional risk that could come from this. So it's not just financially, I think there's other social aspects as well.
Robert Larkins (32:03):
Yeah, I mean obviously the whole phenomenon is horrible. I think people are still trying to get their arms around the extent of the exposure and think that's how I would attack it, which is okay, the client goes to Alex and says, our maximum exposure is a hundred million. Well, how do you know that? And so getting, figuring out what is your available insurance, and I'm not an insurance expert, but my understanding is there's a lot of defenses or exceptions to DNO insurance for this kind of stuff. So how do you plausibly represent to the rating agencies in the market that this is sort of the external parameters of the problem and then getting into the financing stuff that, and Dan Wiles talked about yesterday for LA County generally speaking and playing TV lawyer, which DIA knows I do all the time, you're most likely going to need to validate this judicially, but what are you validating? Are you validating batches of claims or when it's all resolved because these are going to dribble in over time. It's very unlikely that you're going to have one plaintiff counsel for all the plaintiffs and you're going to settle that, but that it'll come in over time. So that's going to make financing it tricky.
(33:28)
We are hopeful that if when we get to that point that Dale and her firm and other law firms can get to a conclusion that it doesn't have to be level debt. Because as you know, for most general fund lease debt for a school district or any local agency generally has to be substantially level debt. Well, that could be from a budget standpoint, pretty brutal, particularly since these were potentially accumulated over 30 years. So does it make sense from a public policy standpoint to have to pay them off over five or seven or 10 years? So ideally longer is better, and if one were able to shape the judgment bonds in conjunction with the district's other obligations. But I think that we're in the early innings of this. I'll leave it at that.
Moderator (34:18):
Thanks, Rob. There are some important issues there related to judgment bonds and tax issues like you mentioned. Alex also mentioned likely would be a 10 year period for that. We know that if you're going to do them on a tax exempt basis, then there's going to be some regulations that you would have to face, including whether or not that debt is going to be extraordinary. And that could be a threshold that might be difficult for some districts. There could be an argument that if you have these claims, maybe they are reoccurring and therefore you don't get to that exception to allow you to do it on a tax exempt basis, might be pursuing it on a taxable basis only, and might be having that shorter period to repay that debt in about 10 years. So that could be another challenge. Would you like to add something?
Dale Scott (35:09):
No, I wanted to go back to another subject.
Moderator (35:11):
Okay. Let's go back to another subject. Subject.
Dale Scott (35:14):
My brain's a little slow, but I did want to add something that Rob said about the cost of construction because I do think this is a huge issue facing not only school districts, but cities and counties and all public agencies around the state. And lemme give you an example. I think it was 1997, 1998, I worked with the Kern High School District on a general obligation bond, 97 and a half million dollars and a won. It was at that time the largest general obligation bond passed by any public agency in the state of California, 97 and a half million dollars. They didn't want to make it a hundred because they thought that people would react negatively to it. 20 some years later, I was in a meeting recently with a small midsize school district in San Diego County, and they are trying to figure out how to build a new middle school in an area that is now being developed.
(36:18)
They thought they had it solved, but they found out that the cost estimate has now gone from $100 million to 150 million for a single middle school. Now we're going to come up with a financing plan, we're going to figure it out. We're working with lots of different people trying to come up with it. But there is a certain point I think, and I think this is a serious piece, there's a certain point when both officials and citizens are going to say, that's just too much. We're not going to do this. We just can't fund this construction. I don't know where that tipping point is. You would think 150 million for a middle school might be it, maybe not, but it just doesn't seem to have a cap. It continues to go up every year, not by the cost of inflation, but by multiples of the cost of inflation. So that's my soapbox. Thank you for letting me take it over.
Moderator (37:13):
No, I think that's helpful. There's a lot of considerations that school districts have to make when they're thinking about what they want to do to finance their debt. There's all these different components to think about. It's beneficial that you mentioned that it's not just school districts dealing with these costs, it's just a general issue, just a wider issue that everyone in the state will be considering when they're thinking about construction. And just to kind of sum up these challenges, there's everything from enrollment and a construction. Challenges appeal to the voters, their approval, trying to find creative mechanisms to finance these projects at schools. There's just a variety of issues that school districts face these days and it takes really sophisticated financing teams to sort of help school districts meet their goals. And so it's great to have our esteem panelists here to talk about some strategies they've used to manage these challenges and what we can expect going forward. So with that, we have about a few minutes left. I'll open it up to if anyone in the room has questions. Go ahead, sir.
Audience Member 1 (38:20):
Hey Dale, thanks for taking the time this afternoon. What's your outlook for election approval rates in the next election cycle? The last few cycles have had lower than expected approval rates, and maybe it coincides with your point about the escalation of costs.
Dale Scott (38:39):
Do you want to know my prediction for the election rates for the entire scene or just the ones we're working on?
Audience Member 1 (38:46):
Just the ones you're working on.
Dale Scott (38:47):
A hundred percent. Everybody else. 90. 90. If you look at the numbers for the last 20 years, with the exception of 2020, anybody remember what was happening in 2020 with the exception of 2020 presidential passage rates for general obligation bonds, presidential election date passage rates for general obligation bonds have been over 90%. Why? Very simple. More people vote, more people vote. The less likely a person is to vote, the more likely that person is to be one of your supporters in a general obligation bond. And so that presidential election brings out all the voters and the passage rates go up. So I anticipate them being back to around 90% except for ours, which I hope I'm hoping for a hundred percent.
Moderator (39:38):
Thanks, Dale. Any other questions from the audience? Okay. Hearing none, I'll return to you. Oh, did I miss one? I'm blind. Somebody said Go ahead. Thank you. It is the light.
Audience Member 2 (39:54):
Thank you. My question is, somebody mentioned about the issues with teachers housing. Have you talked to some school districts where they're having difficulty hiring mental health professionals for the school districts? And whether that's the need, considering that there's a gap between the, I guess the outcomes for children with special needs versus those that don't have one? I don't know if I'm making it clear.
Dale Scott (40:46):
I think I understand the question. Have we considered using teacher staff housing to attract and retain certain types of teachers with certain specialties? Is that essentially the question? The answer is, if I understood that correctly, the answer is yes. I think that's a great, great possibility. When the school districts build these projects, they have complete control of, have set whatever guidelines they want. There are certain guidelines within the city and the state they have to follow. But beyond that, if they want to say We're going to give less rent to a certain teacher who they need, they can do that. That's been discussed. It hasn't been implemented yet, but it has been discussed a lot of trying to figure out how to get these specialized teachers, not just in mental health issues, but all sorts of different types of subcategories. So yes.
Moderator (41:36):
Thanks. Does anyone else have any questions for our panelists today? Alright, well thank you all for your attention and for joining us this afternoon to cover these important topics. And thanks to our panelists.
K-12 Education–Addressing the Challenges
November 15, 2023 1:54 PM
41:58