How Are School Facilities Funded?
California public schools can be funded in the following ways:
State School Facilities Program (SFP) for New Construction
The SFP is funded through statewide General Obligation Bonds (“GO Bonds”). Funding from statewide GO bonds has been exhausted. A future State school bond measure may allocate additional funds to this program. There is an estimated five- to seven-year delay in receiving any State funding due to existing waiting lists.
Local General Obligation Bonds
The community can support school construction funding through local GO bond measures. GO Bonds are loans authorized by the voters and repaid from property taxes levied on the assessed value of property. The assessed value is based on the purchase price of a home and not its market value. District voters authorized Measure G (2014) and Measure U (2016) to fund new construction and modernization improvements at Hollister High School. Additional voter authorization would be required for the second high school.
School districts collect fees from new development to reduce the impact of new students on existing schools. Over the next five years, developer fees will fund approximately 11 percent of the anticipated cost of a second high school.
School districts may negotiate agreements with landowners, developers, and homebuilders to provide additional school funding to reduce the impact of growth. Funding can be in the form of a mitigation agreement, which places new residential housing in a Community Facilities District (“CFD”). The District is negotiating with the Building Industry Association, local land developers and homebuilders on mitigation agreements, which are necessary for a second high school. Currently, the District does not have any mitigation agreements in place.
Community Facilities District
CFDs are financing districts authorized by the Mello-Roos Community Facilities Act of 1982. Developers and homebuilders use CFDs to fund public improvements and services needed to serve new development. Annual special taxes are levied only on homes located within the defined area. Taxes provide additional funding for school facilities.
The City of Hollister and County of San Benito use CFDs to pay for public improvements and services such as police, fire, streets, water, sewage, parks and landscaping and lighting.