Clinton Revisits School Construction Platform

By Joetta L. Sack — February 25, 1998 7 min read
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Each morning, Principal Freeman Tinnin must navigate through a muddy construction site and labyrinth of chain-link fences to reach the main office at Prairie Elementary School here.

If all goes as planned, the construction area will soon become the school’s new library and science center. Then, workers will move to existing buildings to tear down and rebuild walls and reconfigure classrooms. Last year, this school in a Sacramento suburb converted former library space into classrooms to accommodate a swelling enrollment.

Mr. Tinnin is among a rising number of administrators who have learned firsthand the headaches that a booming enrollment brings.

Now, President Clinton says he wants to extend a helping hand. In his State of the Union Address last month, he proposed an ambitious, $10 billion plan to provide no-interest school construction bonds. The administration estimates that the tax credits would be used to leverage nearly $22 billion in bonds.

It marks the second time in two years that the Clinton administration has proposed a program to help school districts pay the interest on construction bonds. What’s surprising is that this new plan is even more expansive than the first, which fizzled last year during balanced-budget talks between Congress and the White House. (“Clinton-Hill Accord Would Hike Ed. Funding,” May 14, 1997.)

But refinements in the funding details of this year’s plan may make it more viable than its predecessor, some education observers say. Regardless, philosophical arguments remain.

Picture Perfect

The Elk Grove district where Mr. Tinnin works could be an advertisement for the need the president wants to address.

Enrollment in the school system has more than doubled in the past 10 years, from some 18,000 in 1987 to 40,000. That count is expected to double again, to 80,000, by 2010, and officials estimate they will need $1.1 billion to build about 34 new schools and update others.

Mr. Tinnin’s school has about 1,080 students this year, and that number will increase to about 1,150 next year. More than 100 students who would normally attend Prairie Elementary now go to schools farther away because of overcrowding.

The Clinton initiative will be sponsored in the House by the top Democrat on the Ways and Means Committee, Rep. Charles B. Rangel of New York, who inserted a limited school renovation measure into a larger tax package last year. Sen. Carol Moseley-Braun, D-Ill., a longtime supporter of federal aid for school construction, will again be the Senate counterpart’s top sponsor.

Perhaps what best distinguishes the new plan from last year’s Clinton proposal is its funding source. Unlike most federal education programs, the initiative would not go through the annual appropriations process in which Congress allots specific spending limits.

Instead, the president’s plan would rely on federal income-tax credits, which--once authorized by Congress--are not subject to annual approval. Investors in two kinds of bonds--school modernization bonds and “qualified-zone academy bonds"--would receive the tax credits. Those credits, in turn, would pay the interest on nearly $22 billion in school construction bonds.

The Department of the Treasury would administer the program, and the tax credits would cost about $1 billion a year for the next 10 years.

According to the White House, the plan should offer schools a two-pronged bond option.

The first--$19.4 billion in school modernization bonds--would be divided down the middle. Half would go to the 100 districts with the highest numbers of low-income children, according to the Title I formula. The other half of that nearly $20 billion in bonds would go to states and would then be passed along to districts in need. States and the eligible 100 districts would have to provide the Department of Education with plans describing how the bond funds would be used and demonstrating their construction needs.

The second prong would be the expansion of the program Mr. Rangel promoted last year.

The “qualified-zone academy bonds” initiative was launched last year to help pay expenses related to certain school-business partnerships, including building renovation. Mr. Clinton has proposed expanding the program to cover school construction. He wants to expand the bond authority for the program from $400 million in fiscal 1998 to $1.4 billion in 1999, with another $1.4 billion in 2000. To qualify for the program, schools must be in empowerment-zone communities, which are urban centers with high poverty and unemployment rates.

By bypassing the appropriations process, the initiative might have a better chance of passing, perhaps through a deal with Republicans on the House Ways and Means Committee, said John F. Jennings, the director of the Center on Education Policy, a Washington research group, and a former aide to House Democrats.

“I am not going to get overly excited until the president actually signs the bill,” Ms. Moseley-Braun said in a floor speech shortly before Mr. Clinton’s Jan. 27 State of the Union speech. “But I am very encouraged.”

Philosophical Qualms

But the plan still could face opposition from GOP leaders and education observers who question the wisdom of introducing a federal role in K-12 school construction. Traditionally, school building has been a local responsibility.

So far this year, GOP members are being careful about what they say about the construction initiative.

Ari Fleischer, a spokesman for Republicans on the Ways and Means Committee, which will handle most of the legislation, said all the White House proposals are being reviewed by the staff. “Nothing is ruled in, nothing is ruled out,” he said.

Away from Capitol Hill, some question whether federal involvement will solve schools’ problems.

“It’s not difficult to say there’s a need,” said John G. Augenblick, a partner with Augenblick & Myers, a Denver-based education finance consulting firm. “The question is, who should pay for it?”

Allowing the federal government to step in to the school construction arena could take states and districts off the hook for underfunding or misspending money in the past, Mr. Augenblick said. Further complicating the problem, he added, is that many states don’t have a clear picture of what their school construction needs are.

Jennifer Grossman, the director of education policy for the Washington-based Cato Institute, a libertarian think tank, said part of the problem is that districts have not been given an incentive to build well and maintain their schools. “Why should they be built to last when you can extract more money from the taxpayers to pay for them?” she said.

Others note that the federal government would have to persuade bond investors to purchase the bonds.

“It would be, as all tax credits are, a fairly cumbersome method” for investors, said Michael W. Ogburn, a senior vice president of California Financial Services, a San Diego-based consulting firm for districts. The federal government would have to offer a higher rate of return for investors as an incentive, he said.

Lori Raineri, the president of Government Financial Strategies, a private consulting firm in Sacramento, Calif., that represents about 100 school districts, cautioned that the plan should not be overly bureaucratic.

“A school district would not take advantage of it unless it were a very practical, workable program,” she said.

Political Considerations

Even so, the idea of federal help in building schools may prove to be politically popular.

A national poll of 1,001 registered voters, released last month by the two major teachers’ unions, showed that three-quarters of those surveyed favored a federal role in building and modernizing schools.

And Department of Education officials, including Acting Deputy Secretary Marshall S. Smith, say the need is so evident that public pressure will force reluctant Republicans to give in.

Mr. Jennings, the former House Democratic aide, echoed that view.

“Regardless of what part of the country you’re in, you hear complaints about school facilities,” he said. “People don’t know the difference between local, state, and federal spending; they just want something done to fix the problem.”

Sen. Moseley-Braun maintains that any federal support will help. And it may not be too far in the future.

“I feel very confident that, if not now, we will eventually pass legislation to rebuild our crumbling schools,” she said in her pre-State of the Union floor speech.

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