School ‘Bonds & Overrides’- Helpful, Harmful or Wasteful?

We all want good schools that serve kids and families, but what do we make of the regular requests for more money through bonds and overrides (B&O)? Where’s the money going? What happened to the money from the last election? Are kids learning more? Is there accountability from the school district to the parents and citizens? Am I helping or harming the kids at my neighborhood schools when I vote to pay more of my taxes to their administrators? 

We’re glad to have Matt Beienburg, Education Director from Goldwater Institute as our guest blogger this week! Matt explains the what Arizonans are funding so we can be informed voters. … Please read and share this blog. ~ Kim 

Should AZ Taxpayers Pay Billions for District Bonds and Overrides? 
Matt Beienburg 

If it sounds too good to be true, it usually is. So what should taxpayers make of the campaign billboards once again popping up around town that are promising financial support for Arizona public schools “without raising taxes?”  Well, that they probably deserve at least a bit of careful scrutiny. 

In short, these signs are for school district “bonds” or “overrides,” which allow local districts to charge their residents extra property taxes in order to spend above and beyond the amounts those districts would normally be allowed to spend under state law.  

While public school funding varies substantially by district, the latest report from the Arizona Joint Legislative Budget Committee (JLBC)—the official, nonpartisan budget analysis for state lawmakers—estimates Arizona public school funding at $14,700 per student in the 2023-2024 school year. (In comparison, nonresident undergraduate tuition at a four-year university like Arizona State University is just $13,200.) 

Even ignoring every dollar of federal funding, Arizona public schools now receive over $12,000 of funding per student, on average, from state and local taxpayers alone.  

Regardless of whether one thinks that’s too much or not enough, it’s a number that’s grown significantly over the past several decades, increasing 20% over the past decade alone. And a significant portion of that extra spending comes from bonds and overrides. According to JLBC, Arizona taxpayers pay over $1.5 billion each year (roughly $1,500 per student) as a result of these tax surcharges. Again, however, the raw amounts don’t inherently answer the question of whether taxpayers should support or oppose them.  

To decide that, taxpayers must weigh whether or not they believe their districts are responsibly stewarding the resources they’ve already been entrusted with, or whether they are already squandering or mismanaging the funds they’ve been given. 

As Kevin McCarthy of the Arizona Tax Research Association recently pointed out, “The largest [bond and override] request statewide is Mesa Unified’s $500 million. With a current enrollment of 57,909, Mesa has lost 11% of its students over the last ten years,” yet “the district is planning major renovations on school and athletic facilities. Mesa clearly plans to market the massive bond as a measure that will not raise taxes, the new debt service requirements won’t increase the existing tax rate. However, even accepting that ruse, most taxpayers will still see steady annual increases in their net assessed values translating into annual increases in their tax bill.” 

Interestingly, in 2021--in the wake of the $4.5 billion of federal COVID stimulus funds showering Arizona public schools--Mesa’s assistant superintendent remarked of the massive infusion going to the district, “It’s exciting but also terrifying to know we have so much to spend.” Relatedly, public schools often remind us they face “fixed costs,” suggesting that charter schools and Empowerment Scholarship Accounts (ESAs), for instance, siphon away students and funding while districts are stuck with the same sized (but emptier) buildings. Yet as these massive new bond proposals indicate, district facility costs are not fixed—they are often the result of conscious decisions made at critical junctures to expand or maintain excess campus capacity rather than adjusting to their actual student populations.  

Speaking of capacity, perhaps nothing indicts the mismanagement of Arizona school districts worse than a report from the Arizona Auditor General, which concluded in 2018:  

“Between fiscal years 2004 and 2017, Arizona school districts added 22.6 million square feet of building space—a 19 percent increase— despite a student enrollment increase of only 6 percent during this same period. … School districts … built additional schools when they already had low-capacity usage rates at their existing schools,” including “districts that rebuilt existing schools with much larger facilities when no substantial student growth was expected.”  

Unfortunately, the “off-cycle” nature of this year’s elections—i.e., the fact that the elections are held in an odd-numbered year in which most voters don’t participate because there are no presidential or legislative candidates on the ballot—mean that the outcomes of district bond and override elections chiefly represent the will of organized interests such as members of government unions or the construction companies that help finance the bond campaigns themselves, knowing they will secure multi-million dollar taxpayer contracts. 

Those running such campaigns continue to repeat the claim that these tax levies won’t raise taxes, but consider an analogy: The logic of those who argue that such measures don’t raise taxes would be on par with a politician suggesting that the U.S. could indefinitely extend the federal government’s massive COVID era financial bailouts without increasing spending. True, such perpetual spending might not technically be an increase over the past couple years’ massively inflated totals, but such blowout spending was sold to taxpayers as a temporary--not permanent—plan. Extending COVID bailout funding into the future would quite obviously cost taxpayers trillions of dollars more than allowing them to expire. In the same way, bond and override proposals quite unambiguously cost taxpayers more in property taxes in every future year (until they themselves expire) than those residents would pay without them.  

Voters may still simply decide that such added costs are an acceptable burden, but they should be under no delusion about the trade they are making. And they should certainly expect their districts to justify their existing track record and their future trajectory.  

Matt Beienburg: Director, Education Policy and Van Sittert Center for Constitutional Advocacy, Goldwater Institute