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Inequity and Privatization in School District Facilities Financing: A Mixed Methods Study By Marialena Dawn Rivera A dissertation submitted in partial satisfaction of the requirements for the degree of Doctor of Philosophy in Education in the Graduate Division of the University of California, Berkeley Committee in charge: Professor Janelle T. Scott Professor Tina Trujillo Professor Robert B. Reich Spring 2016 Copyright 2016 by Marialena Dawn Rivera Abstract Inequity and Privatization in School District Facilities Financing: A Mixed Methods Study By Marialena Dawn Rivera Doctor of Philosophy in Education University of California, Berkeley Professor Janelle T. Scott, Chair This study examines contracting out for public services to the private sector and the increased use of consultants as examples of the growing reliance on new public management strategies in public education. Although the extant literature has examined aspects of educational resource inequality, the growing privatization of core educational services, and education facilities bonds, scholars have not yet sufficiently considered the implications of education facilities finance policies for equity or as part of the broader privatization trend. To address these conceptual and topical gaps, this mixed methods dissertation draws on the tools of fiscal sociology and critical policy analysis to examine how California education finance policies have shaped the current system of school district debt financing over time, the sociopolitical factors (such as district median household income) that influence how districts interact with private organizations in the bond process (such as the level of involvement of private organizations and the fees paid to these organizations per student, and how these fees have changed over time), and how school districts’ experiences with school district debt financing policies vary. Despite record spending on school construction in the decade leading up to the 2008 recession, investment in school facilities attended by minority and low-income students was far less than for their white and middle class counterparts (Filardo, Vincent, Sung, & Stein, 2006). Student access to equitable facilities in many states is largely determined by local wealth, voters’ willingness and ability to raise their own taxes to finance school construction through bond sales, and the nuances of state policies. Though the state of California has improved its educational funding policies over time, inequitable facilities funding persists despite policy reforms. In California, when districts prepare to construct and modernize educational facilities, they typically work with a team of private consultants and contractors to navigate the municipal bond financing process. Findings indicate that California’s policy goals for providing equitable facilities for students fall short when school districts implement facilities policies, given the inadequacy of state funding mechanisms. The state’s reluctance to equitably fund facilities and the Governor’s plans for impending state disinvestment have allowed for an environment where private actors not only flourish, but also influence the policy process. 1 Shortfalls in state support and training have led to the rise of private actors in the facilities financing industry that have stepped in to fill—and profit from—the void. I find that financial expertise comes at a high cost, particularly for elementary school districts and districts with lower median household income. School districts vary in their ability to pay for financial expertise, and when combined with existing political and ethical problems with a highly variable field of consultants and contractors, the absence of clear state guidance leaves school districts with varying abilities to implement complex state facilities policies, contributing to facilities inequities. When considered alongside the escalating costs school districts are paying for services on the operations side of the budget, these findings help portray the fuller extent to which resources are being transferred from the public to the private sector through contracting in an increasingly neoliberal system that already forces school districts to compete with one another for dwindling state funding. Though this research has demonstrated that the field of contractors and consultants profiting from contracts with school districts for facilities financing, modernization, and construction is complex and growing, the issue is not whether there is “too much” privatization. Policies that have allowed for the rise of privatization in educational facilities financing and the implications of increasing privatization are far more consequential for educational inequity. I find that privatization impacts the distribution of power and resources between school districts and private actors, and affects facilities outcomes, particularly with regard to equity. California’s leaders will allow facilities to remain inequitable as long as the system for financing schools relies foundationally on disparate local property wealth and as long as school districts feel pressured to pay for financial expertise to navigate and compete within a complicated system. There remains a compelling need for state action to ensure educational equity for all students. I conclude that research on school facilities finance must shift its focus from efficiency and bond election outcomes to a broader consideration of the sociopolitical implications of privatization for educational equity. 2 To April Maldonado and Santos Rivera, my parents, who have always encouraged my love of learning: Thank you for the sacrifices you made for our family, for the examples you have set, and for your unconditional love. To James Kachelmeyer, my husband and soul mate: Thank you for your insights, patience, encouragement, and unwavering love. To Rose Rivera Kachelmeyer, my sweet, sweet daughter: Thank you for the endless joy. i Table of Contents Chapter 1 - Introduction 1 Chapter 2 - Conceptual Framework 22 Chapter 3 - Literature Review 31 Chapter 4 - Data and Methodology 53 Chapter 5 - Critical Policy Document Analysis Findings: 77 Historical Policy Context for Privatization in School District Facilities Financing 77 Chapter 6 - Quantitative Findings: California School District Debt Trends and Regression Analysis 112 Chapter 7 - School District Case Study Findings, Part 1: West Contra Costa Unified School District 141 Chapter 8 - School District Case Study Findings, Part 2: Oakland Unified School District 184 Chapter 9 - Discussion, Policy Recommendations, and Significance 216 References 239 Appendices 250 ii List of Tables and Figures Table 1: Dissertation Data Management and Analysis Tools 56 Figure 1: Model of Actors and Relationships in the School Facilities Financing Process 60 Table 2: Quantitative Data Sources 63 Table 3: Descriptives for Variables Included in the Models 66 Table 4: Summary of Research Questions, Data Sources, and Analysis 72 Table 5: Statewide Bonds under Leroy F. Green School Facilities Act, School Facility Program 80 Table 6: Selected Policies Related to California School Funding 85 Table 7: Agencies Involved with School Facilities: Public Organization Mapping 98 Table 8: Applying Scott & DiMartino’s Typology to School District Debt Financing Actors 105 Table 9: Types and Prevalence of School District Debt 1984-2015 114 Table 10: Top Ten Underwriters by Number of Deals 116 Table 11: Top Ten Financial Advisors by Number of Deals 117 Figure 2: Number of Different Financial Advisors Listed in Database Over Time 118 Table 12: Top Ten Bond Counsel by Number of Deals 119 Figure 3: Percent of Debt Transactions Reporting Non-Zero Costs of Issuance by Year 120 Table 13: Costs of Issuance Over Time 121 Figure 4: Sum of Costs of Issuance Over Time 123 Figure 5: Median Costs of Issuance Over Time 123 Table 14: Costs of Issuance For Selected Debt Instruments 124 Figure 6: Costs of Issuance per Student by District Attendance 125 Figure 7: Costs of Issuance per Student by Assessed Valuation 126 Table 15: Fees Paid to Underwriters By Year 127 Figure 8: Median Underwriter Fees Over Time 128 Table 16: Fees Paid to Financial Advisors By Year 129 Figure 9: Median Financial Advisor Fees Over Time 130 Table 17: Fees Paid to Bond Counsel By Year 131 Figure 10: Median Bond Counsel Fees Over Time 131 Figure 11: Median Fees Paid to Selected Private Contractors Over Time 132 Table 18: Descriptives for Variables Included in the Models 133 Figure 12: Boxplot of Costs of Issuance Per Student by School District Type 134 Table 19: Regression Model Parameter Estimation of Costs of Issuance Per Student for GO Bond Transactions in 2010 and 2011 135 Table 20: Model 1. Mean Estimates of Costs of Issuance Per Student for Different Values of MHI 136 Figure 13: West Contra Costa School District Map 142 Figure 14: Map of Oakland Unified School District, District-Run and Charter Schools 186 Figure 15: Map of OUSD Bond Projects from Measures B and J 190 iii Acknowledgements First and foremost, I would like to thank my advisor and dissertation chair Dr. Janelle T. Scott. Professor Scott has been a selfless and constant mentor and a champion of my academic growth. She has undeniably changed the course of my life for the better. I also extend my deepest thanks to Dr. Tina Trujillo, who has been endlessly generous with her time, mentoring, and wisdom. Both Dr. Scott and Dr. Trujillo have patiently nurtured my thinking, encouraged me to trust my voice, and served as role models,

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