The Anchorage school bond failed. What happened?

A large bond to overhaul and improve a number of Anchorage school buildings has failed, having been voted down by a slim majority of voters in the municipal election.

Without the roughly $111 million bond package, a number of spending priorities for the district are on hold as education supporters figure out what’s next. The bond’s backers caution that its failure merely delays the inevitable, as the city’s infrastructure ages and state reimbursements for school bond debt remain halted.

“None of the things we feel we need to do go away,” said Anchorage School Board member Andy Holleman. “We will have to delay a lot of them and come back to voters next year with perhaps a reduced package or something a little more succinct.”

With few ballots left to tally in the latest count, there was the 1,969-vote majority of “no” votes, accounting for 51% of the vote, and it would take an electoral anomaly to close the gap. The city’s election officials will rule on challenged ballots on Monday, and the Assembly is scheduled to certify final results on April 26.

The bond likely failed due to a mix of factors, according to people involved with the issue. They range from general economic anxiety amid record inflation to difficulties with the messaging campaign in a year when Assembly races pulled more focus, in addition to the scale of need given the district’s aging facilities. Discord surrounding rebuilding an elementary school also may have been a factor, supporters said.

The bond proposition was a mix of items, including $31 million toward constructing a new building for Inlet View Elementary, and tens of millions of dollars for missing fire suppression systems, updating lighting, the replacement of decades-old roofs, a failing boiler system, a parking lot renovation, plus the construction of several new secure entryways at schools around the district.

In an emailed statement, ASD spokeswoman Lisa Miller wrote that the district had planned for the bond to pass.

“The District has started the process of researching next steps to address the important safety, restoration, and maintenance needs Proposition 1 addressed,” Miller wrote. “Part of the research is also to understand why it didn’t pass.”

Asked to speak about the bond’s failure and its impacts, Miller said over text, “the District is not going to engage in any media interviews around the bond until after the election is certified and we have research data on why it didn’t pass plus a solid plan for next steps.”

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School board president Margo Bellamy said she was personally disappointed, but didn’t want to speculate on why the bond package failed. She said the board plans to discuss what happened and what they could have done differently.

“It’s obvious that we need to do a better job of convincing the public of our needs — that’s Margo Bellamy speaking,” she said.

$824 million in deferred maintenance

School bonds almost always pass in Anchorage municipal elections. In the last ten years, only once, in 2016, did voters reject the proposition. When compiling a bond package, board member Holleman said they try to figure out what voters can bear.

Part of the issue is the district’s sheer size: It owns 91 buildings totaling 7.8 million square feet, making it “the largest physical plant of any public entity in the state,” according to ASD .

And those buildings are getting old: The average age of facilities in the district is 36 years, with about a third of them older than 50 years. Critical infrastructure like roofs, boilers and ventilation systems are being used past their life expectancy, and they receive more wear and tear than comparable facilities in the Lower 48 because of Alaska winters.

“Whenever we’re replacing these boilers, they are way, way past when we would have normally expected their normal expected lifetime,” said John Bulkow, a retired engineer who co-chairs capital improvement advisory committee for the district.

Bulkow said he feels the district’s facilities are well maintained, but you can only patch holes and tighten bolts for so long.

“They’re doing a good job of maintaining stuff. It’s just these are big projects that you just can’t fit into the normal operating budget,” Bulkow said.

According to the district’s estimate, assessed annually with a national firm, it currently has a deferred maintenance backlog amounting to $824 million.

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Voters in Anchorage used to see school bonds on the ballot every year. Three years ago, Holleman said, the idea of going to voters for bonds on a two-year cycle emerged, with the intent of not overwhelming local construction companies with too many projects at once.

“We want to meter it out so that we don’t wind up with people from other states looking at it and making a bid that wins, simply because we don’t have capacity in Anchorage,” Holleman said.

While the two-year strategy had previously worked, Holleman said they might have to return to the annual bond cycle.

Sticker shock

One conservative political observer thought some voters staring at additional expenses via spending on school buildings just decided it was not an appealing prospect.

“In times like this, when inflation is like 8% … people are going to be just much more careful about approving bonds,” said Bill Evans, who formerly represented South Anchorage on the Assembly.

On top of general price increases greeting consumers at the pump and supermarket shelf, many property owners in Anchorage this year learned the assessed value of their homes has jumped because of a red-hot housing market. And while the actual amount people pay in property taxes isn’t fully determined by assessed value, Evans said people seeing that number go up probably didn’t help the school bond’s chances.

Also, many conservatives in Anchorage have longstanding gripes about how the city and school district use bonded debt. Since the municipality has a cap on how much it can levy in taxes, bonds have served as a kind of backdoor for additional spending.

“The municipality tends to be the more flagrant in that,” Evans said, citing past propositions for expenses like ambulances or fire trucks that have included salary money for the staff operating them. “A lot of people don’t like that approach. And there’s some of that in the school bonds.”

Generally, city and school officials aim to retire roughly the same amount of debt as they are proposing residents take on. That means old bonds getting paid off are equivalent to the new debt being taken on. This year’s $111 million would have come as $102 million was being retired, so the net increase in debt was closer to $9 million than the more eye-catching $111 million sticker price voters saw at the top of their ballot.

Still, Evans said, there are plenty of people in Anchorage who will vote against any additional public spending.

“A lot of people would say the tax burden is already too high,” he said.

That is a challenging prospect for Anchorage, and local governments across Alaska, since there is less money available for improvements.

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Starting in 2014, low oil prices cratered the state’s revenues, and the Legislature drastically cut its spending on school capital projects. That included a moratorium on the state reimbursing local governments taking on bonded debt to pay for school improvements, as well as Gov. Mike Dunleavy’s more recent budgetary veto over paying the preexisting debt obligations in full that the state had promised to reimburse, which the Legislature failed to override.

According to a paper published last year by the University of Alaska Anchorage’s Institute for Social and Economic Research, without the state’s help through debt service reimbursements, the cost to local governments for capital projects effectively tripled.

“Anytime there’s division - that has an impact”

For the Anchorage School District, the timing for those spending declines could not be worse.

“You have more deferred maintenance in any given year than anyone can deal with,” said Rep. Zack Fields, a Democrat in the state House whose district covers Inlet View Elementary and was involved in supporting the school bond this year. “All these problems land on local government’s lap.”

Two of the most expensive items in the school bond were for work at the city’s two oldest schools, Inlet View and Lake Otis Elementary. This winter at Inlet View, sewage leaked into the playground, there were days when bathrooms didn’t work, and others where kids wore jackets during lessons because the heat wasn’t working, according to Fields.

“Schools will close,” he said. “That has not been clear in voters’ minds.”

Holleman said conflict around the plan to rebuild Inlet View Elementary was likely one of the reasons the bond failed.

The split arose over where to rebuild the school. Some neighbors voiced a series of concerns over moving the new building’s footprint to the other side of the school site, while others supported the design.

“Anytime there’s division — that has an impact,” Holleman said. “You can only get so many ‘yes’ votes, so anything that makes someone feel uncertain or makes them less likely to cast a ‘yes‘ vote, that means it’s more likely that it’s going to fail.”

Fields also said he thinks part of why a small majority voted down the bond was because of messaging about the stakes wasn’t breaking through in a year when an overwhelming amount of money and attention was focused on five Assembly races.

Denny Wells, a parent of students in the Anchorage School District said he was baffled by the bond proposal’s failure.

“That we would, as a community, decide not to do that with our schools just really seems very, very short-sighted to me,” Wells said.