“Based on my years of experience supporting and working in education, it is clear to me that proper lighting, ventilation, heating and air conditioning in the classroom contributes greatly to a student’s ability to focus, learn and grow during their educational journey,” said Jack O’Connell, former two-term California State Superintendent of Public Instruction and current partner at Capitol Advisors Group.
California school districts continue to face severe budget pressures as both utility and construction costs soar, making it increasingly difficult to maintain quality education while managing school infrastructure. Electricity rates are climbing at nearly twice the inflation rate with alarming projections:
- PG&E: 49% increase through 2027 (12.4% annually)
- SCE: 20% increase through 2026 (5.1% annually)
- SDG&E: 22% increase through 2026 (5.5% annually)
These rising costs disproportionately impact schools with aging facilities — over 30% of California schools are more than 50 years old — forcing districts to divert funds from educational programs to cover operational expenses, such as HVAC breakdowns, rising utilities expenses and labor costs.
Construction costs have also seen double-digit increases year-over-year since 2020, with supply chain delays extending equipment delivery to 6-12 months and sometimes even longer. Districts postponing infrastructure projects often face 1.5-3 times higher construction costs than original estimates. The recent devastating fires in Southern California will likely make costs rise even further, due to scarcity of skilled labor, equipment and other essential construction resources.
These fiscal challenges are potentially exacerbated by AB 218, which extends the statute of limitations for filing claims of childhood sexual assault, leading to significant increases in insurance liabilities for districts across California. With rising budgetary pressures, districts must complete their master plans and find savings within their own budgets to maintain fiscal stability while ensuring safe, modern and energy efficient learning environments.
Proposition 2: A Strategic Solution for K-12 Schools
Proposition 2, California’s landmark $10 billion school facility bond, with $8.5 billion specifically for K-12 facilities, offers help to mitigate these budget challenges. The bond includes several key funding mechanisms:
- Energy Efficiency Funding: Provides up to 5% additional funding for projects exceeding Title 24 energy standards, with grants calculated based on the percentage improvement achieved.
- 75-Year-Old Building Replacement: Offers supplemental funding to replace aging buildings when a cost-benefit analysis justifies replacement over modernization.
Additional provisions include Career Technical Education Grants, Small Project Funding, Financial Hardship Assistance and Water Conservation Requirements.
By implementing modernization projects and strategically leveraging Proposition 2 funding, districts can address their ever-growing list of deferred maintenance and aging infrastructure, lower long-term operational costs and provide needed relief to their general fund budgets.
Success Stories: How Schools Can Invest in Comprehensive Solutions
School districts across California are already demonstrating how strategic energy infrastructure investments can deliver substantial returns.
For example, Rowland Unified School District implemented a seven-phase Energy Infrastructure Modernization Program across their 23 facilities, combining various funding sources including state grants, federal stimulus funds and utility incentives. Their investment in HVAC upgrades, LED lighting, building automation systems and renewable energy is projected to generate over $43 million in savings.
Meanwhile, Lakeside Union School District, facing some of the oldest infrastructure in California including century-old energy systems, launched a comprehensive $17.5 million modernization program using Elementary and Secondary School Emergency Relief (ESSER) federal stimulus, private sector funding and local bond funds. By adding renewables and upgrading antiquated HVAC, lighting and roofing systems, the district will realize over $41 million in savings!
Why Proposition 2 Matters: Equitable Funding and Long-Term Support
Proposition 2 establishes a sustainable funding framework through 2033, requiring districts to develop and submit a five-year facilities master plan. The program addresses historical funding inequities by providing greater support to small and disadvantaged districts:
- Base funding: 50% for new construction and 60% for modernization projects
- Additional funding: Districts with high percentages of low-income students or low property values can qualify for increased funding shares up to 100%.
- Small district support: Schools with under 2,500 students receive significant additional support, including reserved funds and project management grants.
- Matching share points system: A point system is applied that can adjust how much the state contributes to the funding of these projects from 60% to 65%, requiring the district to only contribute 35% of the funds needed.
As Proposition 2’s implementation is being finalized, districts should begin taking steps to find cost-saving opportunities.
“California school districts are at a crossroads. The combination of rising energy costs, aging infrastructure and increased insurance liabilities puts a real strain on our ability to prioritize student learning,” said San Bernardino City Unified School District Director of Facilities Planning and Development & California Coalition for Adequate School Housing (CASH) Chair Thomas Pace. “Proposition 2 offers a lifeline — but districts need to act decisively. By investing in smart infrastructure now, we not only reduce long-term operational costs, but we ensure our schools remain safe, healthy and sustainable environments for students and staff alike.”
Steps for Districts to Take Now
With a three-year processing timeline and limited funding, districts must act quickly to capitalize on this transformative opportunity. Proposition 2 funds can be directed toward modernization projects in facilities that are at least 25 years old or where enrollment growth exceeds current capacity. Key steps include:
- Evaluate your master plan and facilities to identify high return-on-investment infrastructure modernization projects, such as HVAC improvements.
- Partner with an energy service provider to implement modernization projects and expedite your planning and execution process to avoid rising costs.
- Identify opportunities for state and federal financial support, like Proposition 2
By investing in energy-efficient solutions now, districts can ensure that more resources remain available for what matters most: educating the next generation.
Co-Authored by:
- Jack O’Connell – Former State Superintendent of Public Instruction, California State Senate Member of the 18th district, California State Assemblymember of the 35th district and Santa Barbara County School Board member
- Thomas R. Jackson – Corporate Vice President Sales & Major Projects, Climatec Energy – A BOSCH Company
