California policymakers are considering how to allocate Proposition 39 funds — an estimated $2.75 billion over five years — to support energy efficiency and clean energy projects in K-12 schools and other public buildings. Proposition 39 presents a substantial opportunity to help school districts save energy and money.

In order to inform these ongoing discussions, CPI recently analyzed existing resources and gaps in financing energy-saving projects in K-12 school districts to try to get a sense of what school districts need.

In interviews with school district officials, we heard that California’s school districts are actively looking to cut energy costs amid intense budget pressures. Interest rates are currently very low, making many energy-saving projects financially viable. But many of the typical funding sources schools use for facility improvements are limited in availability, and districts are reluctant to take on debt to fill the gap. And many districts don’t have the staff resources and technical expertise to sort through sales pitches and figure out what projects to do.

Our analysis suggests that Proposition 39 funds can best drive energy savings in three ways:

• For districts that have existing resources to support facility improvements, Proposition 39 can provide “sweetener” grants to encourage them to add more energy-saving improvements to their projects.
• For districts that do not have such resources, Proposition 39 can facilitate access to low-cost capital and provide supplemental funding to make more projects attractive. For districts that cannot access capital due to their difficult financial situations, assistance would likely need to be expanded.
• And in order to make all of this happen, Proposition 39 needs to provide technical assistance to help districts navigate their options, figure out what projects will work for them, and pull together the funding pieces.

If Proposition 39 funding is allocated in a way that takes school district resources and needs into account, it can help schools start saving energy to close budget holes right now. And it can help them do longer-lived projects, so that they can continue saving energy into the future.