​​Poway Unified Paid a Financial Firm Double the Contract Amount in Half the Time
June 6, 2016 | By Ashly McGlone | www.voiceofsandiego.org
EXCERPT: When Poway Unified approved a contract with financial firm Dolinka Group in 2014, it did so with the understanding the deal would "not exceed" $625,000. Halfway through the five-year deal, Dolinka Group has already made $1.27 million on the contract - double the amount publicly authorized by the school board. The contract authorized Dolinka Group to provide consulting for Poway's Mello-Roos Community Facility Districts - a special district created with property owner approval that lets Poway Unified collect money through an extra tax. The $625,000 limit was included in board documents , but is not on the contract itself . Poway staff now say the fee cap was actually an annual amount, so the board really approved a $3.1 million contract in February 2014. ... CEO Benjamin Dolinka did not respond to requests for comment. Poway staff declined to say whether their interpretation of the Dolinka contract means all other multiyear "not to exceed" contract totals approved by the board are really annual amounts, not totals. ... Dolinka also works as a consultant on Poway's multimillion-dollar Mello-Roos bond sales, earning tens of thousands more on the bond sale it helped create - posing a potential conflict of interest . The firm has also served as financial adviser on other bond sales, including Poway's notorious $1 billion capital appreciation bond deal in 2011, which sparked changes to state law. "I don't want to put any more money in Benjamin Dolinka's pocket since he was the primary architect of the CABs," said Sellers. ...
To read the complete article please visit:
http://www.voiceofsandiego.org/topics/education/poway-unified-paid-a-financial-firm-double-the-contract-amount-in-half-the-time/ 

AB 2316 |

Bill to Protect Contractors in Controversial Deals Moves Forward
May 6, 2016, 2016 |By Sara Libby | www.voiceofsandiego.org
EXCERPT: Last year, a 5th District Court of Appeal ruling put millions of dollars in payments to contractors who worked on school construction projects under no-bid contracts in jeopardy. This week, California Assembly's committee on education advanced a bill that would protect those payments even if they're deemed illegal because of a conflict of interest. Unlike typical public-works projects, so-called lease-leaseback projects have allowed schools to forgo competitive bidding and merely choose the contractor they want. The district then leases property to the contractor for $1 a year, while the contractor builds improvements. The contractor then collects lease payments from the school district for up to 40 years until the project is paid off. But school districts haven't been treating the deals like true leases. Instead, they've paid contractors in full upon completion of a project like a normal construction job. That's illegal, the 5th District decided in Davis v. Fresno Unified School District.

To read the Sacramento Report please visit: www.voiceofsandiego.org/topics/government/sacramento-report-bill-protect-contractors-controversial-deals-moves-forward/
Assembly Bill 2316:
leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201520160AB2316

AB 2316 | New Bill Would Protect School Contractors In No-Bid Deals
April 18, 2016 | By Dan Walters | www.sacbee.com
EXCERPT: Last year, a state appellate court ruled that when Fresno Unified School District hired a construction company to consult on a middle-school project and then awarded it a no-bid contract to build the school, it violated state conflict-of-interest laws. 
    The state Supreme Court refused to take up the case, immediately placing billions of dollars in school construction payments all over the state in jeopardy as attorneys demanded that districts recapture funds that were paid under illegal contracts. 
    Meanwhile, lobbyists for the construction industry - particularly firms that specialize in "lease-leaseback" projects - began pressing the Legislature for protection from "disgorgement," as it's called. 
    Protective legislation - dubbed a "get-out-of-jail-free card" by critics - was drafted but the effort stalled, in part because legislators were leery about intervening in what had become, in Fresno, a federal investigation of insider dealing. ... 
    ... Assemblyman Patrick O'Donnell, D-Long Beach, who leads the Assembly Education Committee, had already introduced a bill that would require competitive bidding in lease-leaseback projects, in which a school district leases a school site to a contractor, then leases back the school that's built on the site. O'Donnell is now drafting amendments to Assembly Bill 2316, to be introduced in the next few days, that would expand the bidding requirement to include preconstruction consulting contracts. But they would protect contractors who had previously built schools under no-bid lease-leaseback contracts after serving as consultants from having to repay money. ... 
    ... Protecting contractors from having to repay funds they received from such questionable deals is another matter altogether. While some may have acted in good faith, it's evident that others got caught doing something they should have known was unseemly and shouldn't have done. The pending bill would, in effect, reward them for bad behavior.    

To read the complete article please visit: www.sacbee.com/news/politics-government/politics-columns-blogs/dan-walters/article72539072.html
Assembly Bill 2316:
leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201520160AB2316 

Contractors lose appeal on 'free speech' gifts
Builders in South County districts said meals, play tickets, were exercise of First Amendment rights 

March 2, 2016 | By Greg Moran
EXCERPT:  Fancy gifts, lavish meals and free trips given to former South County education officials by contractors aren’t an exercise in free speech, but bribes, a San Diego appeals court has concluded.
   The ruling by the 4th District Court of Appeal affirmed a decision by a San Diego Superior Court judge in December 2014, in a case filed by Sweetwater Union High School District against construction contractors Gilbane and The Seville Group.
   The district is trying to recover millions of dollars it paid to the companies for a series of school building projects. 
   School officials contend the contracts were tainted because the former district officials involved later admitted to violating state conflict of interest laws by accepting thousands of dollars of travel, play tickets, sporting events, meals and other freebies provided by the companies. 
   Those admissions of guilt came in a sweeping investigation by the District Attorney’s Office of a pay-to-play culture in the district that infected the hundreds of millions of dollars in construction contracts. After the guilty pleas, new district leaders filed a lawsuit seeking $26 million be returned. ...
   Associate Justice Cynthia Aaron, writing for the panel, said there was enough evidence, including the guilty pleas of officials, to conclude the long-running pattern of “excessive gift giving” by representatives of the firms influenced the decisions to award them the contracts.
   The justice also wrote that the district has “demonstrated a probability of prevailing” on its claims that it was owed the money. 
   The ruling was certified for publication, meaning it can now be cited as precedent in similar cases around the state.   To read the complete article please visit:
www.sandiegouniontribune.com/news/2016/mar/02/south-bay-gifts-ruling/

Builder Emails Fresno Unified 'We Are a Go' Months

Before School Board Votes on Projects
Feb. 20, 2016 | By MacKenzie Mays | www.fresnobee.com
EXCERPT: Months before Fresno Unified school board members had a chance to vote on school construction projects that now are under federal investigation, the builder who ultimately got the job wrote an email to district officials saying "we are absolutely a go" in reference to those multimillion-dollar projects. ... 
   In the July 15, 2011, email, Mike Spencer, vice president of Harris Construction, writes to Fresno Unified Chief Operations Officer Karin Temple and former facilities officer Lisa Leblanc about plans for projects at Fresno, Roosevelt and Bullard high schools. Those projects were not officially awarded to Harris Construction by the Fresno Unified school board until several months later, at separate public board meetings...
   A Harris Construction representative declined to comment, citing the ongoing federal investigation of its "lease-leaseback" deals with Fresno Unified. The investigation also is probing deals made with Bush Construction and any financial dealings between district officials and contractors. ... 
   The district's use of preconstruction contracts has played out in court, with trustees questioning their legality. According to the preconstruction contracts for the Roosevelt, Bullard and Fresno high school projects, in return for the district's selection of Harris Construction for the general project, consulting services "shall be performed at no cost to the district." However, should the district use another contractor to construct the project, it must pay Harris Construction $5,000, the contract says. 
   The preconstruction contracts were not individually approved by the school board, and critics say the agreements pose a conflict of interest by allowing contractors to act as a consultant on a project they are later awarded. ... 
   "We're under investigation by the FBI, and whether it's a violation of federal law or state law, this is wrong on all levels," [Trustee Brooke Ashjian] said. "I'm going to leave it to law enforcement to decide if it's criminal. The board is supposed to be running the school district. The board is responsible for the school district. 
   "We hired the superintendent, and he is not keeping us in the loop. I don't care if they got all 10,000 employees of FUSD to sign off on it, it's not valid and it's not legal. Any contract has to come before the board, period." Mills, an attorney, said that the Education Code regarding contracts is clear. If the contracts are deemed invalid, Harris Construction could have to repay the district. ... 
   The leaseback financing process is under scrutiny across the state. Meanwhile, a pending legal case brought by another Fresno contractor alleges that Fresno Unified deliberately misused the leaseback process to assure that Harris Construction would receive a $37 million Gaston Middle School project. 
   Fresno Unified has signed 25 leaseback deals since 2011 - a majority of which were paid for by Measure Q, a bond measure that Harris Construction and its owner, Richard Spencer (Mike's father), contributed the top donations to help pass. Richard Spencer also has contributed to school board members' election campaigns. ... 
To read the complete article please visit:
www.fresnobee.com/news/local/education/article61443937.html

West Contra Costa School Board Approves

Full-Fledged Forensic Audit of Bond Program
January 21, 2016 | By Joyce Tsai | www.contracostatimes.com 
EXCERPT: RICHMOND -- With a goal of restoring the public's trust, the West Contra Costa school district's board of trustees authorized a comprehensive forensic audit of the district's $1.6 billion bond program. 
   The board voted 4-1 to have independent forensic auditors Vicenti, Lloyd & Stutzman conduct the high-level, detailed accounting of the school bond construction program to root out potential fraud, waste and abuse. The audit also will verify that proper procedures are in place to prevent financial mismanagement in the future. 
   The vote was a victory for bond watchdogs who had long been asking for improved transparency and accountability in the district. They came to the meeting by the dozens to urge the board to approve a full independent forensic accounting of the bond program so that any lingering doubts about it might be put to rest. ... 
   "A whistleblower subcommittee, formed after a former analyst made allegations of financial mismanagement in the bond program, recommended that the board approve the in-depth forensic audit. A dueling recommendation by district staff for a watered-down version of an audit was not approved by the trustees. The estimated cost of the forensic audit is $1 million and would be paid from bond program money. ...
   ... Trustee Liz Block pointed out that annual performance audits, which are conducted to ensure that bond programs comply with Proposition 39, are different from those of forensic auditors, who specialize in uncovering waste, fraud, abuse and financial irregularities. ...
To read the complete article please visit:
http://www.contracostatimes.com/breaking-news/ci_29412748/west-contra-costa-school-board-approves-full-forensic

West Contra Costa District Staff Recommends to Scale Down Forensic Audit's Scope
January 19, 2016 | By Joyce Tsai |  http://www.eastbaytimes.com
EXCERPT:   School trustees on Wednesday are scheduled to vote on the scope of a forensic audit into whistleblower allegations about waste, fraud, abuse and financial irregularity in the West Contra Costa district's school bond construction program. 
   Controversy has already erupted, with the whistleblower subcommittee saying that district staff has replaced its recommendation with a watered-down substitute that fails to fully investigate the allegations and does not use the special forensic auditing firm selected by the board last year.
   "It was a shock to tell you the truth, to see the recommendation by district staff was written to downplay our recommendation and substituted with the staff recommendation," said school Trustee Liz Block, chairwoman of the subcommittee looking into whistleblower Dennis Clay's allegations of mismanagement. "No one in the district talked to me ahead of time, and it was really unexpected."...
   ... "When you think about it, the Clay investigation represents an attempt to correct the possible wrongs of district," Block said. "And when we're just on the point of finalizing our recommendation, having the district step in and make their own recommendations, it's the kind of action that could completely undo the other work we're doing." 
   Fellow school Trustee and Clay subcommittee member Valerie Cuevas agreed.
   "Our goal from the start was to be open, transparent and clear in our actions, and our recommendation was open, transparent and clear, so the fact that what's being presented to the board isn't a reflection of that is quite surprising to me ... " she said. "This is not in line with how this subcommittee has functioned through its entirety. ... The staff is presenting staff opinion. ...
To read the complete article, please visit:
http://www.eastbaytimes.com/2016/01/19/west-contra-costa-district-staff-recommends-to-scale-down-forensic-audits-scope/ 

California AG's Opinion Targets School Bond Practices
JAN 28, 2016 | BY KYLE GLAZIER
EXCERPT:   School and community college districts violate California law if they hire outside firms to campaign for bond ballot measures or purposely incentivize municipal finance professionals to advocate for passage of a bond measure, the state's attorney general said in a formal legal opinion. 
   Attorney General Kamala Harris released the opinion Tuesday in response to a request from Treasurer John Chiang.
   California law prohibits using public funds to influence the outcome of an election, including campaigning for the passage of a bond measure. Voter-approved bonds backed by property taxes are the primary method of new school construction in the state, and Chiang sought a clarification on whether some common industry practices might be violating the law.
   Such California attorney general's opinions are advisory, and not legally binding on courts, but are generally considered authoritative by the officers and agencies who have requested them and given respect by judges.
   Robert Doty, a lawyer and former financial advisor who now runs his own litigation consulting firm AGFS in Annapolis, Md., said the opinion is a significant development.
   "This is a very important analysis for finance," Doty said. "It is not a general attempt to say that contributions are good or bad, except when they are tied to getting business."...    

To read the complete articleplease visit: www.bondbuyer.com/news/regionalnews/california-ags-opinion-targets-school-bond-practices-1095134-1.html

California Attorney General Opinion of No. 13-304
School District Bonds and Bond Elections 

In connection with a school or community college bond measure, does a district violate state law by contracting with a bond underwriter for both pre-election campaign services and post-election underwriting services?
CaAG0pinion13-304.pdf


Search on CaLBOC

2016 News • Archives

​​​​​​​​Editorial: Pay-to-Play Concerns in WCCUSD School Bond Program?
October 7, 2016 | By Daniel Borenstein |  www.eastbaytimes.com   
EXCERPT:   An audit of West Contra Costa's $1.6 billion school construction program indicates vendors felt pressured to contribute to two board trustees' pet causes in order to receive district contracts. Former trustee Charles Ramsey, current trustee Madeline Kronenberg and political ally and current school board candidate Don Gosney solicited money from vendors and subcontractors, according to the audit.During fiscal years 2009-15, $2.1 million was donated by 26 vendors and subcontractors including architects, financial consultants, contractors, engineers and the bond program's construction management firm. ...   According to the audit report, SGI declined to cooperate with a number of requests for information and thus limited the audit’s scope.    ...If vendors were required to make contributions to obtain public contracts or continue their business relationships with the district, that would violate state and federal criminal bribery and extortion statues, said attorney Michael Martello, a government ethics expert. ...     The audit, by the Southern California firm of Vicenti, Lloyd and Stutzman, doesn't specifically label the solicitations as pay-to-play, but indicates that several vendors regarded the contributions as a cost of doing business.
   The report contains paraphrased summaries of comments from unnamed vendors: "The message was always clear - here's what it costs to stay in." "This is how we continue to get work from WCCUSD." ...
The contribution solicitations arose as part of the conflict-of-interest section of the investigation. The auditors offered no opinion on the legality of the practices. On Sept. 21, the school board voted unanimously to send the audit to law enforcement. ...    
​To read the complete News Release please visit:
mercurynews.com/2016/10/07/borenstein-pay-to-play-concerns-in-school-bond-program


Link to WCCUSD Forensic Audit,

broken up in downloadable sections:
TC = Test Controls, FI = Forensic Investigation
http://www.wccusd.net/audit   

Prop. 51: $9 Billion Bonds for School Construction
Supporters see needs, critics question affordability 

October 29, 2016  |  By Christine Armario, Asso. Press  |  www.ocregister.com
EXCERPT:  California voters are deciding whether to approve $9 billion in bonds for school and community college construction projects - a measure proponents say is necessary to fill a backlog of needed new buildings and renovations.
   Opponents of Proposition 51 argue the state cannot afford the estimated $500 million it would cost each year to pay off the bonds and that reform is needed in how school construction projects are funded. The measure is backed by a coalition funded by two developer organizations that have contributed more than $6 million since January, as well as the California PTA and dozens of school districts, labor and business associations. It would authorize $6 billion in general obligation bonds for building new K-12 schools and renovating older ones, as well as $1 billion for charters and vocational schools and $2 billion for community colleges. Principal and interest payments would be paid off over 35 years and cost a total of $17.6 billion if sold at an average 5 percent interest rate. ... 
    An analysis by the Legislative Analyst's Office warned that the existing system "fails to treat school facility costs as an ongoing expense despite the recurring nature of facility needs" and deepens inequities between school districts, among other concerns.
   The construction bonds are provided on a first-come, first-serve basis, which critics say gives larger and wealthier districts that have facilities staffs dedicated to obtaining new funding for construction and renovation projects an advantage over smaller, less affluent districts. Opponents of Prop. 51 contend that bond money for school projects should be doled out based on need. ...    
     To read the complete News Release please visit:
www.ocregister.com/articles/school-733716-state-bonds.html 


West Contra Costa School Board Accepts Forensic
Audit Report of $1.6 Billion Bond Program

September 22, 2016 | By Rick Radin |  www.eastbaytimes.com   
EXCERPT:     RICHMOND –- West Contra Costa schools trustees formally accepted the results of a forensic audit of the district’s $1.6 billion bond program Wednesday evening and agreed to form a task force charged with carrying out its recommendations for reform.   The school board also agreed in closed session to turn over the results of the audit to “law enforcement,” without specifying what agencies it was referring to. Ernie Cooper of the auditing firm Vicenti Lloyd & Stutzman LLP said an investigation by law enforcement agencies will be required if the district wants to uncover any mismanagement or wrongdoing by district officials and school construction contractors because law enforcement is “not within the scope of our work.”   “It was not our charge to uncover fraud and conspiracy or go out and find if there was a kickback,” he said. “Why don’t you ask the responsible agencies to take a look at this report?”   Bond program critics Ben Steinberg and Ivette Ricco, a member of the subcommittee that chose VLS and oversaw the audit, encouraged trustees to pursue an investigation of possible kickbacks and overcharges for services, especially from SGI, the construction management firm that managed many of the district’s construction projects.    According to the audit report, SGI declined to cooperate with a number of requests for information and thus limited the audit’s scope. ...
To read the complete News Release please visit:
eastbaytimes.com/2016/09/22/west-contra-costa-school-board-accepts-audit-report/

Link to WCCUSD Forensic Audit, it is broken up in downloadable sections:
TC = Test Controls, FI = Forensic Investigation
http://www.wccusd.net/audit   


​​​​Capitol Alert: Statewide School Bond Stymied in Legislature, Backers Go Their Own Way
September 6, 2016 | By Jim Miller| www.sacbee.com
EXCERPT: ... Home builders, school construction companies and others, bypassing the Capitol, spent millions to gather signatures to qualify a $9 billion school bond for the ballot. Eleventh-hour Capitol negotiations to craft a smaller substitute bond in June went nowhere, securing Proposition 51’s fall placement. ... 
     The billions secured by Proposition 51 would be allocated under a framework nearly 20 years old, when California school enrollment was increasing and local school bonds needed to pass by a two-thirds vote, instead of the current 55 percent.
    The Brown administration has been among the biggest skeptics of more school borrowing, slamming the current program as expensive, inefficient and one that should be retooled to help only the neediest districts.
    H.D. Palmer, a spokesman for Brown’s Department of Finance, said Proposition 51 “perpetuates the status quo” while saddling the state with an additional $500 million a year in general fund debt service, on top of more than $2 billion in debt service from earlier school borrowing.  ...   
     To read the complete News Release please visit:
www.sacbee.com/news/politics-government/capitol-alert/article99804172.html

Warrant Issued for Los Banos School Board Member, Merced Contractor Arrested on Bribery Charges
August 29, 2016 | By Rob Parsons |  www.fresnobee.com   EXCERPT: Greg Opinski, a Merced Union High School District board member and owner of Greg Opinski Construction, was arrested Monday on suspicion of bribing a public official and a warrant has been issued for school board trustee and former Los Banos mayor Tommy Jones, law enforcement sources confirmed to the Sun-Star. Opinski, 53, is accused of paying off at least one trustee with the Los Banos Unified School board in connection with the controversial expansion project at Mercey Springs Elementary School, the official confirmed. An arrest warrant also has been issued for Jones, according to the Merced County District Attorney Office. Jones has been in contact with the District Attorney's Office Monday by telephone. He has been encouraged to surrender to the authorities, officials said. ... ... During a special meeting July 26, the board voted 4-3 to award Opinski a contract worth up to $541,208. The project has been estimated to cost the district $6 to $7 million. ...
To read the complete News Release please visit:
www.fresnobee.com/news/local/crime/article98631182.html

How Investment Banks Cash in on School Construction
August 25, 2016 | By Paul Perry | priceonomics.com
EXCERPT: ... So who are the firms that profit from issuing bonds for school districts? It's a mix of Wall Street investment banks (who earn nearly 50% of issuance costs), law firms, insurers, ratings agencies, and consultants that support the bond issuance process. The buyers of that debt include firms like Nuveen Asset Management, Goldman Sachs Asset Management, and OppenheimerFunds, who, for example, recently bought $725 million worth of bonds from Chicago Public Schools at a whopping 8.5 percent yield. Many districts have also gotten tangled in expensive debt financing deals, usually through capital appreciation bonds (CABs), which are longer term financing deals with significantly higher interest rates spread out over a greater number of years. CABS leave school districts saddled with exorbitant amounts of debt for many years. These CABs started popping up just after the financial collapse in 2009, when districts were finding it harder to get the funding they needed for school construction. The Newport Mesa Unified School District in Orange County issued $83 million in long-term notes in May 2011, but will ultimately pay about $548 million in principal and interest overall. So why are our school districts-institutions that have been forced to cut teacher salaries, arts programs, and much more over the past decade-paying so dearly to build new schools? ... To add insult to injury, these firms benefit financially from the issuance of this debt (once it's passed by voters) because they underwrite it as well. A recent study focused on California bond measures found that post-election fees paid to underwriters (like George K. Baum & Co.) that contributed to bond campaigns were on average double those paid to brokers that did not donate to campaigns. As you might expect, this offers many opportunities for graft. In San Diego County, six underwriters (Stone & Youngberg, Piper Jaffray, UBS Securities LLC, Alta Vista Financial, RBC Capital Markets, and E.J. De La Rosa & Co.) hold sway over the entire local school construction market by using campaign donations to secure underwriting contracts. But even after accounting for the cost of election services, school boards pay dearly to raise money for building or renovating schools due to a simple truth of the business world: the smaller and less experienced you are, the more you pay. ... 
To read the complete News Release please visit:
priceonomics.com/how-investment-banks-cash-in-on-school/ 


Chiang and County Treasurers Move to 
Stop 'Pay-to-Play' School Bond Campaigns

July 27, 2016 | Press Release| www.treasurer.ca.gov
EXCERPT:  State Treasurer John Chiang and a coalition of county treasurers and tax collectors moved to stop questionable bankrolling of campaign activities in local bond election campaigns. Preying on school districts eager to win voter approval for bond elections, municipal finance firms, including bond counsel, underwriters, and financial advisors, are offering to fund or provide campaign services in exchange for contracts to issue the bonds, once approved by voters. The payments could violate state laws governing the use of bond proceeds and public funds, according to a recent California Attorney General's opinion. Such payments could saddle taxpayers with exorbitantly high, bond issuance costs, the opinion noted. "There are unscrupulous Wall Street firms offering to fund local bond campaigns in exchange for lucrative contracts," said Chiang. "Not only are these pay-to-play arrangements unlawful, they rip-off taxpayers and endanger the integrity of school bonds, which are vital tools for building classrooms and meeting the educational needs of our communities."... Common Cause, another "good-government" advocate, echoed the sentiment. "Pay-to-play government contracts have no place in a democracy," the group said in a statement. "School bond underwriting contracts should go to the most qualified firm, not the one that agrees to make the biggest ballot measure campaign contribution." The attorney general acknowledged the pay-to-play problem in a response to requests for a legal opinion from Treasurer Chiang and his predecessor, Bill Lockyer. Both officials sought a legal basis for cracking down on these schemes which often lead to higher costs that must be shouldered by taxpayers. Specifically, the deals result in padded bills that allow municipal finance firms to recoup money spent on illegal campaign-related work. "Local treasurers throughout the state and I are united in refusing to do business with any securities firm which promotes these quid-pro-quo schemes," said Chiang. "They do nothing but inflate taxpayer bills and reduce resources for students."
To read the complete News Release please visit:
www.treasurer.ca.gov/news/releases/2016/20160727.asp 
Fact Sheet: Treasurer Chiang and County Treasurers 
Stop Wall Street Pay-to-Play Pressure On School Districts:
www.treasurer.ca.gov/news/releases/2016/20160727_fact.pdf

Building California Schools Now Big Business, 
Big Money and Big Politics

August 1, 2016 | By Dan Walters | www.sacbee.com
EXCERPT: Building and refurbishing the schools that house 6 million California kids has become very big business. Over the last few decades, the state has issued about $45 billion in school bonds, mostly for K-12 schools, some for colleges, and repaying lenders costs the state nearly $3 billion a year. With interest, retiring the bonds will have cost about twice their face value, or some $90 billion. Local school districts have issued many billions more in voter-approved bonds to match state grants, and property taxes have been hiked to pay for them. The school construction tab is likely to increase even more because a $9 billion bond issue has been placed on the Nov. 8 ballot by a coalition of school groups, developers and the construction companies that profit from school contracts. If it passes, the state's tab for repayment would increase by another half-billion dollars a year, and Gov. Jerry Brown has been highly critical, saying the system for allocating bond money is fatally flawed. Pointedly, the bond measure, Proposition 51, preserves an arcane formula that protects developers from having to fully pay for school construction serving their residential tracts as long as the state has bond money. ... Another very questionable aspect of Proposition 51 is that bonds repaid over 35 years may be used for reroofing, air conditioning, playground equipment and other maintenance and operational projects that won't last nearly that long. ... 
To read the complete article please visit:
www.sacbee.com/news/politics-government/politics-columns-blogs/dan-walters/article93143177.html 

Grand Jury Report Eviscerates San Ysidro School Bond Program
May 24, 2016 | By Ashly MGlone | www.voiceofsandiego.org
EXCERPT:  The San Ysidro School District's dark days were even darker than previously known and compromised the school bond program, according to a new County Grand Jury report.      Former district officials misspent school bond funds, double paid vendors, spent $45 million on an ill-advised land purchase and fulfilled few promises made to voters who approved a $250 million bond measure in 1997, according to the report released Tuesday. About $376,900 removed from the bond fund may still be unaccounted for.      "Prior SYSD boards did not perform due diligence and disregarded their fiduciary duty, approving expenditures from bond proceeds for purposes other than those listed in the ballot measure," the  Grand Jury wrote. "The district has amassed hundreds of millions of dollars in long-term debt with little to show for it."      San Ysidro's superintendent Manuel Paul and board member Yolanda Hernandez were among 18 people convicted in a wide-reaching corruption probe by the San Diego County district attorney that concluded in 2014. Hernandez was one of five public officials forced from office in the South Bay, and Paul spent time in prison for a separate federal corruption charge.  ...      The 19-person citizen jury recommended an independent forensic audit.      District officials say one is already under way, and concurred with the thrust of the report, acknowledging former administration members destroyed records and mismanaged district finances and bond funds. ...     The jury also confirmed what's been known for a while: That former district employees destroyed district records. The school board ordered an internal investigation into the matter, but no records show any investigation occurred.      The jury claims the school board at one point approved the destruction of 215 boxes of documents, "but there is no record of what was destroyed."      Many records that do exist, the jury claims, are sloppy and filled with errors. ... 
To read the complete article please visit:
www.voiceofsandiego.org/topics/education/grand-jury-report-eviscerates-san-ysidro-school-bond-program/ 
San Ysidro School District San Diego Grand Jury Report 5/24/2016
www.sandiegocounty.gov/content/dam/sdc/grandjury/reports/2015-2016/SanYsidroSchoolDistrictReport.pdf 

California League of Bond Oversight Committees