Sweetwater UHSD Gets $8.2 Million in Settlement
Over Pay-To-Play Scandal   

Jan. 12, 2017 | By Greg Moran | www.eastbaytimes.com 
EXCERPT:  Two construction management firms will pay $8.2 million to the Sweetwater Union High School District to settle a lawsuit with the companies that were involved in a pay-to-play scandal that roiled the district beginning in 2011.
     The school board voted unanimously Thursday night to approve the settlement.
     The district had sought $26 million from the companies, Gilbane of Providence, R.I., and SGI of Pasadena, when it filed the suit in 2014. Employees of the two companies were among 18 people charged in a wide-ranging corruption probe of South County school districts that showed the businesses wined and dined district officials to get work under Proposition O, a $664 million voter-approved construction bond.
     The agreement includes no admission of liability from any of the parties and waives seeking recovery of legal fees, the district said in a statement. ...
     The district argued that the contracts the companies won were tainted by the scandal. School district trustees and administrators were among the 18 people charged and were the beneficiaries of the gifts, which included fancy dinners, Rose Bowl trips and free theater tickets.
     Under the state's conflict-of-interest law, public officials can't enter into a contract in which they have a financial interest. If they do, the contracts become void and the money paid should be returned. ...   To read the complete article visit:
http://www.sandiegouniontribune.com/news/courts/sd-me-sweetwater-suit-20170111-story.html


Brown Demands Better Auditing Procedures to Be

in Place Before Issuing Bonds
Governor Proposes Minimal funding Increase for K-12 Schools Next Year
Jan. 10, 2017  |  By John Fensterwald  |  www.edsource.org
EXCERPT:  ... And in a press conference surprise that will likely frustrate school districts and the construction industry, Brown said that his administration would not issue any of the $7 billion bonds for K-12 school facilities that voters approved in November until the Legislature established better auditing procedures to document how the money will be spent.  
      Michael Cohen, the director of the state Department of Finance, said, "We must continue to have commitment to taxpayers that the money will be accounted for appropriately."
       Brown was responding to a 2016 Department of Finance report that criticized the Office of Public Construction's failure to fix weaknesses in auditing procedures for $7 billion in school bonds that that voters authorized a decade ago. Eric Bakke, interim co-director of Los Angeles Unified's Office of Government Relations and the district's expert on facilities, said it could take a year to 18 months to pass corrective laws and regulations and train districts in new auditing methods.
     The delay will irk school districts whose building needs have to be addressed, Bakke said. "I would hope the process (of responding to the governor) will be expedited," he said.
     Voters passed Proposition 51 the November bond initiative, with a 55 percent majority. Brown opposed it because it kept the state's current first-come, first-served formula for allocating state building aid, which he said favors wealthy districts with full-time construction staff. He reiterated his displeasure on Tuesday, and he is expected to press hard for some revisions through regulations. ...
        To read complete article please visit:
edsource.org/2017/governor-proposes-minimal-increase-for-k-12-schools-next-year/


California League of Bond Oversight Committees

San Dieguito UHSD Cancels Building Contracts    

February 2, 2017 | By Aaron Burgin | www.thecoastnews.com 
EXCERPT:  The San Dieguito Union High School District recently canceled four building contracts with three separate developers after being threatened with legal action by a taxpayer advocacy group.
    The California Taxpayers Action Network demanded in a letter dated Jan. 12 that the school district rescind the contracts, which were lease-leaseback agreements with McCarthy Building Companies, C.W. Driver, LLC, and Erickson-Hall Construction Company, which the group said were approved without the plans for the projects being first approved by the Division of the State Architect.
    The school district rescinded the agreements at the Jan. 19 board meeting and will rebid the project packages in the near future. The action will not delay the projects, district officials said. ...
     Lease-leaseback arrangements are contracting mechanisms in which a district leases land to a developer selected outright for the purpose of developing a project on said land. The developer then has control over the subcontracting process.
     The contract delivery method has been controversial in nature after several high-profile cases in which lawsuits argued that some districts were corrupt in their contract awarding practices and that developers were able to unduly influence the awarding of said contracts.
     Gov. Jerry Brown recently adopted new laws that require the lease-leaseback agreements to be subject to competitive bidding for the prime and subcontracts, and that the district, not the contractor, handle the bids. ...
To read the complete article visit:
www.thecoastnews.com/2017/02/02/sduhsd-cancels-building-contracts/

2017 News • Archives

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IN THE NEWS:  Little Hoover Commission Report
Watchdogs Don't Have Much Bite, Says New Report
Feb. 15, 2017 | By Ashly McGlone | www.voiceofsandiego.org  
EXCERPT:   ... The oversight groups, "By and large ... have proven ineffective and some committee members have told the Commission that is at least in part, by design," wrote the Little Hoover Commission. "Most of the concerns revolved around bond oversight committee members who lack training, have conflicts of interest, either real or perceived, and the difficulty committee members have receiving required documents from the districts."   Those same issues have surfaced in San Diego County, where some appointees represent workers building bond projects and others get paid to lobby the very government officials they oversee.
     Among other things, the Little Hoover panel proposed county treasurers review and comment on bond sales before they occur to help prevent poor debt financing decisions by local government agencies.   The commission also recommended changing the oversight committee appointment process, currently handled by district officials the group oversees. The report also recommends committee members play a larger role in selecting bond auditors, and that audits measure effectiveness and results, as well as compliance.
     The commission also believes oversight groups should receive a minimal budget to hire independent counsel when needed. Such requests by the oversight committee watching San Diego Unified's $4.9 billion bond program have been denied.
     In addition, the commission called on the state Treasurer's office to provide online trainings about bond sales to elected officials, and suggested state leaders allocate one-time funding for the state's school business advisory group, known as the Fiscal Crisis & Management Assistance Team, to put together online training for bond oversight committee members. ... To read the complete article visit:
voiceofsandiego.org/topics/government/bond-watchdogs-dont-much-bite-says-new-report
     Little Hoover Commission Report: "Borrowed Money: Opportunities for Stronger Bond Oversight"   Feb. 2017:
www.lhc.ca.gov/studies/236/report236.html 


Says New Little Hoover Commission Report
Feb. 15, 2017 |By Ashly McGlone | www.voiceofsandiego.org  
EXCERPT:  Groups that oversee government bond spending could stand to grow some teeth, according to a new report. ...
     The oversight groups, "By and large ... have proven ineffective and some committee members have told the Commission that is at least in part, by design," wrote the Little Hoover Commission. "Most of the concerns revolved around bond oversight committee members who lack training, have conflicts of interest, either real or perceived, and the difficulty committee members have receiving required documents from the districts."
     Those same issues have surfaced in San Diego County, where some appointees represent workers building bond projects and others get paid to lobby the very government officials they oversee.
     Among other things, the Little Hoover panel proposed county treasurers review and comment on bond sales before they occur to help prevent poor debt financing decisions by local government agencies.
     The commission also recommended changing the oversight committee appointment process, currently handled by district officials the group oversees. The report also recommends committee members play a larger role in selecting bond auditors, and that audits measure effectiveness and results, as well as compliance.
     The commission also believes oversight groups should receive a minimal budget to hire independent counsel when needed. Such requests by the oversight committee watching San Diego Unified's $4.9 billion bond program have been denied.
     In addition, the commission called on the state Treasurer's office to provide online trainings about bond sales to elected officials, and suggested state leaders allocate one-time funding for the state's school business advisory group, known as the Fiscal Crisis & Management Assistance Team, to put together online training for bond oversight committee members. ...
To read the complete article visit:
voiceofsandiego.org/topics/government/bond-watchdogs-dont-much-bite-says-new-report
Little Hoover Commission Report, February 2017
"Borrowed Money: Opportunities for Stronger Bond Oversight"
www.lhc.ca.gov/studies/236/report236.html
Little Hoover Commission Press Release:
www.lhc.ca.gov/studies/236/PressRelease236.pdf