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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



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." ... To read the complete article visit:
www.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 



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

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:

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/


Sweetwater UHSD Awarded $8.2 Million in Settlement
Feb. 17, 2017 | Jessica Caimi | norcalrecord.com  
EXCERPT:   The Sweetwater Union High School District in Chula Vista, California, is putting the past behind it after receiving $8.2 million as part of a pay-to-play legal settlement involving two construction companies. Gilbane Building Company and SGI Construction Management, two Northern California-based construction companies, will pay Sweetwater for their alleged involvement in the scandal. In exchange, the school district will drop its pending lawsuits against them. ...

To read the complete article visit:
norcalrecord.com/stories/511083211-sweetwater-union-high-school-district-awarded-8-2m-in-settlement



California Places Alum Rock Schools on Tighter Fiscal Leash
June 29, 2017 | By Sharon Noguchi | www.mercurynews.com 
EXCERPT:  ...The California Department of Education late Wednesday revoked the district's fiscal independence - in itself an unusual status among California school districts - and granted greater oversight by the Santa Clara County Office of Education. ... 
     On Wednesday, Tran and Assistant Superintendent Rene Sanchez emailed Torlakson asking that the request be denied. They insisted that the district is following the law and improving its accounting - contrary to concerns raised earlier this month by a critical state audit.     The letter also stated that the district has hired the law firm Fagen Friedman & Fulfrost and construction consultants WSP/Parsons Brinckerhoff to help respond to the audit.      In fact, the district's five-member board has not approved contracts with either firm, its lawyer, Luis Saenz said Wednesday. ...
     "We rarely see anybody fighting back on a FCMAT report. They're highly respected, independent, and they don't have any axes to grind," said Ron Bennett, CEO of School Services of California, which advises about 850 of California's roughly 1,000 school districts. ...
     FCMAT audits of school districts are rare - fewer than 40 have been done in the 12 years since they've been authorized by the Legislature. Bennett said he can't remember an instance when a state schools superintendent has refused a recommendation to revoke a district's financial independence....
     The audit by FCMAT, as it's known, warned that Alum Rock may be vulnerable to fraud, mismanagement and misspending, and cited millions of dollars paid to its bond construction manager, Del Terra Real Estate, with scant documentation. In 3½ years through last spring, Alum Rock had paid Del Terra $3.25 million for construction management.
     Despite passing three bond measures totaling $444 million over nine years, all with the promise to fix basic infrastructure, several Alum Rock schools will start next school year lacking heating, cooling, secure roofs or functioning bathrooms.
     In seeking broader authority over Alum Rock, Gundry cited its refusal to respond to requests for timely finance reports, lack of internal controls, lack of an auditor and failure to track bond expenditures. ...  To read complete article and letters, please visit: 
www.mercurynews.com/2017/06/29/california-places-alum-rock-schools-on-tighter-fiscal-leash/


Mello-Roos Special property tax lacks robust oversight, accountability
June 21, 2017 | By Leo Castenenda | www.cbs8.com
EXCERPT:  ... Here’s a simple summary of how Mello-Roos generally works:
A developer who wants to build housing submits paperwork to form a community facilities district. Voters who own land in the prospective development vote to pay Mello-Roos taxes to fund roads, community buildings and schools. Because no one yet lives in the area, the developer is usually the only one to vote. So taxes are often established by a vote of one person.
     Gutierrez, of the taxpayers’ association, said Mello-Roos tax rates can’t be set based on a percent of a property’s value, the way normal taxes are. That has led to some creative taxation. He said he found one Mello-Roos district in Santa Barbara that taxed property owners for the number of bedrooms in a house. ...
     More commonly, Mello-Roos taxes are based on square footage or the property type, such as an apartment or senior housing.
     inewsource first looked into Mello-Roos taxes in 2012 and 2013, focusing on the Poway Unified School District. That investigation uncovered questionable spending of special taxes by the school administration, such as renovations at the district offices and upgrades at non-Mello-Roos schools. ...  To read the complete article please visit: 
www.mercurynews.com/2017/05/12/alum-rock-bond-reviewers-blast-construction-management


Alum Rock Bond Reviewers Blast Construction Management
May 12, 2017 | By Sharon Noguchi | www.mercurynews.com
EXCERPT:  SAN JOSE - The Alum Rock Union school board was blasted by its bond oversight committee for spending millions on new buildings while allowing students to suffer in chilly and overheated classrooms and endure flooded bathrooms with broken fixtures.   In its annual report, Alum Rock's Citizens Bond Oversight Committee chastised board members for failing to fix essentials like heating and bathrooms, which it said voters clearly had signaled they wanted repaired. ...  The oversight committee, whose job is mandated by state law, produced a compact report that highlighted key problems with construction and its management - an area so troubled it has triggered an investigation by the state's school district auditor, known as the Fiscal Crisis and Management Assistance Team, and reportedly by the Santa Clara County District Attorney's Office as well.
    The FCMAT report had been promised in early spring to the Santa Clara County Office of Education, which requested the investigation. A draft is due out soon said Michael Fine, FCMAT's chief administrative officer, and will be made public after review.   Alum Rock's bond review committee noted that many construction and improvement projects identified on a decade-old needs assessment haven't begun. ...   
To read the complete article please visit: 

www.mercurynews.com/2017/05/12/alum-rock-bond-reviewers-blast-construction-management


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