I received the following e-mail last night from Terry Francke, of Californians Aware, regarding my story about Alicia Minyen, a 2010 Mt. Diablo Measure C Bond Oversight Committee member, who has had difficulties getting financial records from district officials:
“State law requires school districts not only to establish bond oversight committees but to accord them full cooperation in providing documentation of bond money spending. To treat Ms. Minyen’s requests as simply governed by the California Public Records Act is to defy the bond oversight law and invite a taxpayer suit to force the district to comply with it, if not a recall of the trustees who permit this obstructive nonsense.
He included the following excerpt from the state’s Education Code Section 15278 et seq.15278, with emphasis added to pertinent portions:
“a) If a bond measure authorized pursuant to paragraph (3)of subdivision (b) of Section 1 of Article XIII A of the California Constitution and subdivision (b) of Section 18 of Article XVI of the California Constitution is approved, the governing board of the school district or community college shall establish and appoint
members to an independent citizens’ oversight committee, pursuant to Section 15282, within 60 days of the date that the governing board enters the election results on its minutes pursuant to Section 15274.
(b) The purpose of the citizens’ oversight committee shall be to inform the public concerning the expenditure of bond revenues. The citizens’ oversight committee SHALL ACTIVELY REVIEW and report on the proper expenditure of taxpayers’ money for school construction. The citizens’ oversight committee shall advise the public as to whether a school district or community college district is in compliance with the requirements of paragraph (3) of subdivision (b) of Section 1 of Article XIII A of the California Constitution. The citizens’ oversight committee shall convene to provide oversight for, but not be limited to, both of the following:
(1) Ensuring that bond revenues are expended only for the purposes described in paragraph (3) of subdivision (b) of Section 1 of Article XIII A of the California Constitution.
(2) Ensuring that, as prohibited by subparagraph (A) of paragraph (3) of subdivision (b) of Section 1 of Article XIII A of the California Constitution, no funds are used for any teacher or administrative salaries or other school operating expenses.
(c) In furtherance of its purpose, the citizens’ oversight committee may engage in any of the following activities:
(1) Receiving and reviewing copies of the annual, independent performance audit required by subparagraph (C) of paragraph (3) of subdivision (b) of Section 1 of Article XIII A of the California Constitution.
(2) Receiving and reviewing copies of the annual, independent financial audit required by subparagraph (C) of paragraph (3) of subdivision (b) of Section 1 of Article XIII A of the California Constitution.
(3) Inspecting school facilities and grounds to ensure that bond revenues are expended in compliance with the requirements of paragraph (3) of subdivision (b) of Section 1 of Article XIII A of the California Constitution.
(4) Receiving and reviewing copies of any deferred maintenance proposals or plans developed by a school district or community college district, including any reports required by Section 17584.1.
(5) Reviewing efforts by the school district or community college district to maximize bond revenues by implementing cost-saving measures, including, but not limited to, all of the following:
(A) Mechanisms designed to reduce the costs of professional fees.
(B) Mechanisms designed to reduce the costs of site preparation.
(C) Recommendations regarding the joint use of core facilities.
(D) Mechanisms designed to reduce costs by incorporating efficiencies in schoolsite design.
(E) Recommendations regarding the use of cost-effective and efficient reusable facility plans.
15280. (a) The governing board of the district shall, without expending bond funds, provide the citizens’ oversight committee with any necessary technical assistance and SHALL PROVIDE ADMINISTRATIVE ASSISTANCE IN FURTHERANCE OF ITS PURPOSE and sufficient resources to publicize the conclusions of the citizens’ oversight committee.”
Anton Jungherr, executive director and cofounder of the California League of Bond Oversight Committees, or CALBOC, told me that some districts don’t give bond oversight committees the respect they deserve.
“A lot of these districts think this is like one of their little local citizen advisory committees,” he said. “This is not that. This is an oversight committee required under the law because they got the benefit of the 55 percent vote. They could have gone with a two-thirds vote.”
In 2000, California voters approved Proposition 39, which lowered the threshhold for approval of school construction bonds from two-thirds to 55 percent, with the requirement that a citizen’s committee provide strict oversight of the spending.
But many citizens throughout the state serving on these legally required bodies do not understand their responsibilities, Jungherr said.
“They don’t know what they’re supposed to do and the districts are not helpful in telling them what they’re supposed to do,” he said. “It’s a basic conflict of interest.”
Better trained oversight committee members would provide stronger oversight, which districts are not eager to invite, he said.
“Our mission is to train some 5,000 bond oversight committee members in California,” Jungherr said. “There’s about 500 of these committees.”
His organization is conducting a statewide survey to find out how many districts are complying with Proposition 39. Some districts, he said, don’t even appoint oversight committees. Others don’t have websites or don’t post all the information they should.
“You get a great variety of understanding of these matters,” he said. “The problem is: there’s no central state agency that administers this or enforces this.”
Some oversight committees meet monthly, while others meet quarterly or annually. The minimum is one per year, he said.
I told him the 2002 Measure C Bond Oversight Committee hasn’t met since September, 2009 — even though money remained from bond proceeds.
“That’s illegal,” he said. “The committee is obligated to at a minimum issue a report until the funds are fully expended.”
After Minyen began raising questions about the 2002 Measure C audits, I noticed that no audits appeared on the district’s website for 2002, 2003 or after 2008. In response to a Public Records Act request, I received the following audits from 2002-03 and for fiscal year 2009: http://www.docstoc.com/docs/document-preview.aspx?doc_id=91135270
No audit appeared for fiscal year 2010. I repeatedly asked district officials if there was and audit for 2010 and if not, why not?
That question was never directly answered. However, the agenda for Tuesday’s board meeting shows that the district intends to belatedly enter into a contract for the fiscal year 2010 audit of 2002 Measure C funds: http://esbpublic.mdusd.k12.ca.us/public_itemview.aspx?ItemId=4390&mtgId=313
Jungherr said he serves on the West Contra Costa bond oversight committee, which meets monthly and receives 100-page reports.
“It not only shows what’s been spent, but it shows what’s been obligated,” he said. “If you issue a contract today for $100,000, what you want to know is what’s the contract amount, how much as been paid and how much has been obligated — otherwise, how could you know where you are and what your status is? That’s just normal bookkeeping.”
Jungherr said it’s also critical for districts to give oversight committees detailed information about revenues.
“You have not only the bond proceeds, but you have interest and state matching funds and developer fees,” he said. “How would you know how to manage a project if you don’t know what the total income is?”
In his opinion, Jungherr said districts have a higher duty to provide documents to members of their bond oversight commitees than to the general public, because committee members are legally charged to review such records.
An effective bond oversight committee can give credibility to efforts to pass new bond measures in the future, he said.
Minyen says the 2010 Mt. Diablo committee should meet monthly, so it can review detailed records related to bond proceeds and expenditures as they are happening. Given the size and scope of Mt. Diablo’s proposed projects, which are expected to cost $348 million and span seven years of construction, Jungherr said he agrees.
Jungherr said his organization was so impressed by Minyen’s knowledge and background that they elected her to their board of directors Aug. 12.
“We thought, because of her work in Mt. Diablo, she would be useful on statewide basis,” Jungherr said. “She is very meticulous and knowledgeable about bonds and refunding bonds.”
I also asked Jungherr whether it is important for oversight committees to follow their bylaws. He said bylaws are not legally binding according to state law, since they are approved by district trustees. However, he said a committee should strive to be in compliance with its own board-approved bylaws.
The bylaws of the Mt. Diablo oversight committee state that the group is supposed to hold an organizational meeting each July. Yet, the committee didn’t meet in July.
“Certainly it wouldn’t be a best practice to have the school board provide that in their policy and then have them not do it,” Jungherr said. “It certainly doesn’t give any credibility to the committee.”
John Ferrante, chairman of both the 2002 and 2010 committees, said he didn’t call a July meeting because all of the business that would have been conducted at such a meeting was discussed at the June meeting. When I asked him if the bylaws should be changed to reflect the committee’s practice, he said that might be a good idea.
John Parker, who is a member of both the 2002 and 2010 committees, said he has spoken to Ferrante about the need to hold another meeting of the 2002 committee. He said he recalled the 2002 committee discussing the need for another audit at its last meeting, but said the committee never met again to review it.
The state controller’s office criticized the San Joaquin Delta College in 2008 for lax bond oversight by its committee, calling it “passive, perfunctory and ineffective.”
It stated that the San Joaquin committee “apparently did not seek any information or data beyond that presented by Delta College’s staff during its quarterly meetings.”
Instead, it said the committee merely listened to staff presentations and did not engage in any other oversight activities.
“We also found that the information presented was general in nature and did not contain sufficient detail for the (committee) to conduct meaningful reviews of bond expenditures.”
The report also criticized the San Joaquin committee for failing to follow its own bylaws related to its annual report.
Garin Casaleggio, spokesman for the state controller’s office, said the controller’s office only audits districts if requested to do so by a state legislator.
Jungherr said many oversight committee members aren’t very motivated to provide strict oversight.
“In most of these districts, the school board makes the appointment,” he said. “Most of the people that get on those committees, they’re interested in lobbying for their locoal programs. Most of them don’t have any interest in bond oversight, and they have no skill in doing it, either construction skill or fiscal skill. And there’s no agency that’s training them.”
He said a San Mateo County grand jury recommended that the County Office of Education provide training.
His organization has helped to push for new legislation that would require annual performance and financial audits to be completed and submitted by March 31st for the previous fiscal year.
It also wants better enforcement of Proposition 39 violations. Right now, Jungherr said, citizens must take the district to court.
His organization would like to see legislation that imposes penalties on districts that don’t comply with the law, such as prohibiting them from spending bond money or from seeking future construction bond measures.
“To think that a private citizen has to go to court and pay the fee to enforce a consitutional and statutory requirement doesn’t make sense at all,” Jungherr said.
Minyen says she’d like to get legal clarification about expenses and revenues related to Proposition 39 projects.
According to the Smartvoter website, Proposition 39 authorized districts to seek bonds for repair, construction or replacement of school facilities and classrooms for projects evaluated by districts for safety, class size and information technology needs. Districts are prohibited from using bond funds for salaries or operating expenses.
Minyen questions whether solar panels meet these requirements, since district officials have said they are constructing the solar projects to provide general fund relief, for the express purpose of paying operating expenses.
She also questions the district’s plan to divert solar credits from the bond fund into the general fund. This goes against generally accepted accounting principles, since the credits are supposed to offset the cost of the solar panels, she said.
Jack Weir, a Contra Costa taxpayer advocate who served on the Contra Costa College District’s bond oversight committee, agrees. He said the college district left its solar rebate money in the construction fund, which lowered the cost of its project for taxpayers.
Jungherr, who is an accountant, shares this opinion, saying it’s “completely inappropriate” to transfer the solar rebates into the general fund.
“That should go to retire the bond,” he said.
Minyen also questions the legality of using bond proceeds to pay off Certificates of Participation (COPS) and leases, which she says appear to be operating expenses. In addition, she questions how COPS for landscaping and maintenance property at 2344 Bisso Lane in Concord, leased by a nonprofit public benefit corporation run by district trustees, fulfills the district’s obligation to spend bond money on safety, class size and information technology needs.
Do you believe the Legislature should adopt a law penalizing districts that fail to comply with Proposition 39?