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A closer look at school construction bond oversight

By Theresa Harrington
Sunday, August 21st, 2011 at 4:17 pm in Education, Mt. Diablo school district.

The 2010 Measure C campaign promised voters funds would be spent to upgrade labs and classrooms, improve career technical education facilities, fix old leaky roofs and windows, make other basic repairs and provide safe places for after-school activities. This flyer, distributed in Walnut Creek, did not mention solar panels, which are projected to comprise about $88 million of the district's $348 million in bond expenditures.

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.
Terry Francke
Californians Aware”

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?

[You can leave a response, or trackback from your own site.]

  • g

    Oh, I also checked under “Community” on the District site and don’t see it there. Now, if they could simply decide on just one place to post this “C” shtuff… Then again, that might make it too easy.

  • Theresa Harrington

    Yes, it’s odd that the agenda wasn’t posted with the PowerPoint in one place. It should be.
    Jenny Reik said she wants to discuss requirements for posting information.

  • Theresa Harrington

    I received responses from Bryan Richards and Pete Pedersen regarding the warrant expenses I mentioned in an earlier comment (executive chairs and a water payment).

    Here’s what Pedersen said:

    “1) The warrant for the chair purchase is unrelated to Measure C. I took the liberty of calling Purchasing this morning and they indicated that this requisition came from a school site.

    2) The warrant to CCWD is toward required fees associated with the installation of a new 4″ water meter for P.H. Middle/Education Center. It has nothing to do with charges for water.The installation of a new meter is the final deferred phase of the Measure C modernization work completed in ’06 and ’07. The existing 6″ water meter is located just off Oak Park Blvd on what was the old Oak Park Elementary site that now belongs to the county. The water main servicing the P.H. Midle site is located under the county owned service road adjacent to the library. This is an old transite line that breaks frequently. Repairs are difficult as access must be coordinated through he county. Originally we were hoping that the county would let us relocate the old meter on our property but this arrangement could not be worked out as the meter is oversized for our current needs. As part of the Measure C work already completed we installed new dedicated fire lines and worked with CCWD to “stub out” to a new domestic meter location on our property for the P.H. Middle site. The new meter and service line will all be located on MDUSD property.

    Originally, CCWD had quoted us a meter cost of approximately $825k for a new 6″ meter. I believe you have been given a copy of the 8/31/2009 “Program Budget Summary”. The meter cost, the installtion and the cost for the design and installation of new plumbing to connect the new meter to the school main is reflected in a $1.2M “Projected Committment” on the P.H. Education Center (Group 4) line on the Program summary.”

    Here’s what Richards said:

    “The warrant 954738 to Contra Costa Water District is not a water bill. It is the capital costs of a new 4″ water meter and service.
    The warrant 954411 to School Specialty is an order for 16 chairs for Rio Vista Elementary School for their conference room and offices from their Measure A furniture and equipment budget.”

  • g

    Nope. I’m on a laptop, I’ve hit the site 11 times since last night and still no powerpoint except for the rehashed Pedersen one from June.

    I did catch your Twitter link to your column though.

  • Theresa Harrington

    Perhaps they should ask one of their IT people to help them with the site.
    Our computer guy was somehow able to look at the “code” and he said the way it’s set up doesn’t make sense.

  • Theresa Harrington

    For those of you who can’t see the district’s Powerpoint, here’s a DocStoc link to it: http://www.docstoc.com/docs/document-preview.aspx?doc_id=91729090

  • Hell Freezing Over

    G and Theresa – on my iPad – had to “touch” presentation link and saw the URL, selected open in a new window – can see the presentation as a PDF :

    http://169.199.90.240/MDUSDFacilities/files/June11.pdf

  • Theresa Harrington

    This links to the June 16 presentation.
    On my computer, a link to the Aug. 22 meeting doesn’t even show up.

  • Wendy Lack

    Whew! 55 comments and counting! Is that a record?

    One thing the bond counsel was correct about at last night’s meeting: The District’s handling of its bond programs is POLITICAL. Yes, you can sure bet that PUBLIC TRUST will be a huge issue in future Board campaigns.

    Incumbents will have an uphill battle . . . sorta like Richard Nixon trying to run for a third term post-Watergate.

    Hmmm . . . could MDUSD’s dismal performance be why private school waiting lists are longer than ever and increasing numbers of families are homeschooling? Who has time to wait for this District’s management performance to improve, when that may never happen . . . and, in the meantime, kids are deprived of the education they deserve, year and year?

    Thanks for your ongoing reporting on this important developing story.

    http://www.contracostatimes.com/breaking-news/ci_18742957

  • Theresa Harrington

    You’re welcome.
    Here’s a snippet of video from Johnson’s opening remarks: http://qik.com/video/43590569
    (My phone was low on battery power, so I had to stop taping)

  • g

    She didn’t sell me. Even after seeing on the Powerpoint that they are refinancing again and again for Bisso Lane and Gasoline Alley 20 year old M&O, Bus lot and Grounds & Landscaping buildings and projects just doesn’t make it seem like proper expenditure of the letter of law on Prop 39 use of “school” improvement Bonds.

  • Dan

    Greetings everyone. I’m posting my videos with the help of my good friend Mt. Diablo Jester.

    So, I learned a couple things: I need a bigger battery and a tripod for next time. The video quality is poor and shaky. I will however be posting more of these low quality videos as I process them.

    But take a look at the video here and help me out with a few things:

    http://youtu.be/8Mp-flDzQJI

    1. Identify the guy in the leather jacket and the woman who makes a grand entrance with him. This guy goes up and makes a big production of going up and seeing Gary and making jokes and laughing with Gary every time a tough question gets asked by Alicia or a member of the audience (he went up a total of 5 or 6 times during the meeting). Who is he?

    2. Who is the guy sitting behind Pedersen on the computer? At one point both the guy on the computer and the leather jacket guy get up leave together step outside into the other room/hallway, have a conversation and then when Alicia asks another tough question they both make another grandiose entrance into the board room. It appeared that they were purposely trying to distract the committee from the tough questions. Who is he?

    More to follow.

  • MDUSDude

    You’re kidding right? You’ve encoded 2:37 thus far and the first thing you post is some guy entering the room? The only thing making it grandiose is what seems to be your impulsive need to track him across the room, and the only thing distracting thus far is your lack of focus on the actual person speaking.

    So, did you actually film the meeting or is this just b-roll for some conspiracy project you’re working on?

  • Dan

    MDUSDude,

    Hey buddy, feel free to come and videotape yourself sometime. Who is this guy? He interrupted the meeting 5 or 6 times during crucial points. Did you hear the allegations being presented by the speaker as this guy was trying to disrupt the proceedings?

    Gary is this you or the leather jacket guy?

  • g

    Dan; thanks for the tape and thanks for concentrating on the reactions (ho-hum) of Isom and Johnson. That late entrance kissy/huggy was way out of order–I’d have looked that way too–and unless that’s Gary’s long lost brother and sister he should not have gotten up to participate in the display! Looking forward to more!

  • Alicia Minyen

    Dan,

    #62 – The guy sitting behind Pedersen on the computer is Don (he gave me his business card). Don is a bond oversight committee member for West Contra Costa Unified School District. He told me he worked with Anton Jungherr on the same oversight committee. Anton is also the Co-Founder of the California League of Bond Oversight Committees.

  • Theresa Harrington

    Here’s another snippet from my phone, in which the bond counsel says the attorney general’s opinion is not the force of law, so there is no legal authority on the books today saying that cash out refunding is illegal: http://qik.com/video/43591900
    (Sorry, my phone battery died at the end of the video)

  • g

    Alicia, thanks for pointing out the WCCUSD Oversight Committee folks. That made me go look at just one of their meeting agenda, and the “draft” minutes of that July Meeting that are ALREADY posted.

    http://www.wccusd-bond-oversight.com/Uploads/CurrentAgenda.pdf

    MDUSD from head to rattle should be embarrassed at how arrogantly and sloppily they run things!

    Who knows–maybe if our Board, Management?, Legal? and some on Oversight? didn’t act so greedy, slimy and secretive with plans and records, we wouldn’t be having these problems!

  • Theresa Harrington

    John Ferrante has continued to maintain that he can’t post “draft” minutes online, even after I pointed out to him that the board does this.
    Perhaps Jenny Reik will mention this, as part of the documents that should be posted.
    Also, at tonight’s board meeting, there was a PowerPoint presentation about the solar program. It wasn’t distributed to the public and it isn’t yet posted online. Board President Gary Eberhart asked how the information would get out to the community.
    Powerpoints should be posted BEFORE meetings, so the public can follow along.
    Bryan Richards typically posts his PowerPoints before meetings.

  • Dan

    MDUSDude,

    Here is another one:

    http://youtu.be/lMFTSUn8zgg

    Sorry about the production quality, I’m sure you would have done better right?

  • Dan

    John Ferrante was clearly over his head, in his ability to run a meeting of this importance.

    Here is video #2

    http://youtu.be/lMFTSUn8zgg

    Let the complaints from MDUSDude commence.

  • Theresa Harrington

    John Parker told me tonight that the 2002 committee’s last meeting took place in September 2009. I said the last minutes posted online are from June 2009.
    I have contacted Pete Pedersen to see if he has minutes from September 2009.

  • g

    Nothing about a solar presentation was listed on the Agenda!

    My rights under the Brown Act to make an “informed decision” whether or not to attend, based on agendized topics has been violated.

    Shocking!

  • Theresa Harrington

    It’s item 13.1 on the agenda, but there’s no staff report: http://esbpublic.mdusd.k12.ca.us/public_itemview.aspx?ItemId=4389&mtgId=313

  • Doctor J

    Did the Board approve the MOU with MDEA on the SIG schools ? I do appreciate Gary asking staff how the public would get copies of the Powerpoints — but he has known since last week and should insist they be posted with the agendas — this is getting to be a broken record. Really what is happening is they are prepared on Tuesday afternoons — what will happen with Board meetings on Monday ? LOL

  • John Q

    Theresa,
    We hope your job is secure. We need you as a watchdog for democracy. Although the dog reference is not literal, of course ;) Let us know which boss to email to save your job and it will be done.

  • Theresa Harrington

    JQ: Thanks for that comment. We don’t know who will be hit by layoffs. Our Walnut Creek office is closing and remaining staff will be relocated. We should find out more information by Oct. 1.
    Any comments about the consolidation of the Contra Costa Times newspaper can be sent to Assistant Managing Editor Katherine Rowlands at krowlands@bayareanewsgroup.com.
    Here is the link to the story explaining the plan: http://www.contracostatimes.com/business/ci_18744287?nclick_check=1

  • g

    leave not, nor stray far,
    “Lois Lane of the Laptop”
    watching, needing you!

    :) just a little haiku for you–

  • Doctor J

    Anyone have a recap of last night’s Board Meeting, including administrative appointments ? Anyone know who the two new people on the Meas C 2010 committee are ?

  • g

    Dr J; minutes may be up sometime in late Nov. ;)

  • Doctor J

    Too funny G. Actually I can look at the agenda and see the votes, but no employees are identified.

  • John Q

    Excellent example of why we need Theresa. Everyone email Katherine Rowlands!

  • g

    Theresa, would you please call John Ferrante (or whomever) and tell them that changing the title of what WAS shown as the June 16 “Powerpoint”, and now calling it 6/16 “Minutes”, does not make it minutes — or a rose by any other name!

    Do they really think we won’t notice this stuff?

    Ask him to please post the actual Minutes!

  • g

    Alicia Minyen, I hope you and your team are still at the helm. Was there any excuse or satisfactory explanation given of how, starting in 2002 and right through to today, they legally used “easy money” (55% vote) to refund or refinance or cash out “hard money” (67% vote)?

    I’m not buying that voters should have known by the language of either 2002 or 2010 Measure that they were going to payoff or refinance the 2/3% voted debt, and then, [Yet Again] in 2011, refinance or refund the earlier refinances. Even if it could turn out to be a money saver, it just doesn’t seem legal.

  • Doctor J

    G, its pretty hard to make up minutes when you don’t have an agenda and know that you are under investigation.

  • Alicia Minyen

    Hi G #84…

    We are still at the helm, but which 2/3rd vote debt are you referring to?

    There are still many questions I have on questionable expenses that I didn’t get to ask on Monday night. I’m following up with another records request too.

    I’m still floored by the fact that our district failed to disclose their ability to charge $120 per $100k, and failed to disclose that the $60 cap was not enforceable. I’m all about full and fair disclosure of all material facts. If this isn’t illegal, laws should be changed so this kind of deceit never happens again. I wonder if the parents that helped campaign for this bond even knew about this?

    I have voted in support of school bonds my whole life until I saw the 2010 Measure C Bond. The reason I voted against 2010 Measure C was because I knew it was impossible to not raise taxes and issue an additional $348 million…and this is clearly evident by the district’s issuance of capital appreciation bonds.

    If you look at the bond prospectus for the $50 million Series A capital appreciation bonds, you will see for example, a $3 million capital appreciation bond will cost over $9.5 million to pay off. Capital appreciation bonds with 25 to 30 year terms will cost the community anywhere from 3 to 6 times the face amount of the bond…that’s just a fact.

    The cost of capital appreciation bonds is so dangerously costly to tax payers, that even some states, like the State of Michigan have banned the issuance of these type of bonds.

    Unfortunately, the bond issuance is not the purview of the Committee, except for how it pertains to underwriting and legal costs. The more complicated the bond, the higher the underwriting and legal fees.

    I will do my best to inform the public of how the bond money is being spent. And I’m inspired to lobby to have capital appreciation bonds banned in the State of California. Please write to your Assemblyman.

  • Doctor J

    @Alicia, please keep pursuing the truth and full disclosure. I am sorry that when you were giving your presentation the other night, that some did not have the courtesy nor manners to listen and be quiet.

  • Theresa Harrington

    Alicia, According to the law cited in this blog post, it is within the committee’s purview to: review efforts by the school district or community college district to maximize bond revenues by implementing cost-saving measures, “including, but not limited to” mechanisms designed to reduce the costs of professional fees…
    Since this says “not limited to,” it could be argued that you could also look at cost-savings efficiencies for taxpayers.

    The district still has not adequately responded to requests for detailed information about “soft costs” paid to the financial advisor, bond counsel, bond underwriters and tax attorneys. All the commitee was told is that $2 million had been spent as of June 16. The committee deserves to see detail on that, as well as on the total amount of the proceeds available for spending by the district.
    I

  • g

    Alicia, by 2/3 vote I am speaking of debt incurred prior to 2000 and Prop 35 when bond measures needed a 2/3 majority to pass.

    How could they use 2002 (55% vote) series of bonds to pay any earlier bond debt for Mellow Roos, Measure A etc.? By that same token, how can they now use 2010 bonds to pay/refund the 2002 expenditures that may have been wrongly used to start with?

    Maybe I’m just confused about what they were paying with the recent Refunding Bond for $42million?

  • Alicia Minyen

    Doctor J…I was so focused on hearing the bond counsel, I didn’t notice any of the distruptions until Faye accused me of trying to bring down the district.

    Based on the lies regarding the tax assessments and capital appreciation bonds, the district has just destroyed itself…political suicide.

  • Alicia Minyen

    G-

    I think you are talking about the 1989 Measure A Community Facilities District – Mello Roos bonds and the Proposition 55 bonds.

    Actually, according to the 2002 Measure C board minutes, Proposition 55 state matching funds was used to pay debt service on 2002 Measure C. In addition, in 2008, $14 million of Prop. 55 funds were used to pay a cost overrunn in 2002 Measure C. According to the State..both transactions would be exceptions. However, I haven’t asked for records to evidence the use of Prop 55 money to pay debt service on 2002 Measure C. I’m still focusing on 2010 Measure C.

    At least the state told me there is a freeze on giving out state matching funds to schools. Other than the Prop. 55 money remaining, I don’t think MDUSD will receive any matching funds anytime soon.

  • Alicia Minyen

    Hi Theresa,

    You are right. The committee should be looking at soft costs and any contracts relating to professional service providers. Sometimes these service providers may have an imbedded expense that is not appropriate…like PR.

  • Doctor J

    I am going to pull a trick out of G’s hat and quote some California laws:

    1710. A deceit, withing the meaning of the last section, is either:
    1. The suggestion, as a fact, of that which is not true, by one who does not believe it to be true;
    2. The assertion, as a fact, of that which is not true, by one who has no reasonable ground for believing it to be true;
    3. The suppression of a fact, by one who is bound to disclose it, or who gives information of other facts which are likely to mislead for want of communication of that fact; or,
    4. A promise, made without any intention of performing it.

    1711. One who practices a deceit with intent to defraud the public, or a particular class of persons, is deemed to have intended to defraud every individual in that class, who is actually misled by the deceit.

    Sounds a lot to me like the Measure C Campaign. You can draw your own conclusions.

  • Doctor J

    Would someone please explain about this secret corporation of the District. When was it formed and why ? Who are the officers and directors ? What does it own or do ? Does it have any assets and how are they accounted for in the District books ?

  • Alicia M.

    Dr. J …it is a related non profit corp. The board of trustees are the directors. This corp was created in 1994 to be the counter party in a lease, where the district leased a 35k building that the district says is a maintenance bldg to the nonprofit and then the nonprofit leased it back to the district. Then the district sold on the open securities market fractional share interests in the rental stream evidenced by certficates. The district raised 7,760,000 in this transaction. The nonprofit was also used to obtain solar rebates from the northgate solar project installed in 2007.

  • Doctor J

    @Alicia, and who are these security investors ? Is the lease still on going ? Did the solar rebates get passed through to the district 100% ? There is something about this complicated transaction that doesn’t sound right.

  • Alicia M.

    Dr. J …I don’t have the lease yet. But you can find board minutes that say 3.9 million will be paid from rebates, energy savings, and state matching funds. In the end, Our 2010 measure paid off this lease, so I question what happened with the funding sources mentioned in the minutes.

  • MDUSD Board Watcher

    Dr. J. and Alicia,

    Ever read the book “The smartest guys in the room”?

    This book describes how Enron set up their finances and books to do what they did. These “off record” corporations that lease the property of and then lease back the identical property to the original property owner are how extensive sums of money are shifted around in a huge shell game. Essentially money laundering in a way.

    Someone is making a pretty penny off this unusual financial arrangement, and you can bet your bottom dollar it isn’t the kids and education. My guess is the bond council and the solar power contractors are laughing all the way to the bank.

    Now, I am not suggesting that Gary & CO. are “the smartest guys in the room”, we have clearly seen evidence that they couldn’t poor piss out of a boot if the directions were written on the heel. But the bond council and bond finance guy may very well be “the smartest guys in the room”.

    These “off record” (has anyone ever seen a meeting or this corporation mentioned in a board meeting or agenda) corporations should be illegal.

  • Theresa Harrington

    The district has also entered into a lease agreement with Northgate HS for its bleachers: http://esbpublic.mdusd.k12.ca.us/public_itemview.aspx?ItemId=4304&mtgId=314&mtgType=No

  • Just J

    This should absolutley be illegal. I am not sure how this could be legal with a public school district. It seems that this goes way deeper than I ever imagined. What happened to them being like a window for all to see. It seems as if they pulled the shade down.