Comments on: MDUSD Bond Oversight Committee to meet Thursday

By: Theresa Harrington

Theresa Harrington — Sat, 18 Feb 2012 03:52:41 +0000

Here’s a new blog post outlining some of Minyen’s questions about the audit: http://www.ibabuzz.com/onassignment/2012/02/17/questions-raised-about-mdusd-bond-expenditures/

By: g

Sat, 18 Feb 2012 02:38:27 +0000

Alicia @32; Hi! Question please. Since we cannot see minutes newer than last Sept, can you give me the accurate number of members on the committee.

There are 15 on White’s list, which is 8 months old!

The website lists 15, but it is waaay out of date, but we’ve come to expect that–since both Ferrante and Pedersen plead the “duh” when questioned about anything legal.

Per Sept Minutes counting the two new members, there were 17 members, but since then, Schulte (senior member) left.

Has someone else left? Are there 16 still? Were there only 8 at this meeting?

If Pedersen wasn’t allowed virtual control of the Committee and its website, and if Ferrante had managed to learn anything at all from his “at large” membership on virtually every committee on earth, maybe we wouldn’t have so many questions.

And speaking of basic info questions, When the ‘one year’ memberships expired in June 2011, was there ever a formal discussion or vote to renew those memberships? It was not in the Sept minutes, or on the Dec Agenda…?

By: Theresa Harrington

Theresa Harrington — Sat, 18 Feb 2012 01:37:21 +0000

White concluded: “The district appears to have complied with the law.”

By: g

Sat, 18 Feb 2012 01:35:46 +0000

Ed Code 15146 subd. (f) states …”The bond proceeds withdrawn shall not be applied to any other purposes than those for which the bonds were issued”.

But, it seems to me that– the bonds were not issued for the “purpose” of paying for their own “issuance”. Even if the law states that bond money can be used to pay issuance costs, that doesn’t mean the “interest earnings” of the bond funds can also be used that way.

Is there something wrong with White’s mental processes? Is Juhl-Darlington really cute or something?

By: Theresa Harrington

Theresa Harrington — Sat, 18 Feb 2012 01:02:33 +0000

Here’s a link to the Poway letter that the audit references regarding the use of bond premiums to pay issuance costs: https://s3.amazonaws.com/s3.documentcloud.org/documents/202322/ags-warning-letter-on-poways-school-bond-behavior.pdf

Here’s what Gov. Code Sec. 29303 says: “29303. This section does not apply to the sale by counties of bonds purchased as investments. Whenever any bonds issued by any county or by any school, drainage, or other district in any county, whose accounts are required by law to be kept by the county auditor and treasurer, are sold at a premium or with accrued interest, or both, the amounts received for the premiums and accrued interest shall be deposited in the debt service fund of the county or district unless it is expressly provided by law that they be deposited in some other fund.”

Here’s what Ed Code 15146 subd. (f) states: “The proceeds of the sale of the bonds, exclusive of any premium received, shall be deposited in the county treasury to the credit of the building fund of the school district, or community college district as designated by the California Community Colleges Budget and Accounting Manual. The proceeds deposited shall be drawn out as other school moneys are drawn out. The bond proceeds withdrawn shall not be applied to any other purposes than those for which the bonds were issued.
Any premium or accrued interest received from the sale of the bonds shall be deposited in the interest and sinking fund of the district.”

The auditor says that since the funds WERE deposited into the debt service fund, the fact that nearly $1.8 million was then transferred out to pay the costs of bond issuance does not violate these laws.

By: Doctor J

Doctor J — Fri, 17 Feb 2012 18:20:14 +0000

Is there a difference between the audit reported committee membership and the Board minutes of who has been appointed to the Bond Oversight Committee ?

By: Alicia M.

Alicia M. — Fri, 17 Feb 2012 18:09:05 +0000

@19…. Based on who was present at the meeting last night and their title/representation (see page 1 of the audit report), I believe we had a quorum.

By: Doctor J

Doctor J — Fri, 17 Feb 2012 17:17:35 +0000

The only way to make the district follow the law is with a lawsuit and court supervision. As long as the district relies on incompetent attorneys and attorneys with financial conflicts of interest, the district will continue to flaunt the law and screw the taxpayer.

By: Alicia M.

Alicia M. — Fri, 17 Feb 2012 17:16:14 +0000

Theresa#28. The Education Code says that bonds cannot sell at a discount greater than 5% (EC 15146). The district’s Series A capital appreciation bonds sold at a discount as high as 50%. However, schools can elect to issue bonds following Government Code 53506, 53532. The GC appears to allow deeper discounts as long as the yield does not exceed 12%. However, some of the capital appreciation bonds sold at accretion rates of 12% and without recieving bond premium…the district may not be in compliance. Further, the EC requires that the district inform the public the maximum interest rate on the bonds, which is 8% if following the EC or 12% following the GC. The district did not disclose the max rate as a percentage…instead they referenced the sections of the EC and GC…so any reasonable person would have no idea what the Max rate on the bonds might be.

By: Alicia M.

Alicia M. — Fri, 17 Feb 2012 17:01:40 +0000

Retired CPA…I agree with all your comments, but I couldn’t convince the auditor that her and management’s conclusion regarding the premium was inaccurate. Basically, there is no court ruling on the matter, and I doubt the auditor and district will change their opinions. It is so annoying that it would take suing the district to make the taxpayer whole. With respect to the quorum and agenda…we may be having another meeting.