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Two Contra Costa County districts are in financial jeopardy

By Theresa Harrington
Wednesday, May 23rd, 2012 at 4:27 pm in Education, John Swett school district, Mt. Diablo school district.

The John Swett and Mt. Diablo school districts in Contra Costa County are among 188 statewide that have signalled in their most recent budget reports that they may not be able to pay their bills within three years.

Here is more information about the budget reports, from a California Department of Education news release:

“SACRAMENTO—State Superintendent of Public Instruction Tom Torlakson warned today that 2.6 million California children now attend schools in districts that are in financial jeopardy—the highest number of financially troubled districts in state history.

‘This is the kind of record no one wants to set. Across California, parents, teachers, and administrators are increasingly wondering how to keep their schools’ lights on, their bills paid, and their doors open,’ Torlakson said. ‘The deep cuts this budget crisis has forced—and the uncertainties about what lies ahead—are taking an unprecedented and unacceptable toll on our schools.’

The state’s Second Interim Status Report for 2011-12 also shows a record-high 188 local educational agencies (LEAs) are either in negative or qualified financial status. That’s up 61 LEAs from the First Interim Status Report for 2011-12 issued in February, and up 45 from the Second Interim Report for 2010-11 issued a year ago.

The new report shows 12 LEAs received negative certifications and 176 received qualified certifications. Students in these 188 LEAs represent more than 2.6 million of California’s 6.2 million students attending schools in districts with serious financial challenges, up from nearly two million students in February.

Twice a year, the California Department of Education receives Notice of Interim Certifications on the financial status of the state’s 1,037 LEAs, comprised of school districts, county offices of education, and joint powers agencies. The certifications are classified as positive, qualified, or negative.

A positive certification is assigned when an LEA will meet its financial obligations for the current and two subsequent fiscal years.

A qualified certification is assigned when an LEA may not meet its financial obligations for the current or two subsequent fiscal years. This certification allows the LEA’s county office of education to provide assistance to the district.

A negative certification—the most serious of the classifications—is assigned when an LEA will be unable to meet its financial obligations for the remainder of the current year or for the subsequent fiscal year. This certification means the LEA’s county office of education may intervene in the district’s finances.

The assistance or intervention by the county office may include assigning external consultants, requiring a district fiscal recovery plan, or even disallowing certain district expenditures.

This new list is a compilation of the certifications by LEAs that were due April 16, 2012, and cover the financial and budgetary status of the districts for the period ending January 31, 2012. The certifications reflect whether the LEAs are able to meet their financial obligations for the remainder of the current fiscal year and subsequent two fiscal years, based on projections at that point in time.

These certifications predate the Governor’s May Revision to the proposed 2012-13 state budget. Because these Interim Status Reports are snapshots in time, the LEAs’ financial status may have changed since these certifications were collected.”

In the East Bay, four school districts filed “qualified” second interim reports: Emery and Oakland in Alameda County and John Swett and Mt. Diablo in Contra Costa County.

Here is a link to a list of all the negative or qualified second interim status reports for FY 2011-12:

What do you think the John Swett and Mt. Diablo school districts should do to cut costs and/or raise revenues?

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59 Responses to “Two Contra Costa County districts are in financial jeopardy”

  1. Doctor J Says:

    These so called financial “certifications” have become political tools, shell games, used to get more money to increase administrators pay and pay the perks for Board members. Case in point is MDUSD a month ago extending the contracts with automatic pay increases and step increases for the BIG5 and the Board keeping its “Full Family Medical Dental Vision” while keeping clerical below the threshold to qualify for such benefits. Remember that the CFO had recommended a “positive certification” but then Eberhart asked him to change it to “Qualified Certification” — its just a political shell game.

  2. Theresa Harrington Says:

    Yes, there were two options: positive or qualified. The qualified option also included a higher estimate of the financial impact of the CVHS charter conversion, I believe.
    The change also came after MDEA refused to accept the district’s contract offer, which called for possible furlough days next year, in part because the district had built up such large reserves that its three-year projections showed a positive ending balance.
    As negotiations went into impasse, the district found a way to project a more dire ending fund balance. Perhaps this partially accounts for the $3 million swing in Superintendent Steven Lawrence’s estimates for the ongoing deficit. He told the State Board of Education the district was deficit-spending $9 million a year. He told the MDUSD board on Monday the district was deficit-spending $12 million a year.
    Perhaps administrators will shed more light on the current projections at the BAC meeting tonight:

  3. SR Says:


    Have you been informed of this? As a parent of two Special Education Students in MDUSD, I am very concerned….

    WEDNESDAY, MAY 23, 2012

    The Mt. Diablo School District is holding a meeting for parents who have children that receive special education services in their district. There are many changes happening in the Fall and staff will be providing parents with pertinent information.

    Meeting Date/Time/Location:
    Tuesday, May 29
    Monte Gardens School Library
    3841 Larkspur Drive (next to the District Office)
    Concord 94519

    Topics to be discussed include:
    Middle School Services including Collaborative/SDC Changes
    Transportation Changes
    AAC/Assistive Technology Assessment Timelines
    Autism Specific Classroom Update
    Update on FCMAT Studies (Transportation and Special Education)

    Please plan to attend this very important meeting.

    Thank you.
    Lorrie Davis
    CAC Chairperson

  4. Theresa Harrington Says:

    SR: No, I was not informed of this. And, this meeting is not noticed on the district’s home page:

    Trustee Gary Eberhart has repeatedly asked the superintendent to post agendas and minutes for committees on the home page. If he is truly interested in improving transparency, agendas for meetings such as this — as well as the Bay Point Master Plan meeting and Ygnacio Valley stadium lighting project — should ALL be posted on the district’s home page.

    As Dr. J has pointed out, there does not appear to be a BAC agenda on the district’s home page, although the meeting is noted in the “upcoming events” section. It might be a good idea for special education parents to attend tonight’s BAC meeting, since many of these issues are directly related to the budget. The CAC does have a rep on the BAC, but Eberhart has said that he wants that committee to take on a greater role in advising the board. Public comment should be allowed at their meetings.

  5. Anon Says:

    Theresa, You need to be at that meeting. There is no agenda. I have called every department in SP. ED and no one knows anything about it (or they are not saying)
    No one is calling back. I see many law suits coming down the line. MDUSD is just barely holding their head above water.

  6. Doctor J Says:

    Tonight’s BAC Meeting violates the Brown Act for no Agenda posted 72 hours in advance. If Gary is true to his word in a recent Board meeting, he will not be there to participate in a meeting that would be a crime in violation of the Brown Act.

  7. Theresa Harrington Says:

    The superintendent’s secretary said she would send it to me when she gets it done. So, clearly it was not even created 72 hours in advance of the meeting.

    Anon: I will be there. It’s too bad I didn’t find out about the Bay Point Master Plan meeting until the day after it happened. I have emailed the superintendent asking for his “thoughts” on Bay Point, which were shared at the end of that meeting PowerPoint, but he hasn’t responded.

  8. Doctor J Says:

    @TH#7 Why don’t you email Gary and ask him why the Board is allowing Meetings that violate the Brown Act by not having Agendas posted [or even created — chuckle, chuckle] 72 hours in Advance ? Also please ask him if he is going to participate or attend a meeting that would be a crime ?

  9. Theresa Harrington Says:

    Here is the agenda for tonight’s BAC meeting:

  10. Theresa Harrington Says:

    The CAC blog is getting the word out about Tuesday’s meeting:

  11. joey d. Says:

    Public schools in Contra Costa County are hugely expensive jobs programs and construction bond boondoggles which can’t be sustained by taxes from the impoverished demographic which uses them. Time for education vouchers. Private schools offer vastly superior instruction at a greatly reduced cost.

    Let a hundred flowers bloom.

  12. Theresa Harrington Says:

    Here’s the latest Contra Costa County Grand Jury report on Bond Oversight:

  13. Doctor J Says:

    Mt. Diablo USD should be audited likewise by the State Controller’s Office for their violations of Prop 39 and the violators held accountable.

  14. Doctor J Says:

    If the Grand Jury response required by the Board is not discussed in open session with input by all members, Board members should individually respond to the Grand Jury and request an investigation of how responses to the Grand Jury are done in secret.

  15. anon Says:

    How about a report card for the board and superintendent?

  16. Doctor J Says:

    Theresa, can you isolate Gary Eberhart’s comments at the last board meeting in voting AGAINST the 2002 BOC membership and give us a link so we can listen to Gary’s hypocritic words against Gary’s being smoked by the Grand Jury ?

  17. MDUSD Board Watcher Says:

    Dr. J or anyone else,

    Can you please paraphrase Gary’s comments? Let me guess, a bunch of his lackeys were not on the list so he voted No.

  18. Seriously... Says:

    @16 Dr. J – I believe Gary did not approve that 2002 BOC memberships because certain persons on the committee were “not serving students.”

  19. Seriously... Says:

    It appears the County Board of Supervisors approved MDUSD’s issuance of $150 million on May 8th. The MDUSD resolution provided to the County, and which indicates was approved by the MDUSD Board, is not consistent with what the MDUSD Board approved the night of April 23rd.

  20. g Says:

    Serioulsy, can you explain “not serving students”?

  21. Seriously... Says:

    @20 G – No, but Eberhart’s job is to serve students. Bond oversight commitees serve the public.

  22. Wait a Minute Says:

    I think The Gary’s comment was a freudian slip.

    He voted against them because they were not going to serve The Gary’s interests!

  23. Theresa Harrington Says:

    Here is a link to the resolution the district claims the MDUSD board approved:

    The resolution states on page 2: “there has been presented to this meeting of the District Board a form of Preliminary Official Statement relating to the marketing and sale of such bonds” and “there has been presented to this meeting of the District Board a form of Bond Purchase Agreement by and among the District, the County and Stifel, Nicolaus & Company, Incorporated dba Stone & Youngberg a Division of Stifel Nicolaus as representative of itself and George K. Baum & Company, relating to the marketing and sale of such bonds..”

    As I recall, Alicia Minyen complained that those two items were not part of the board approval.

    Here is a link to the April 23rd meeting, where no such preliminary official statement or Bond Purchase Agreement was presented to the board:

  24. Wait a Minute Says:

    Good work Theresa,

    This is a Brown Act violation and as such should be reported to the CCC Grand Jury as a complaint.

    The MDUSD cannot be allowed to continually break the law and shoot from the hip by breaking these important legal safeguard for the public’s interest.

    The root word in Trustee is TRUST!!!

    I have yet to see any evidence of well compensated certain board members and highly paid district administrators earning this trust or showing any integrity.

  25. Theresa Harrington Says:

    Despite the fact that Lawrence and Rolen promised to change the resolution to reflect the will of the board, the resolution currently attached to the MDUSD agenda appears to be identical to the resolution submitted to the county.

    Regarding the assurances about the Preliminary Official Statement and the Bond Purchase Agreement, the resolution states immediately afterward: “The foregoing recitals are true and correct.”

    On further examination, it appears that the district has replaced the original resolution presented to the board on April 23rd with the revised resolution submitted to the county. I have a copy of the original resolution, which did not specify “the bonds shall be issued as current interest bonds only.” That language has been added to the revised resolution. However, both versions claimed that the Preliminary Official Statement and Bond Purchase Agreement were presented to the April 23rd meeting of the board.

    The original version also did not include Section 13: “Indemnification.”

  26. MDUSD Board Watcher Says:

    Let me guess, The Gary wanted to exclude Alicia from the 2002 Bond Oversight Committee.

    The Gary must be fuming mad at Linda Mayo right now.

  27. Doctor J Says:

    If these bonds are being sold under false pretenses, perhaps its time for the Federal Grand Jury to get involved.

  28. Theresa Harrington Says:

    At the very least, the district needs to disclose the two documents it claimed were presented to the board April 23.
    It’s unclear why the board approved the resolution and why Lawrence signed it, without adhering to it.
    I wonder if the county requested the indemnification clause, which holds the county harmless for approving the resolution and requires the district to reimburse the county for any legal or other expenses incurred in connection with investigating or defending claims or actions resulting from it.

  29. Doctor J Says:

    Clearly the indemnification clause was never presented or considered by the Board. Since Cheryl Hansen voted against it, clearly they won’t be able to wiggle out of this one, like Gary did with the ultimate denial that he never saw the voter poll prior to Measure C being voted upon.

  30. Theresa Harrington Says:

    That’s true. Since the board did not discuss indemnifying the county, trustees did not authorize Lawrence and Rolen to add that clause.

  31. g Says:

    The current Grand Jury report seems to me to be little more than a weak cop-out. It speaks to general conditions of ALL Districts, and expends very little breath to specific problems of specific Districts. In light of the numerous, and very specific complaints presented to them about MDUSD, I am very disappointed in their response.

    It is time for the State Auditor to look at MDUSD and both 2002 and 2010 Measures.

  32. Doctor J Says:

    Were the two documents presented to the Board on or before April 23 but just not disclosed to the public ? Each of the Trustees should know the answer that question. Does the audio give a clue ?

  33. Theresa Harrington Says:

    The resolution states that they were “presented to this meeting of the district board.” That implies that they were publicly presented.
    I don’t recall there being any discussion about the trustees receiving them privately, especially since Minyen raised the issue and said they should be publicly presented.

  34. Seriously... Says:

    Theresa….do you have a copy of the original resolution that was attached to Item 16.5 of the April 23rd meeting?

  35. Theresa Harrington Says:

    Yes, there was no Indemnification clause and the Purchase Agreement and Terms of Bonds clause did not limit the sale to current interest bonds.

  36. Seriously... Says:

    The Board did not discuss the Indemnification. I wonder if Measure C paid to increase the Boards Errors & Omissions Policy. I also wonder who required this clause.

  37. Seriously... Says:

    Was the Treasurer mentioned in the Credit Enhancement clause of the original bond resolution?

  38. Theresa Harrington Says:

    Yes, that clause is identical.

  39. Doctor J Says:

    Houston, we have a problem.

  40. MDUSD Board Watcher Says:

    Uh oh, Looks like Gary and Stevie stepped in it again. This won’t be good for Gary’s campaign this fall.

  41. Doctor J Says:

    I wonder which Federal agency investigates irregularities in the issuance of bonds for sale to the public ?

  42. Doctor J Says:

    Here’s how to file a complaint about municipal securities.

  43. Seriously... Says:

    @41- The State Attorney General is the enforcer. Feds only pursue federal law violations. Complaints can be made to the FINRA, SEC. In addition, complaints can be made to MSRB.

  44. Seriously... Says:

    I noticed that an indemnification clause was not included in the bond resolution dated August 2010 for the $110 million of 2010 Measure C Series A and Series B bonds. I also noticed this bond resolution attached many agreements, including the purchase agreement, bond counsel opinion, and preliminary bond statements for CIBs and CAB bonds. Why was the bond resolution for the $150 million so short?

  45. Doctor J Says:

    @Seriously#44– The current indeminification clause appears to be inserted at the request of CCC Board of Supervisiors. Do you have a link to the 2010 submission to CCC that might have a different “resolution” attached than the one proposed by MDUSD ?

  46. Seriously... Says:

    Dr. j….I’m unable to attach a link, but you can view the CCC Board Agenda dated 5/8, under Item C.93.

  47. Doctor J Says:

    @Seriously: 5/8 was the 2012 meeting; when was the 2010 meeting of the CCC Supervisors to approve the original issue ?

  48. Theresa Harrington Says:

    The minutes of the April 23 meeting do not mention anything about adding an indemnification clause to the resolution:

  49. Theresa Harrington Says:

    The board may lease out a portion of Holbrook to a special ed school:

  50. Theresa Harrington Says:

    The board will also consider forming an Employee Unions Council, which would meet monthly with the superintendent:

    The city of Concord does this and it has improved union relations, according to the city manager.

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