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MDUSD superintendent responds to questions about false and misleading bond resolution

By Theresa Harrington
Friday, June 8th, 2012 at 6:18 pm in Education, Mt. Diablo school district.

I sent the following e-mail to Mt. Diablo schools Superintendent Steven Lawrence on Wednesday, asking him to explain misleading statements in the bond resolution approved by the board in a 4-1 on vote April 23rd (Hansen against).

I received his response this afternoon, which I am posting below my original e-mail. After reading his response, which did not include the bond documents I requested, I sent a follow-up e-mail, which I have posted after his response.

INITIAL EMAIL TO SUPERINTENDENT STEVEN LAWRENCE:

“Subject: April 23 Bond Resolution

Dear Steven,

I have some questions about the April 23rd bond resolution, which was changed after the board saw it, then submitted to the County Board of Supervisors on May 8:
http://esbpublic.mdusd.k12.ca.us/public_itemview.aspx?ItemId=5270&mtgId=
341

According to the minutes, the board authorized you to make the following changes to the original resolution (which has been removed from the district’s online agenda):

“Eberhart moved, Mayo seconded and the Board voted 4-1-0 (Hansen – no) to approve 16.5 to modify the resolution so the changes reflect the will of the Board around option 3 and real property/land acquisition.”

Although the resolution was changed to reflect the will of the board regarding Current Interest Bonds, I do not see any language added to reflect the will of the board regarding real property/land acquisition.

However, I see that an entire new section was added (13), indemnifying the county. As you know, the board never authorized or discussed that addition.

I also noticed that both versions of the resolution include the same false information, which was not changed. Both resolutions specifically state that both the Preliminary Official Statement and the Purchase Agreement were “presented to this meeting of the District Board.” Further, both resolutions state: “The foregoing recitals are true and correct.”

Yet, those two documents were not presented to the board.

After the board meeting, the resolution was changed and the original resolution was removed from the district’s website and replaced with the new resolution, which was never presented to the board. That revised resolution (signed by you) was submitted to the County Board of Supervisors on May 8, as backup for the Supervisors’ resolution authorizing the sale of the bonds:

http://64.166.146.155/docs/2012/BOS/20120508_204/11101_Mt.%20Diablo%20USD%20Resolution.pdf

Based on all of this, I am requesting that you provide me with copies of the Preliminary Official Statement and Purchase Agreement, which the board reportedly approved.

Section 3 states that the Purchase Agreement is “on file with the District Board and is hereby approved….” Section 4 states: “The District Board hereby approves the form of Preliminary Official Statement relating to the Bonds on file with the Clerk of the District Board…”

I also have the following questions:

1. Why did you not present the Preliminary Official Statement and Purchase Agreement to the board at the April 23 meeting, as stated in the resolution?

2. Why did you sign the resolution, including the statement, “The foregoing is true and correct,” when it wasn’t true and correct?

3. Why was Section 13 added, indemnifying the county?

4. Who requested the indemnification clause?

5. Who authorized the indemnification clause?

6. Why is there no restriction on the acquisition of property or land in the revised resolution, even though the board directed you to add language reflecting “the will of the board” regarding that?”

SUPERINTENDENT’S RESPONSE:

“Theresa,

The District’s bond program includes a team of legal and financial professionals who advise us as to the legal, financial and other requirements in authorizing and issuing our bonds. The District makes every effort possible to meet those requirements. The following responses are provided to your questions of June 5th:

1. On April 23, 2012, the Board of Education (the “Board”) of the Mt. Diablo Unified School District (the “District”) considered a resolution requesting the issuance by the County of Contra Costa of certain general obligation bonds (the “Bonds”) of the District (the “Resolution”). Prior to the April 23, 2012 meeting, the Board was provided with the Resolution for review in preparation for that meeting. In addition, as stated in the Resolution, the Board, through its Clerk, was provided with certain supporting documentation, including a preliminary official statement and a Bond Purchase Agreement. The supporting documentation was not presented at the meeting because it had already been provided prior to the meeting thus allowing for review prior to action being taken.

2. The recitals in the Resolution are true and correct. I signed the Resolution with that understanding and belief.

3. Section 13 of the Resolution was added after a request was received by Bond Counsel to include such language. The County of Contra Costa requires the language in Section 13 of the Resolution for all bond issuances for which the County issues on behalf of a school district.

4. The County of Contra Costa through the Treasurer-Tax Collector’s office requested the indemnification clause in Section 13.

5. The indemnification clause in Section 13 was authorized by General Counsel to the District after discussion with Bond Counsel. The addition was made prior to the April 23 meeting. The revised resolution was provided to the Board for review prior to the April 23 meeting.

6. The Board authorization prohibited the expenditure of bond proceeds for the acquisition of new school sites but rather provided that bond proceeds were to be used to improve existing school sites. The authorization granted with respect to the issuance of the Bonds is accurately memorialized in full in the Resolution and the minutes of the April 23, 2012 meeting.”

FOLLOW-UP E-MAIL TO SUPERINTENDENT:

“Steven,

Thank you for these responses. I am again requesting that you provide me with the preliminary official statement and bond purchase agreement that were provided to the board for review. As you know, since they were distributed to the board, they should be public record, available for immediate review by anyone who asks for them.

Also, I am requesting a copy of the revised resolution, which you said was provided to the board prior to the April 23 meeting.

I also have the following follow-up questions:

1. Why did you not make the bond documents available to the public as part of the agenda docket?

2. Since you didn’t present the bond documents during the meeting, why didn’t you change the language in the recitals to reflect the fact that they were distributed to the board prior to the meeting?

3. The language in Section 2 of the resolution states that proceeds are to be “used for the acquisition and improvement of certain real property.” How does this prohibit the acquisition of new school sites?

4. Why did you not announce to the board and the public that the resolution had been revised prior to the meeting?

5. Why are the first two versions of the resolution no longer available for public review on the district’s agenda?”

Lawrence appears to be arguing that the resolution’s statements that the bond documents were “presented to this meeting” really meant: were provided secretly to the board without public disclosure. Based on his belief that these two are interchangeable, he is asserting that the recitals were “true and correct.”

He also appears to believe that it is not necessary to announce to the public that a resolution has been revised after it was published with the agenda, or to make the bond documents being approved at the meeting available for public review before they are approved.

Are you satisfied with Lawrence’s responses?

JUNE 20 UPDATE:

When I spoke to Superintendent Steven Lawrence on Monday regarding the bond resolution and supporting documents, he said the district was following the same procedures it had in the past and he wondered why there were so many questions this time around.

In response, I sent the email posted below. I am also posting his response, along with my follow-up questions:

“Tuesday, June 19, 2012 12:32 PM

“Steven, In response to your assertion last night that you did everything the same this year as you did in the past regarding bond sales, please refer to this agenda docket item from Aug. 10, 2010: http://esbpublic.mdusd.k12.ca.us/com/print_item.aspx?itemId=2849

As you can see, the 2010 resolution was substantially different and did not include the ‘whereas’ clauses I questioned in the April 23, 2012 resolution. The 2010 resolution also did not include the statement: ‘The foregoing recitals are true and correct.’ But, it DID include forms of the purchase agreement and preliminary official statement as attachments.

I continue to question why you failed to present the bond preliminary official statement and purchase agreements to the public in April, yet claimed in the resolution that they were presented. Also, when Alicia Minyen asked to see them, you did not tell her that they were available for inspection upon request. Your rationale that they were “made available” to the board does not change the fact that they were not, in fact, ‘presented’ as you attested in the resolution. Also, you did not make a public statement that they were ‘available’ to the board upon request.

Do you believe your failure to publicly present the preliminary official statement and bond purchase agreement, as stated in the resolution, violated the Brown Act?”

“Wed 6/20/2012 6:10 PM

Theresa,

Please find the following response to questions that you have raised regarding the Resolution authorizing the bond sale and specifically the Bond Purchase Agreement (‘BPA’) at the April 23rd Board meeting. Also, per your request I asked Loreen to send you both the Draft BPA and Final BPA.

The Resolution that was adopted is different from earlier resolutions adopted by the Board. The most obvious difference is that earlier resolutions provided for the issuance of bonds under the Government Code while this latest resolution provided for the issuance of bonds under the Education Code. Thus, there will be a number of different provisions due to the different code. That is to be expected. There are also similarities. Both forms of resolution approve both a Preliminary Official Statement (“POS”) and a BPA and provide direction to staff to complete those documents.

The Resolution does not claim that the POS and the BPA were presented to the public. The Resolution states that forms of those documents were presented to the meeting of the Board and further states that they were held on file with the Clerk of the Board. That language was intended to mean that the documents were provided to the Board for consideration at the meeting and available for review if needed.

Our financial advisor Jon Isom personally hand delivered the BPA to Loreen with Lori Amenta’s assistance at the start of the Board meeting on the 23rd. This explains why Loreen didn’t have an electronic copy to share with you. In fact, he sent an email to Deborah Cooksey (referenced below at 7:31 pm on April 23rd) from his iPhone with the BPA attached to be printed and available at the meeting. I have since confirmed with Loreen that she does have the original hard copy from that meeting.

‘From: Jon Isom [mailto:jon@isomadvisors.com]
Sent: Monday, April 23, 2012 7:31 PM
To: Jon Isom; cookseyd@mdusd.org
Subject: Fwd: Mt. Diablo BPA

Sent from my iPhone’

I hope this background helps to clarify the questions surrounding the resolution, what it does and doesn’t do, and the source of the BPA.

Thanks,

Steven Lawrence”

(Note: Isom’s email appeared in the body of Lawrence’s email exactly as shown above, without the attachment mentioned.)

“Wed 6/20/2012 6:27 PM

Steven, Thanks for this explanation. I have received the first version from Loreen and she said she’ll send the final one soon.

Regarding the email from Jon Isom: I don’t see the attachment you referenced.

Regarding the language in the resolution, I am still unclear about whether the documents were actually distributed to board members. Did board members receive the preliminary official statement and bond purchase agreement at that meeting? Or, by “provided to the board,” do you actually mean that you had them and they were available for review, but not distributed to trustees? If this is the case, why was there no public announcement about this? Also, why did you not provide them to Alicia Minyen for review, when she specifically asked to see them? Also, why didn’t Deb forward the electronic version to Loreen?

Thanks,
Theresa Harrington”

Are you satisfied with Lawrence’s latest responses?

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  • Doctor J

    @G #97 Amazing ! Follow the money !

  • g

    This district is advised by its counselors to ‘ignore any opinion that does not have a written statute behind it’, and is directed to ‘skirt any issue that does have a statute behind it’!

  • Doctor J

    @G#102 Did you get that from a closed session ? :-)

  • g

    My sources told me. :)

  • Theresa Harrington

    The bond counsel essentially told the BOC that when the auditor questioned the last time the premium was used to pay issuance costs. But, Minyen points out, the last time the district did that was BEFORE the Poway letter. With the next issuance immediately after the Poway letter, the district did not pay the cost of issuance out of the premium, Minyen said. Now, it’s back to the premium payment, with no public disclosure at a district board meeting. I want to find out if the attorney general agrees with the district’s bond counsel that it’s okay to ignore the Poway letter.

    I’m also wondering who told Lawrence that the district is doing everything the same this time as it did in 2010. Anyone who compares the resolutions and attachments can see that that’s not true. Either he hasn’t read the resolutions himself and he’s relying on what his team of legal advisers is telling him, or he’s hoping no one else will read them. The problem is: he’s the one who signed them and he’s the one who attested that the recitals were “true and correct” in April, when they weren’t.

  • Doctor J

    Sounds like Lawrence has turned the Dent Center into the “No Tell Motel” — expediency overrules the truth. More than ten days have come and gone and he still refuses to give you the agreement. When are you going to sick the legal beagles on him ?

  • MoMx3

    There is a job opening for a Measure C Asst Program Manager… is this a new position or replacing someone?

    http://www.mdusd.org/personnel/Documents/ASSISTANT%20PROGRAM%20MANAGER%20%20WEB%20%20_2_.pdf

  • Theresa Harrington

    That’s a good question. Since the job description isn’t very specific, it’s hard to tell. Perhaps Pete Pedersen will explain this at tomorrow night’s BOC meeting.

  • Wait a Minute

    Hey everyone,
    I found this editorial by Sac Bee columnist Dan Walters to be interesting because it postulates why is there so much wacko behavior amonst east-bay politicians:
    http://www.sacbee.com/2012/05/11/4482481/dan-walters-california-political.html#storylink=misearch

    Maybe Dan Walters would like to take a look at the incestous relationships going on here at the MDUSD?

    By Dan Walters
    Published: Friday, May. 11, 2012 – 12:00 am | Page 3A

    The East Bay Municipal Water District captures water from the Sierra snowpack in reservoirs on the Mokelumne River and sends it via sealed pipeline 90 miles to customers in Alameda and Contra Costa counties, saying it “assures that all customers get high-quality drinking water …”

    One wonders, however, whether the East Bay’s water is contaminated by a germ that compels its politicians to misbehave.

    While there’s a long history of aberrant behavior in the region, it’s been particularly evident recently.

    Within a few months, East Bay politicians were arrested on a shoplifting charge (Assemblywoman Mary Hayashi), resigned after becoming involved in a tawdry sex-and-drugs scandal (Alameda County Supervisor Nadia Lockyer) and lapsed into gibberish and accused a journalist of donating money to his opponent (Rep. Pete Stark).

    It’s facetious, of course, to blame water. Nevertheless there is a common syndrome – ingrown politics.

    The East Bay’s voters are overwhelmingly Democrats, so its politicians need only win the party’s blessing – or, more accurately, the patronage of a few pooh-bahs – to hold office.

    If one says the right things to and does the right favors for the right people, one is magically ordained and protected from re-election challenges.

    A rare challenge is what set off 20-term Rep. Stark during an interview with the San Francisco Chronicle’s editorial board.

    Relying on research by his 16-year-old son, the 80-year-old Stark erupted and falsely accused Chronicle columnist Debra Saunders of contributing to his rival’s campaign.

    Stark’s bizarre behavior in Washington is legendary. He once called a congresswoman a “whore” and was denied chairmanship of the House Ways and Means Committee because of his erratic demeanor.

    Hayashi initially blamed a brain tumor for shoplifting, but eventually pleaded no contest to the charge, paid a small fine and was placed on probation.

    And then there’s Nadia Lockyer, who was elected to the Alameda County board mostly because state Treasurer Bill Lockyer, her husband and one of the region’s dominant figures, transferred huge sums into her campaign. She resigned after admitting to substance abuse problems and an affair with a man she met in rehab, claiming that he had assaulted her during a meeting in a motel room.

    In one bizarre email, she claimed that her husband supplied her with drugs – which he denies. But he has a history of rather strange behavior himself, including public meltdowns.

    It’s something, and whatever causes East Bay politicians to misbehave appears to be infectious. In March, a Southern California assemblyman, Roger Hernández, was arrested on a drunken driving charge in Concord – in a state car, no less.

    Read more here: http://www.sacbee.com/2012/05/11/4482481/dan-walters-california-political.html#storylink=misearch#storylink=cpy

  • Theresa Harrington

    Speaking of East Bay agencies and politicians, the attorney general’s office would not say whether they intend to follow up on the district’s plan to use bond premium to pay issuance costs.
    The attorney general’s spokeswoman acknowledged that Alicia Minyen sent them a copy of her Brown Act complaint and possible misuse of public funds complaint, but noted that those complaints are seeking action from the District Attorney.

  • Wait a Minute

    Maybe Alicia needs to resend it to the AG’s office with revisement seeking action from the AG instead of the DA?

    Maybe that would let DA Peterson off the hook here?

  • Theresa Harrington

    Minyen said she may inquire about that.

  • g

    Alicia may need to include a bit of information about a possible conflict of interest with DA Mark Peterson being the person who wrote the “Pro” comments on the ballot, along with his up front City of Concord Mayoral support of Eberhart in 2008.

  • Theresa Harrington

    Minyen did mention in her Brown Act complaint that Peterson endorsed Measure C.

    On another note: I sent a PRA to the district today for the bond purchase agreement, based on the superintendent’s failure to produce it after three written requests and one verbal request (with the first request sent June 5).

    Later in the afternoon, I got a message from the superintendent’s secretary saying she thinks she has it after all. But, since it was a hard copy and she didn’t have it in electronic form, she apparently didn’t realize that was it. Also, she said it has a lot of blanks on it. So, hopefully, I’ll be receiving that version by tomorrow. I have also requested the final, executed version, with all changes made after April 23.

  • Doctor J

    @#114 If she didn’t think she had it, how were the Board members supposed to get it ? Reminds me of “Who’s on First?” Either its an incredible cover-up or pure incompetence.

  • Theresa Harrington

    I have just posted a “June 20 update” to this blog with more email exchanges between Lawrence and me about this.

  • g

    …And why is Isom’s email time stamped at 7:31 on the date of the meeting?

    So Cooksey received a FORWARDED copy of an email at 7:31? Where is the original?

    Obviously an email received during the meeting could not be distributed AT the meeting!

    I also do not see any indication of an attachment on the email.

  • g

    Check the minutes of 4/23—Cooksey was not listed as even being there!

  • Doctor J

    Lawrence digs a deeper hole: he admits the POS and BPA were not provided to or even available to the public — a clear violation of the Brown Act.

  • Theresa Harrington

    Yes, and this is the basis for Minyen’s Brown Act complaint.
    If Cooksey received an email with the bond purchase agreement to print, copy and “make available,” then why didn’t she give it to the board and to Minyen?
    The final version was signed May 30, more than a month after Minyen filed her April 25 Brown Act complaint.

  • g

    The board voted on a resolution stating: “The form of Purchase Agreement on file
    with the District Board is hereby approved…”

    The Superintendent, the Legal counsel, the Chief Financial Officer are all at fault for allowing this “false statement” to even be presented to the board for a vote.

    The Board is at fault for not properly preparing themselves for the job they are entrusted to perform.

    Meeting after meeting they vote on items that they obviously have not read, much less studied.

    Shameful!

  • Alicia

    Theresa, I actually haven’t asked for the POS or BPA. I listened to my public comments again from 4/23. Because I was under the impression that the resolution would be amended and brought back to the board at a subsequent meeting, I stated that I expected the POS and BPA to be attached to the Agenda (because of the language in the resolution indicated that such documents were “presented to the meeting of the District Board”). I actually expected a presentation during the 4/23 meeting, and I commented that it would be difficult to present the POS and BPA in just a few minutes. I also commented that that the POS and BPA be separately discussed and separately approved, rather than including the approval of these important documents in with the resolution. As Mr. Lawrence stated, the resolution said the POS and BPA has “been presented to this meeting of the district board…” Any reasonable person would interpret this to mean that these documents would, by default, be presented to the public, since the “meeting of the board” is held in front of the public.

  • Alicia

    @G – #121 – I agree that the Board of Trustees has a duty, especially involving a decision that results in a tax rate increase, to perform adequate due diligence to ensure that they are fully informed prior to vote. This mess is precisely what can happen when a Board of Trustees essentially waives their duty and responsibility by giving staff authority that they otherwise don’t and should not have in the ordinary course of business.

    It is very irritating that the district appears to down play the events surrounding the Resolution especially when the Brown Act concerns relate to a tax rate increase to be assessed on over $29 Billion in property in Contra Costa County that will cost taxpayers $227 million.

  • Alicia

    On the upside, it appears the $89 tax rate estimate is reasonable. I forgot to assume the IRS subsidy payments pertaining to the CREBs.

  • Theresa Harrington

    Alicia, Thanks for clarifying your comments. My point is that you stated the documents should be “presented to the meeting.” As you suggest, any reasonable person would assume that would be public. If Lawrence had the documents available, he should have stated that and made them available to you and anyone else who wanted to see them.

  • Doctor J

    Lawrence clearly engaged in deception, sleight of hand, was misleading, and it continues. Shameful for a Superintendent of 32,000 children.

  • Hell Freezing Over

    TH – did you get all the docs you asked for and were told would be provided? Did you get answers / responses to all your questions posted above in this blog post?

  • Theresa Harrington

    I got the bond purchase agreement and the preliminary official statement. However, I have not gotten answers to all of my questions.
    As I previously noted, the district does appear to be making an effort to mark revised agenda attachments as “updated” and to leave the original documents online so the public can see what has been updated. However, Superintendent Lawrence is still resisting Trustee Cheryl Hansen’s suggestion that he make an announcement about such updates so the public will know that a revision has been made and what the revision is.
    Rolen has not yet provided me with the “thorough analysis” of the Poway letter that Lawrence said was provided to the board regarding the bond cost of issuance. I have not yet received a response to my PRA for that document.
    It appears that Lawrence, Rolen and Eberhart want to be able to claim they have definitive proof that they are abiding by the law when they use bond premium to pay underwriters — and the same legal advisers who are giving them that advice — without showing the alleged proof to the public.
    Also, the DA’s office has acknowledged receiving Minyen’s Brown Act and improper use of public funds complaints, but is not willing to divulge the status of those complaints — or whether they are even being pursued.

  • Wait a Minute

    Wow Theresa,

    I’m sure that the reason Rolen has not given you the “thorough analysis” is because it doesn’t exist and they are attempting to write something up after the fact.

    This is a minefield that Rolen might not escape. He has been and continues to break many ethical rules that lawyers are supposed to follow and this one could lead to him losing his license if he is not careful.

    I predict that Rolen and his Chico buddy that he “persuaded” the MDUSD to hire Mr. Matt Juhl-Darlington esq will attempt to blame the real bond counsel that they associated in to do the real work while Matt took a big fat cut.

  • g

    Quoting Theresa: “Eberhart said the board received “extremely definitive assessments of the process we’re using.” He said it’s an important issue and it’s important for the public to know that the district is operating appropriately.”

    Could I suggest holding Eberhart’s toes to the fire on these “extremely definitive assessments”. If Eberhart refuses to “let the public know”, then someone else on the Board should have a copy of the assessments.

  • anonadad

    @G #130: yes, please suggest that Cheryl Hansen have a copy of the assessments. She is currently the only Board Member that the public trusts and Steven Lawrence, Rolen, and Eberhart have made it a point to bully her into silence/submission; however, Cheryl Hansen is not even phased by their bullying. She continues to question, and insist on transparency for the public. I believe that if Cheryl Hansen has a copy of these assessments, all of the public and their children will benefit.

    @Wait a Minute #129: what Rolen and Juhl-Darlington have financially gained from the district’s general fund is literally “taking candy from a baby”; the baby is each student in our district that is receiving less because Rolen and Juhl-Darlinton have taken away academic opportunities (candy)from each student. In addition, Rolen’s fiance’ is close to making a 6 figure paycheck for this last year; yet, the public is not provided with the number of hours her AIS company has provided. I have to blame taxpayers (myself included) that we allow these unethical antics to continue. During this past school year, I have read this blog and pinpoint the problem of irresonsible spending and unethical proceedings; my conclusion is that: Steven Lawrence, Eberhart/Whitmarsh, and Rolen are all in cahoots with ignoring what is in the best interest of students (and I have 2 yet to graduate), and continue to make covert decisions in their best interest. At this point, I am encouraging every person I know in my neighborhood and church to not vote for Eberhart and Whitmarsh (although she has not yet stated whether or not she’ll run); what would be helpful for me from this blog is what candidates my wife and I SHOULD vote for in November.

  • Theresa Harrington

    Anonadad: Please note that this blog will not endorse any candidates. However, the Contra Costa Times’ editorial board may endorse candidates. Also, of course, blog readers are free to post their comments regarding candidates and the election.

  • Theresa Harrington

    FYI, here’s a primer on Public Records Act requests, in case anyone else wants to request information from the district: http://www.contracostatimes.com/news/ci_20981435/thomas-peele-primer-public-records-requests

  • g

    Excellent article from Mr Peele. I guess the term “cumbersome” which is so often used by MDUSD officials might be considered insubordination.

  • Doctor J

    Despite Mr. Peele’s great article, Rolen continues to defy the law, thumbing his nose at anyone who challenges him — when will someone pursue the next step not talked about by Mr. Peele ? File a lawsuit under the PRA and collect the attorney fess for doing so from MDUSD. When the Board has to write that check, maybe in the immortal words of Lawrence “a lesson will be learned.”