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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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