6th Annual CaLBOC Statewide Conference
April 25, 2017 - Tuesday
"Bond Oversight Basics"
Executive Director, Little Hoover Commission
School Bond Money Can Be - and Is - Used on Employee Salaries
In 2000, California voters made a trade-off in order to help schools.
They made it easier to pass school bonds, and in exchange, they included a caveat to safeguard the funds: The money can't be spent on employee salaries.
That way, the thinking went, taxes approved for school construction actually paid for facility repairs and upgrades, not employee paychecks or other routine costs.
by the California attorney general said the new law lowering local voter approval requirements for school bonds from two-thirds to 55 percent, "Prohibits use of bond proceeds for salaries or operating expenses."
So, it may come as a surprise to learn school districts statewide have been freely - and legally - spending bond money on employee salaries and benefits for more than a decade.
That's because of an opinion issued in 2004 by then-Attorney General Bill Lockyer said the prohibition does not include employees who oversee and administer the bond program. "Administrative oversight work is an integral part of the construction process," Lockyer reasoned.
Since then, school districts have spent bond money - which is borrowed and paid back with interest sometimes decades later - on employee salaries, as well as staff benefits like pensions and insurance for health care, unemployment and workers' compensation if they're working on the bond program.
San Diego Unified's Proposition S and Z bond measures in 2008 and 2012 both said there would be "no money for administrators," but further down, the ballot language had this disclaimer: "Proceeds of the bonds may be used to pay or reimburse the District for the cost of District staff when performing work on or necessary and incidental to the bond projects."
"Most people don't read all that," said Michael Turnipseed, president of the nonprofit California League of Bond Oversight Committees. "Everybody states there will be no salaries going for administration. Some say teachers and administrators. It's a big selling point, but that's not true. But all the election people put it in because it sounds good." ...
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State watchdog agency points to flaws in bond oversight
... California voters approve an overwhelming majority of the bond initiatives placed before them on the ballot, but too often there's little attention paid to how the authorized funds actually are spent.
The state's independent watchdog agency, the Little Hoover Commission, last week released
that reinforces that point. In the past decade, voters have approved $70 billion in state bonds and more than $138 billion in local school-facilities bonds - numbers that have increased after the state lowered the voter threshold for approval, it explained.
"Spreading the costs of major infrastructure projects across generations makes sense," the commission's chairman Pedro Nava added. "But as Californians have put more and more on the tab, a day of reckoning will arrive." The commission cautions that these payments on the debt service will remain after the next recession hits and called for a re-evaluation of "whether current oversight mechanisms are enough to ensure both state and local bond proceeds are spent as efficiently as possible and as voters intended."...
Regarding local bonds, the commission in 2009 recommended the creation of local oversight committees. It modeled its suggestion on the largely unheeded testimony from the
California League of Bond Oversight Committees
. "Unfortunately, but understandably, many locally-elected government officials who must make multimillion- and multibillion-dollar decisions on bond issuances lack experience in municipal finance," according to the report. This situation, it wrote, is like "playing with financial matches."...
6th Annual CaLBOC
April 25, 2017 - Tues.
Bond Oversight Basics
D R A F T A G E N D A
Welcome & Introductions
Legal Roles and Responsibilities of CBOCs
11:45-12:15 pm: LUNCH
Little Hoover Commission
The Anton Jungherr Award
Case Studies in
Recent Bond Oversight
Preparing for Your Bond Measure
$50 per person, includes lunch & refreshments.
Provided to Attendees.
To promote school district accountability by improving the training and resources available to California's Proposition 39 School Bond Oversight Committees and educating the state legislature, local school boards and the public about the oversight and reporting powers these Citizens' Bond Oversight Committees (CBOCs) have, and to advocate on a state level, where appropriate, on issues of common concern to all CBOCs.