Cashing in on Education 

California’s school bond system is dominated by well-funded private interests and plagued by a lack of oversight.

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click to enlarge PHOTO BY BRIAN KRANS
  • Photo by Brian Krans

Brown has argued that Prop. 51 simply carries on old practices of favoring larger and wealthier school districts and private interests. “This has, over time, developed into a very cumbersome and complex process,” said H.D. Palmer, the governor’s spokesperson on budget and fiscal issues. “One of the things Prop. 51 did above and beyond getting voter approval to sell several billions of dollars in K-12 school bonds was to essentially codify a system we found problematic.
Even though that was the final decision with the people, that does not deter the governor from trying to get more accountability in this process.”

Unbeknownst to the average Californian who voted for Prop. 51, the last time the state passed a state school bond in 2006, the measure ultimately had no final oversight, even though it was promised to voters and required by law. This allowed some school districts to use school bonds not to build or upgrade their facilities but for superfluous items, a practice some state officials wanted to discontinue.

“My guess is that when voters approved Prop. 51, they weren’t approving practices like using voter-approved bond funds to purchase things like golf carts and mascot uniforms,” Palmer said.

Don Ulrich stepped up to the microphone in a Sacramento conference room with a smile on his face. It was January 2017, and the first time the now-director of CASH publicly addressed the group’s members after it fueled the passage of Prop. 51.

“It’s exciting,” Ulrich told the room of about two dozen people, according to a video of the meeting. “In fact, one of our board members today said, ‘It’s like there’s blood in the water.’ I don’t know if he’s comparing us to sharks or what, but as a school district employee, if our kids and the environment they’re in with teachers is at stake, I’m happy to be a shark.”

The sharks were circling because in a state of nearly 1,100 school districts, the money earmarked for brick-and-mortar improvements in K-12 schools and community colleges spreads thin quickly.

A few hours after CASH’s meeting, some of its members followed the monthly tradition of attending a nearby meeting of the State Allocation Board, which is made up of various state senators, assemblymembers, governor’s appointees, and the head of the state Department of Education, and is chaired by the Department of Finance.

As one of its first orders of business, the board addressed a 2016 audit by the state finance department of Proposition 1D, which California voters approved 10 years earlier. Lisa Silverman, the board’s executive officer, sought to provide a clearer picture of the audit to the board after Prop. 51 passed. “One of the critical findings that they outlined was that we weren’t conducting field audits — again, a critical component of the bond program,” Silverman said, her voice cracking as she spoke, according to a video of the meeting. “And they also had some questioned costs that they identified in the projects that they audited with the school districts.”

The Department of Finance audit of 19 projects submitted by 10 school districts for a total of $300 million in Prop. 1D funding showed that despite employing an average of 36 auditors, the state’s Office of Public School Construction never checked the final expenditures on any project. The Finance Department audit report concluded: “The failure to perform statutory audits demonstrates a significant lack of accountability over bond funds.”

The report also noted that school districts had been using bond funds on items with a shorter lifespan than the life of the 30-year bond. One unnamed school district had nearly $1.1 million in suspect costs, including purchasing a pickup truck, two tractors, four golf carts, 23 cameras, apparel for athletic teams and its school band, and even a new costume for its mascot. Others used it for iPads and floor cleaner. In one district, a contractor claimed costs twice for the same project and others couldn’t account for where the money went.

“With the passage of Proposition 51, we think it’s appropriate and imperative and timely to address the findings and to prevent these issues from recurring again and to ensure greater accountability of the bond funds,” Silverman said at the January 2017 meeting.

The Little Hoover Commission, a state watchdog agency, said the following month that the response from the State Allocation Board was “hardly reassuring from an entity that now will have another nearly $10 billion in bond proceeds to distribute.”

Still, voters passed Prop. 51, 55.2 percent to 44.8 percent.

When Brown wasn’t releasing the money fast enough, CASH and other groups appealed to the public in 2017, including by writing several op-eds to newspapers criticizing the governor for not selling the bonds. In August 2017, CASH skipped its usual monthly meeting to hold a press conference on the west steps of the state capitol building. Ulrich and representatives for the Assembly Education Committee, the Association of California School Administrators, and the California School Board Association urged state leaders to respect the will of the voters and get the money out to schools. Even with a $2.4 billion backlog in projects — $61 million just for Clovis Unified, where Ulrich is also a deputy superintendent — no school bonds had been sold at the time.


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