http://pleasantonweekly.com/print/story/print/2011/08/26/citizens-committee-to-recommend-oversight-for-future-bond-issues


Pleasanton Weekly

News - August 26, 2011

Citizens committee to recommend oversight for future bond issues

'Best practices' to be discussed at Pleasanton school board meeting in September

by Glenn Wohltmann

It took more meetings than originally planned, but a citizens committee formed to look into cash-out refinancing will issue its final report to the school board next month.

Some members of the committee are still unhappy that a few of their questions remain unanswered, in particular what money from cash-out refinancing done by the school district was spent where. Cash-out bond deals, similar to home refinancing where a homeowner takes extra money for a project, were popular for school districts across the state in the mid-2000s until declared illegal by then-Attorney General Jerry Brown.

The committee did learn that some of the money from Measure B was spent on projects that were to have been completed with Measure A money after the Measure A language, which had been missing, was discovered by Alameda County officials. The district spent nearly $1.7 million in Measure B bonds on Donlon Elementary, more than $981,000 at Harvest Park, more than $453,000 on Foothill High School, nearly $39,000 at Vintage Hills Elementary and nearly $36,000 on Lydiksen Elementary. Committee members also noted that $2,140 from Measure B was spent on Mohr Elementary, although that was a "growth" school and all work there should have been paid by developers.

The district took nearly $6.8 million from refinancing of Measure A and Measure B bonds in six borrowings between 2003 and 2005. Raneri pointed out at the final citizens committee meeting that the money from refinancing was commingled with other money and said there was no way to separate it out to determine where it was spent.

The district saved taxpayers $9.7 million by refinancing bonds at a lower interest rate. Using the cash-out method, much the way a homeowner would when refinancing a mortgage, the district borrowed $6.79 million and will have to pay back, with interest, $9.28 million; that $6.79 million, legally, should have gone to reduce taxpayer debt.

Some of the committee members wanted to focus on moving forward by not having those same sorts of problems in the future.

Jack Dove, the only member of the original bond oversight committee appointed to the citizens committee, read a statement to that effect at the beginning of Monday night's meeting.

"Instead of belaboring problems of the past, we should be looking to the future and those things we can do to meet the challenges which our leaders and educators are facing," Dove read.

A series of "best practice" recommendations will be forwarded to the school board for its mid-September meeting. Those recommendations include forming a citizens bond oversight committee to watchdog future voter-approved bonds, even if not required by law.

Lori Raineri, head of Government Financial Services, the firm called in as a consultant about past bond practices, also recommended the creation of an audit committee and a staff debt review committee. That committee would review proposed financings and review how the administration is handling the district's outstanding debt. At the request of the citizens committee, Raineri agreed to include a public participation component to that recommendation so that residents could be kept in the loop.

Best practices recommended by the consultant are included in a 22-page document; Raineri said her hope is that the staff debt review committee would become familiar with it and ultimately become the district's best practices experts.

Those best practices are:

* Establishing a written debt management policy;

* Adopting guidelines to achieve the lowest borrowing costs, taking into account short-term and long-term taxpayer debt;

* Hiring an independent financial advisor, using a request for proposals (RFP) method for the best costs and services;

* Using a similar RFP process to hire a bond counsel and for an underwriter;

* Pricing bonds in a negotiated sale, in which the bond issuer negotiates both the bond yield and the underwriter's compensation to minimize the total cost of borrowing;

* Using caution when issuing variable rate bonds; and

* Developing a formal policy for refunding.

Also recommended by Raineri is ethics training, although attorney Robert Kingsley did give school board members and administrators a half-day course in ethics last February.

However, at least one committee member, Julie Testa, remains unhappy with the idea of leaving bond repayments in the hands of staff, something she said led to the district using cash-outs like a revolving loan for school construction projects not approved by the voters.

Testa also said she would prefer for a group of citizens to monitor the repayments being made to both the Measure A and B bonds.

The bond issue became a hot-button item in the weeks before a vote on Measure E, which would have established a $98 parcel tax for Pleasanton homeowners.

Comments

Posted by Beth Limesand, a resident of Amador Valley High School
on Aug 26, 2011 at 6:35 pm

Actually, to refute a small part of this article that stated that Mohr Elementary construction was funded from Measure B cash out refundings, that's not proven. Since the proceeds from the refundings were co-mingled with other building fund monies (as is customary in government financing), the Mohr construction could possibly and likely have been funded by other means.

The conclusion that the consulting firm came to was that there was no feasible way to know. This did not sit well with many members of the Citizen's Committee. But, ultimately, we need to look to the future and what will be policy going forward.

We need more oversight and transparency going forward with money collected from property owners through local elections. Recommendations will be made at the next school board meeting -- best practices to put in place to prevent policies that could lead to questions of impropriety in the future.

Beth Limesand
Chair,
Measure A/B Cash-Out Refundings Citizens Committee


Posted by registered user, Stacey, a resident of Amberwood/Wood Meadows
on Aug 26, 2011 at 11:09 pm

Thank you, Beth.


Posted by Kathleen Ruegsegger, a resident of Vintage Hills Elementary School
on Aug 27, 2011 at 9:45 am

Beth, I don't believe the consultant said where funds were spent wasn't knowable. It was beyond the scope of work they were assigned, and it didn't necessarily serve any purpose for the committee to dig that deep. We do know a total spent per school, and there is no undoing what might not have originally agreed to by voters. I would not want the community believing there is "no feasible way to know." I do agree, however, that moving forward with best practices, including training in ethics. is the best thing for changing a previous culture of being less than forthcoming with the public.


Posted by Estaban, a resident of Stoneridge
on Aug 27, 2011 at 12:59 pm

I cannot wait for the committee's report to be made public. I only hope that P-town's overpaid police force makes a good faith effort to prevent the criminals from leaving the country. Once I see the culprits being led away in handcuffs, me and my family will begin to breathe easier.


Posted by Kathleen Ruegsegger, a resident of Vintage Hills Elementary School
on Aug 27, 2011 at 1:34 pm

Estaban(Phillip/Jake/etc.), Those responsible for this unconstitutional method of taxation will never face a day in court. The committee represented a broad spectrum of opinion about district operations; we all learned. The best practices are change for transparency going forward; good enough.


Posted by Estaban, a resident of Stoneridge
on Aug 27, 2011 at 1:51 pm

I have to say I'm very disappointed that the crooks, criminals, law breakers and unconstitutionalists are not looking at serious jail time. I mean what does one have to do in order to get arrested in this town?

But at least we know that the practice which was stopped after MoonBeam said it wasn't legal way back when will continue to be stopped now so many years after the fact. We can all breathe a lot easier. It was worth every penny to find this out. Now my family and I can sleep peacefully again.


Posted by Kathleen Ruegsegger, a resident of Vintage Hills Elementary School
on Aug 27, 2011 at 2:29 pm

E, If you want donations or parcel taxes or just plain faith restored, then the exercise is worth doing. Why would you not want the truth? The governance team in place at the time of the issue being raised could have been forthcoming and saved you and yours many good nights of sleep. They chose not to do so.


Posted by Marie, a resident of Amberwood/Wood Meadows
on Aug 27, 2011 at 7:47 pm

To those who have all jumped on the band wagon to accuse former district employees/board members of not being forthcoming, were you ever present during any of the board meetings where Ms. Lepley gave explanations? it appears that you can all say no information was given and yet i doubt that you were present during those years. It is easy to talk negatively about people on these blogs. More power to you. I, on the other hand, would be questioning the new administration on why they are so uneducated on past practices.


Posted by Kathleen Ruegsegger, a resident of Vintage Hills Elementary School
on Aug 28, 2011 at 9:00 am

The practice of not providing information was a legacy of the previous administration. Those who attended the board meetings and expressed concerns over the refinancings and where the money was being spent were ignored. So it is kudos that go to this board and administrators who also are seeking the answers and are sharing them with the public.


Posted by Kathleen Ruegsegger, a resident of Vintage Hills Elementary School
on Aug 28, 2011 at 2:20 pm

And here's why oversight is important: Web Link


Posted by Kathleen Ruegsegger, a resident of Vintage Hills Elementary School
on Aug 28, 2011 at 2:26 pm

More from another reporter: Web Link


Posted by Mike, a resident of Highland Oaks
on Aug 28, 2011 at 9:44 pm

Oversight is essential and could be accomplished with relative ease if detailed information about proposed and completed projects were made public. The taxpayer should not have to play investigative journalist to find out where the money is going.