Bond issue continues to bring questions from citizens committee Crimes & Incidents, posted by Editor, Pleasanton Weekly Online, on Jun 21, 2011 at 9:42 am
The Pleasanton school board will only get a partial answer tonight to questions about cash-out bond refunding that are being addressed by a citizens committee and the consultant group Government Financial Services (GFS).
Read the full story here Web Link posted Tuesday, June 21, 2011, 6:56 AM
Posted by resident, a resident of the Another Pleasanton neighborhood neighborhood, on Jun 21, 2011 at 9:42 am
This should read:
::: Cash-out refinancing IS ILLEGAL, AND WAS CLARIFIED AS SUCH in 2009 by then-Attorney General and now Governor Jerry Brown. The refinancing done by the PUSD will cost AN ADDITIONAL $9.3 million over 20 years, according to the GFS analysis. Of that, almost $2.5 million is in interest AND FEES, while nearly $6.8 million was spend on? :::
Posted by Brian, a resident of the Another Pleasanton neighborhood neighborhood, on Jun 21, 2011 at 10:44 am
Why has this committee not asked how much was saved when the bonds were refinanced? It would be good to put this "cost" in perspective. Is it $9.3 million out of $93 million saved? Is it $9.3 million out of $10 million saved?
I don't think this committee is interested in answering that question because, god forbid, they show the school board actually saved the taxpayers substantial amounts of money. That would defeat the apparent purpose of this committee to erode public confidence in the school board in it's effort to cut funding to the schools.
Posted by parent, a resident of the Another Pleasanton neighborhood neighborhood, on Jun 21, 2011 at 10:53 am
Brian, the committee did look at how much was saved by the refunding as well as the additional debt that was issued by cashing out. You should look at the packet of material by this consultant which is available on the PUSD website before you jump to conclusions. The purpose of this committee is to look at all of this to get an understanding of what occurred as even the current administration could not follow the paper trail. The findings are to be presented as well as best practices to allow the community to have better transparency in the future. Also, if you look at the make-up of this committee you will see that it is fairly evenly split between those who supported additional taxpayer funding (i.e., parcel tax) and those who did not. The committee was also put together by district administration and I doubt their goal was to "erode public confidence."
Posted by Kathleen Ruegsegger, a resident of the Vintage Hills Elementary School neighborhood, on Jun 21, 2011 at 11:12 am
Last night's materials are posted here: Web Link I can't get it to open on my mac; others may have better luck.
Here's what I posted last night on the thread about last night's review:
Was the term extended as a result of the refinancings? No for Measure A; shortened for Measure B. Caveat, the refinancings did increase debt for taxpayers to cover in the short term. Measures A and B saw rates ranging from $57.30 to $121.10 per $100,000 AV. Savings start to show up in 2015.
Savings of $9M vs cash out of $7M.
Compensation to bond counsel and underwriter is not cheap, but not wildly out of line.
More to come in August on where the money was spent. Update of materials so far will be presented to the board tomorrow night. I believe tonight's charts will be posted on the web.
It will save taxpayers money if you still own your home in 2015 and beyond. In the meantime, it cost a lot more for homeowners from 2002 until 2015. If you bought in 2002 and sell in 2012, you will be paying through the peak. They aren't savings until you've actually received them.
Posted by Sal, a resident of the Downtown neighborhood, on Jun 21, 2011 at 11:22 am
The "citizens committee" is nothing more than a conservative firing squad intent on ruining our public. Ayala and her crew should be the ones answering questions about all the damage they have done to Pleasanton.
Posted by Kathleen Ruegsegger, a resident of the Vintage Hills Elementary School neighborhood, on Jun 21, 2011 at 11:25 am
Brian, I am not interested in cutting funding to K-12 education. I would still support a parcel tax with language specificity. I still donate to the classroom. This is about transparency for me. The public, and frankly teachers and classified staff members as well, should be able to pick up any board report, be it curriculum, operations, or budget, and understand what is being proposed and how it might affect the community.
A board has three major responsibilities-hiring and supervising a superintendent, setting policy, and overseeing and approving a budget. They are elected to represent the voters of our community, not staff (certainly there is a collaboration). This board is taking a step to ensure that those they represent have access to information based on their topic of interest, be that an employee contract, the homework policy, or use of their tax dollars--all of which are on tonight's agenda.
Posted by Kathleen Ruegsegger, a resident of the Vintage Hills Elementary School neighborhood, on Jun 21, 2011 at 11:31 am
Sal, I hardly think Jan Batchellor or Jack Dove or I consider ourselves part of anyone's "crew." Seems to be a group of very independent thinkers, including the consultant. The meetings have been productive; there is no damage, just information that has surprised all of us in one way or another, despite what we thought as individuals when this began.
Posted by Brian, a resident of the Another Pleasanton neighborhood neighborhood, on Jun 21, 2011 at 1:15 pm
Sorry. My mistake. That question was answered. I just assumed that as being Glenn did not report something so significant, it was still an unknown.
From what I gather from the GFS report, slightly more than 1/2 the savings of refinancing or $9.87 million was given back to the taxpayers while slightly less than 1/2 or $9.28 million was turned into cash + interest.
This is good to clarify for those who have the misunderstanding that the school board simply added to taxpayer burden. The truth is that they reduced taxpayer burden by $9.87 million. Had they not taken cash out, it would have been reduced by $19.15 million.
Posted by FYI, a resident of the Another Pleasanton neighborhood neighborhood, on Jun 21, 2011 at 1:46 pm
“California School Board Association pay to play allegations?”
The C.S.B.A, a non-profit funded by tax dollars, is involved in another scandal. Essentially they are officially supporting/endorsing certain private company services for “royalty fees“, sometimes at a cost of over 40 percent more for similar services from entities that aren’t on the endorsement list. The investigative news video of this story is from KCRA News: Web Link
This is the same organization that came under scrutiny late last year: “ Scott Plotkin, executive director of the California School Boards Association, announced his retirement Friday amid revelations he had charged thousands of dollars to a company credit card at area casinos, and according to the most recent tax filings, was drawing annual pay of more than $500,000.”
“CSBA is not a government agency, but is indirectly funded by taxpayers. Much of its funding comes from more than $5 million in membership dues paid by public school districts, which are taxpayer funded…CSBA is a nonprofit group that represents more than 1,000 school districts and county offices of education. It offers professional development for school board members and staff, and is a strong voice in the Capitol, lobbying on behalf of public schools.”
Posted by resident, a resident of the Another Pleasanton neighborhood neighborhood, on Jun 21, 2011 at 2:39 pm
You are comingling the act of refinancing to reduce obligation (the district’s legal responsibility) with refinancing to remove cash (illegal and defiantly unethical). As explained by Kathleen, that move costs the taxpayers considerably more money now. I don’t believe the district should be allowed to make that choice for me (and others) without consequences.
Posted by Kathleen Ruegsegger, a resident of the Vintage Hills Elementary School neighborhood, on Jun 21, 2011 at 3:07 pm
Brian, The news was better than expected, but we won't really see the impact of the savings until 2015ish. In the meantime, the short term tax burden was increased. And I don't think the savings would have been $19.2 million. I'll admit being fuzzy on the explanation, but had there not been cash outs, the savings would have been $9.28 million. See page 9 of the deck. There is the blue slice without cash outs being done; the green slice with cash outs; and there is a black line that shows a steadier rate of pay back had no refinancing been done at all.
Posted by More: FYI, a resident of the Another Pleasanton neighborhood neighborhood, on Jun 21, 2011 at 3:30 pm
The C.S.B.A, a non-profit funded by tax dollars...they are officially supporting/endorsing certain private company services for “royalty fees“, sometimes at a cost of over 40 percent more for similar services from entities that aren’t on the endorsement list...“ Scott Plotkin, executive director of the California School Boards Association, announced his retirement Friday amid revelations he had charged thousands of dollars to a company credit card at area casinos, and according to the most recent tax filings, was drawing annual pay of more than $500,000.”
Non-profit? "Plotkin served as CSBA executive director for nine years. The most recent available tax filings show Plotkin was paid $540,395 during the 2007-08 fiscal year, an amount that included a $175,000 bonus. Filings show he earned $352,636 during the 2006-07 fiscal year and $289,810 in 2005-06."
While the great recession was rearing its ugly head this guy was getting a bonus of 175K. I guess non-profit means you need to distribute the money. Now he is receiving a pension of 205K. I wonder if the CSBA endorsement list included the company that was charging four times the going rate for cash-out Bond refinancing?
Posted by Brian, a resident of the Another Pleasanton neighborhood neighborhood, on Jun 21, 2011 at 5:03 pm
All I'm doing is trying to state facts, not distort them.
In the long run, refinancing the bonds, even after taking cash out, will save the taxpayers $9.87 million. If the district had not taken cash out, the long term savings would have been $19.15 million.
The legality of taking cash out was uncertain at the time it was performed. However, in 2009, it was determined to be illegal. There has been no cash out refinancing performed by PUSD since 2005.
Some of the intricacies (may have already stated by Kathleen): The refinancing has apparently achieved some of the savings by shortening the term (or length) of the loans relative to the original bond measures. This has resulted in higher loan payments and therefore a higher taxpayer burden until 2014 relative to the original bond measures. The bulk of the savings from refinancing don't kick in until 2015 when several loans are paid off and loan payments drop well below what would have been the case if the original bonds were not refinanced.
So, forget about cash out. A valid concern moving forward would be: Who decides when the time is right to refinance and if it's ok to increase payments in the short term for a net long term savings? Another valid concern would be: Who will keep and eye on debt and going interest rates to try to maximize the taxpayer savings if there is no incentive for the school district to do it? Sure, they have a legal obligation to refinance when it's advantageous to the taxpayer. But let's get real, with all the recent staff cuts, will they have the time or motivation going forward?
Perhaps we need to create a taxpayer funded position to perform the duty of debt management. Having taxpayer funding for such a position would remove the cost burden of debt management from the school district. Furthermore, any blame for debt mismanagement would fall on the shoulders of the debt manager, not the school district.
Posted by parent, a resident of the Another Pleasanton neighborhood neighborhood, on Jun 21, 2011 at 5:52 pm
Brian, It was fairly well know at the time of the cash-outs that that was probably not a legal activity to do. That is only a few bond councils would put their name on an opinion saying the cash out was legal. The Attorney General and a grand jury investigated this and said under no uncertain terms that it was an illegal activity and also let the public know what could be done after the fact by the taxpayer. It turns out not much after 90 days. The only cash-outs were done under the direction of John Casey as Superintendent.
On the motivation to get the best deal, the district has very little they have to do in a refunding. There is a whole industry that contact the districts when there are better deals out there; sort of like a personal mortgage broker. The fees they receive are fairly substantial so they will market their services. However the director of business and the superintendent should have the expertise to evaluate what is a good deal; that is why we pay them the big bucks.
Posted by Brian, a resident of the Another Pleasanton neighborhood neighborhood, on Jun 21, 2011 at 10:46 pm
It sounds like you are in favor of keeping the present system as is.
You want to leave the work of finding good refinancing deals up to an industry well known for charging exorbitant fees and pushing questionable refinancing practices? Furthermore, you expect the school officials to be able to go over the details of these offers with less staff, due to recent budget cuts, and do a better job at picking a good deal than they have in the past with no reward for doing a good job and potential taxpayer outrage directed at the school district if something goes awry?