Pleasanton school board members got an earful at their meeting Tuesday night about cash-out refinancings done by the district, as a consultant walked them through a 20-page document showing the costs and savings to taxpayers.
Government Financial Services head Lori Raineri refused to be pinned down by the board on whether the cash-outs were illegal; she said, however, that they were "unconstitutional" and that she steered her own clients away from the practice.
Pleasanton schools were not alone in doing that type of borrowing, Raineri said.
"This practice was going on for a long time," she said. "As it became more popular, it became more controversial."
The district took $6.79 million from refinancing of Measure A and Measure B bonds in six borrowings between 2003 and 2005 and spent it on as-yet-undetermined projects, something GFS and a citizens committee hope to find before the board meets again in August. While the district saved taxpayers $9.7 million from refinancing, much the way a homeowner would by refinancing a mortgage, the $6.79 million cash-out will result in a payback, with interest, of $9.28 million.
Using money -- that should legally have gone back to taxpayers -- for school facilities became so popular that then-Attorney General Jerry Brown released an opinion letter in 2009 saying the practice violated both the state constitution and education code, which prohibits schools from levying taxes without a vote.
"The question is, how do the tax levies compare to what was told the voters," Raineri told the board, noting that the wording on one of two bond measures, Measure A, has still not been found. The district has searched dozens of possible places, including county election offices, the district's own files, and even the local library.
Committee member Julie Testa complimented both GFI's work and Luz Cazares, assistant superintendent of business services, for choosing a firm that didn't support cash-outs, but Testa maintained the practice has been illegal all along.
In the district, she said, "It was understood that in order to create more debt it required a vote of the people."
Testa said she worked for years trying to get the bond oversight committee reinstated to monitor spending, and that all the money from refinancings should have gone to lower taxes.