Who’s watching over the billions of dollars in voter-approved school bond money?
When California voters lowered the threshold to pass school bonds nearly two decades ago, they opened the floodgates for $133 billion in taxpayer-funded spending to modernize campuses across the state.
Crucial to the passage of Proposition 39 in 2000 was the requirement that citizen oversight committees in each school district would watch every dollar of spending like a hawk, with an annual audit to ensure accountability.
Before Californians lowered the vote required from two-thirds to 55 percent, roughly half of the school funding measures passed. Since the law was changed in 2000 — and citizen oversight panels became a requirement — 80 percent of school bonds have been green-lighted by voters who know the importance of schools to their communities and are interested in upgrading aging campuses.
Making it easier to pass school bonds, says former Los Angeles Unified School District board member David Tokofsky, has created “this lust for the money.”
Locally since the vote change in 2000, $40 billion in school bonds have been issued in Los Angeles County, $6.6 billion in Riverside County, $6 billion in Orange County and $3.5 billion in San Bernardino County.
But critics say the bond oversight committee system at the core of change is flawed. Often, they say, such panels are stacked with members who have a vested interest in campus improvements — from construction or trade union interests to school foundation representatives.
And that leaves actual oversight on shaky ground.
“Very often, you get friends of friends, or rubber stamps, or people who don’t understand what’s going on and the staff will take advantage by not adequately training them,” said Nick Marinovich, former executive director of the California League of Bond Oversight Committees.
“When the selection process breaks down,” he said, “the whole oversight process breaks down, because you don’t get people who know what they’re doing.”
‘Foxes guarding the hen house’
Shawn Chen, president of the Manhattan Beach Teachers Association, agrees.
“When you look at the people who comprise the bond oversight committee, they have a personal interest,” Chen said. “They’re either connected to our (education) foundation or they have an interest in possible financial opportunities with construction. You look at the names and say, ‘Yay, citizens,’ but you look at them and they’re often the foxes guarding the hen house.”
In nearby Hermosa Beach, resident Miyo Prassas agrees that bond oversight committees are filled with people not inclined to question the school district.
“They’re friends, or they appoint people pro-school district,” Prassas said. “We had someone from our anti-bond group go in there, who’s very qualified, and she got rejected.”
In theory, citizen oversight committees ensure everything stays on track, with money only spent on improvement projects listed in the bond proposal, and not diverted to other expenses such as teacher or administrator salaries or school operating costs. But, according to some critics, the committees often don’t provide enough scrutiny.
“They stock these with rubber-stamp people and they don’t ask many questions and they don’t offer much material,” said Riverside resident and community activist Scott Andrews. “There was $15 million of projects under one (Alvord Unified School District) agenda item. … I said ‘What are you doing? I’ve got no idea what you’re voting on, and neither do you!’ “
Committee chairman goes rogue
A recent controversy in Pasadena illustrates what can happen when a citizens bond oversight committee or one of its members steps out of bounds.
Political turmoil erupted over the Pasadena Unified School School District’s efforts to silence oversight committee Chairman Quincy Hocutt, who questioned expenses for legal fees from a prior $350 million bond measure.
The school board on Thursday ousted Hocutt after accusing him of violating the district’s ethics policy in his relentless pursuit of perceived financial missteps and his opposition to an upcoming schools-related ballot measure. Specifically, the district said Hocutt stepped out of line when he penned a ballot argument opposing the city’s Measure J on the Nov. 6 ballot.
Hocutt acknowledges he has ruffled feathers because of his close scrutiny of district financials and his tendency to ask tough questions. “I think it’s important that districts listen to those questions and take some actions,” he said.
For example, he said, the oversight committee has suggested that the district publish construction status reports so residents know how the projects funded by bond proceeds are progressing.
“They weren’t even telling the public what’s going on with the (construction). Nobody knew. To me, that’s not transparent,” said Hocutt, who presided over a committee meeting Sept. 19 even though the district tried to cancel it and five of the panel’s 10 members did not show up.
Stifling oversight committees
Michael Turnipseed, current president of the California League of Bond Oversight Committees, said it’s not unusual for bond oversight committee members to be removed, as Pasadena Unified did with Hocutt.
“Sometimes people get pretty aggressive because they see something they don’t think is right,” Turnipseed said. “The vast majority of the time, the district thinks anybody who questions them is a troublemaker.”
And if committees ask too many questions, said Marinovich, Turnipseed’s predecessor, school boards can find ways to thwart them.
“If the committee does get active,” he said, “they frustrate them, they disband them, they stifle them.”
Some school boards, he said, have forbidden committees from asking for information or incorrectly told them they can’t discuss the committee’s business under the state’s open meetings law, the Ralph M. Brown Act.
Indeed, when a previous chairman of Pasadena Unified’s oversight committee also raised concerns last year over what he described as “clearly illegal” spending of bond proceeds on legal fees, district officials disputed that notion and refused to turn over records. The committee then resorted to filing public record requests.
But even if committees do spot problems, there’s little they can do.
“They have no legal power to enforce anything,” said Earl De Vries, who has been opposing bond measures in the Ontario-Montclair School District, Chaffey Joint Union High School District and Chaffey College for two decades. “Any time you say ‘oversight,’ you’d think they have some power, a rubber stamp, ‘yes,’ ‘no,’ ‘maybe so.’ “
In Montebello, committee stands down
On the flip side of disputes involving aggressive oversight committees are committees that simply fail to carry out their statutory duties.
In 2017, state auditors excoriated the Montebello Unified School District for a series of management blunders, including its failure to oversee expenses funded by bond proceeds. A bond oversight committee that was required to meet annually did not meet once from October 2013 to March 2017, putting millions of dollars in bond proceeds at “risk of abuse,” a state audit said.
Auditors said the district used bond money to pay administrator salaries and buy more than 150 computers that it left, unopened, in a warehouse.
In contrast with a state audit, critics say audits conducted by individual school districts often are not useful.
“They’re very focused on a ‘clean audit.’ But the audits are very narrow on what they’re focused on,” Marinovich said.
Such audits, he said, often only explore the simplest questions: Were funds spent on capital projects? Were they authorized by voters? Did the district inappropriately spend bond funds on operating expenses? That’s not enough to tell voters that their money is being spent correctly, he said. “You need an expanded performance audit.”
Tokofsky, the former LAUSD board member, said: “I’m guessing if you gathered 20 of these audits and gave them to a high-grade professional auditor, they’d probably say they meet the minimum standard of the Prop. 39 requirements. I don’t think any of them would be submitted for Audit of the Year.”
Nonspecific ballot measures
Among the challenges for citizen oversight committees is ensuring bond proceeds are spent in a manner consistent with what was approved by voters. Increasingly, however, ballot measures are not specific in what construction projects are planned.
“The lawyers have gotten it down to the point where they never put a specific list of projects in the ballot measure,” said Richard Michael, a retired IT worker from the Pomona area who operates the Big Bad Bonds website.
“It just says ‘improve the quality of education, get students ready for 21st-century careers and college,’ ” Michael said. “There will be things that they get that are certainly good, like new science classrooms, but they’ll also get items like new theaters or sports stadiums, things that aren’t related to the quality of education, but are good for attracting people to their districts.”
Indeed, that seems to have happened in Hermosa Beach, said Prassas, the resident who questions the independence of the oversight committee in her town of less than 20,000 people.
Although she notes she is “a liberal Democrat” who has “no problem spending money,” Prassas is highly critical of how the tiny Hermosa Beach City Elementary School District has spent some of the proceeds from $72.9 million in bond measures passed in 2002 and 2016.
When it proposed the 2002 measure seeking approval of $13.9 million in bonds, she said, the district said it needed to build 11 new classrooms.
“They ended up spending $11 million for a gymnasium and two classrooms that replaced two other classrooms and didn’t add anything,” she said.
It was legal — and therefore outside the purview of the oversight committee — for the district to build the gym with the bond money, instead of the other nine classrooms, because it was on a list of projects the money might be spent on, Prassas said.
In the Cypress School District in Orange County, one critic similarly said district officials have marketed their bonds in misleading fashion.
“The school district listed nine schools to be renovated,” said George Pardon, a former vice president for administration and finance at Cal State Dominguez Hills and Cal State Los Angeles.
Instead, the district closed three of the nine schools and replaced the classroom space with modular classrooms on other campuses. The district then exchanged two previously closed schools for apartment complexes, from which it draws ongoing revenue.
“If every school district engaged in this type of action, they could add modulars to some campuses for the purpose of creating ‘surplus’ property to exchange it for income property to augment their operating budgets,” Pardon wrote in an email. “This is terrible fiscal policy by passing off high-cost debt costs to future generations in exchange for a small return on investment so they don’t have to (do) their budgets.”
Solving the problems
Tokofsky, who served on the LAUSD board from 1995 to 2007, believes it’s time to revise the bond oversight committee process. Currently, he said, the committees “are missing a lot of stuff.”
“There’s no question that in the next decade or less we need to revisit the bond oversight language and toughen it up,” he said. “It’s still good government, it’s still oversight, it’s all good things. But at 55 percent, and with people’s proclivity to vote for schools no matter what, it needs more reform. It needs strengthening.”
He’d like to see the vote percentage required to approve a school bond increased to 60 percent.
“I think school districts need facilities, and I’m not anti-tax,” said Michael, who operates the school bond watchdog website. “If they followed the law, and had an intention to follow the law, it could be done without changing any law. Right now they’re not following any of the laws.”
Clarifying the mission of the oversight committees also might help, some suggest.
“What I would add, if I was in charge, was some transparency to the process of selecting people and make them disclose what their personal interests are,” said Chen, the Manhattan Beach teachers union rep. “I would create a process that’s more transparent and reliable and make sure there’s an ability for them to communicate to the public when there’s some discord.”
Marinovich, the former head of the California League of Bond Oversight Committees,.would like to see an expanded oversight audit, funded by bond revenue, and more training for committee members.
“Committee members need to have structured training, so they understand their role and function and especially the history,” he said.
But in the end, Marinovich said, the public and news media need to do a better job of holding districts accountable.
“When they go back to the voters, they should be asked, ‘What’s your accountability, how has that been going?’ “
Staff Writers Nikie Johnson and Chris Lindahl contributed to this article.