Is the Saugus Union School District misusing construction bonds? Jason Gibbs wants to make sure the answer is no.
Gibbs, a member of the district’s nine-person citizens oversight committee, wonders if an expenditure in the Measure EE building fund audit called “salaries and benefits” violates the provision that school construction bonds are not to be used for such things.
“We’re concerned only in the sense that it’s a number on a piece of paper, and we want to see where it’s coming from,” Gibbs said.
The board followed suit at its last meeting and asked for the same additional information.
At issue is an expenditure in the audit for the year ending June 30, 2017 for $263,863 in salaries and benefits. Under state law, specifically Propositions 13 (1978) and 39 (2000), school bonds may not be used for “teacher and administrator salaries and other school operating expenses.”
The actual text on page 1 of the Measure EE bond, which voters approved in 2014, says something slightly different: The proceeds can only be used for “construction, reconstruction, rehabilitation or replacement of school facilities, including the furnishing and equipping of school facilities … and not for any other purpose, including teacher and administrator salaries and any other school non-construction operating expenses.”
Yet, on page 11 the text differs slightly. It says that “teacher and non-construction related administrator salaries and other non-construction related operating expenses” are prohibited.
It is this difference, argues Richard Michael, who runs the website Big Bad Bonds, that is so critical.
“This is a tactic to give districts reliable cover to do what they’re doing,” he said. “This is what they try to do to siphon off hundreds of millions of dollars in bond money. In every district, my anecdotal information is that between 10 and 20 percent of funds are reimbursed back to districts in salaries, which is illegal.”
Michael referred to a three-page letter Saugus District Assistant Superintendent of Business Services Nick Heinlein received from attorney Brian W. Smith of the Irvine-based law firm Atkinson, Andelson, Loya, Rudd & Romo. In it, Smith addressed the differences in the wording and pointed to a 2004 opinion by then state Attorney General Bill Lockyer that said construction-related administrative salaries were within the law. This is the same position oversight committee chair Collin Schoenfeld took at the district board meeting.
Michael countered in a written response that since Smith represents the district and not the oversight committee, “the letter is just a thinly veiled effort to confuse the (oversight committee) and impose the district’s agenda on it.”
Michael wrote that Smith doesn’t address “the prohibition against bond proceeds being spent on salaries in both the California Constitution and the Strict Accountability in Local School Construction Bonds Act of 2000 (Proposition 39).”
Heinlein saw a copy of Michael’s report and didn’t want to comment because, as he said in an email, “(I)t seems like an opinion piece and we are all entitled to our opinions.”
He did, however, write that he calculated the percentage of salaries and benefits as 4.47 percent of the total expenditures.
“I just wish it was easier to explain that bonds often bring with them a whole huge list of projects,” he wrote. “These new projects bring with them a new workload that, typically, existing staff simply cannot add to their already long list of duties. Some districts hire construction management firms and other consultants to do the work, others create positions and add staff in hopes to avoid the high cost of consultants, but most often, it’s a mix of consultants and staff.”
Heinlein said that the district is paying district personnel to oversee the project, not a management company.
“I wonder what people think school districts are supposed to do once the bond is passed,” he said. “Who is supposed to do all these projects? … The whole thing is very confusing to me. Bond projects are a long-term plan, and these folks are paid out of the bond funds. We’re hiring people. We’re not supplanting funds. It’s not for anything else.”
That’s what Gibbs wants to ensure.
“I believe it’s our job to act independently and check to see if they’re doing a good job,” he said.