 |
| 4LAKids: Sunday, Aug 30, 2009 |  | | | In This Issue: | | • | HEADS HE WINS/TAILS KIDS LOSE: Two sides of a bad story | | | • | CALIFORNIANS LOSE $1 BILLION FROM UNCONSTITUTIONAL BOND SALES | | | • | SCHOOL CHOICE SHAPING UP AS L.A. NEXT CIVIL RIGHTS FIGHT | | | • | HIGHLIGHTS, LOWLIGHTS & THE NEWS THAT DOESN'T FIT: The Rest of the Stories from Other Sources | | | • | What can YOU do? | |
Featured Links: | | | | "First God created idiots; that was for practice.
Then He created school boards." - Mark Twain
THE ENDLESS MISADVENTURE THAT IS LAUSD/BEAUDRY and the summer festival that is politics in LA never cease to amaze. The intersection where the twain meet is often a train wreck.
• LAUSD schools are doing better in test scores – if test scores are a way of determining anything worth determining.
• We are doing better than charters and the mayor's partnership if one is driven by that data.
But reality and perception are two sides of the political coin – and the media is message, not messenger. Educators know that test scores are no way of determining much more than data points in time. Politicians in the limited universe of DC and Sacramento and in Room 303 at city hall put great value in test scores. Value = Money. Money = Power.
Parents know this and kids are figuring it out. Nobody will ever ask how you or your child did in the CST; that printout isn't going to go up on the fridge door. College admissions officers and human resources directors will not inquire about student scores on standards-aligned achievement tests . They look at aptitude tests like the SAT - tests that measure how well one learns, not what one's learned. And they look at grades – where an individual assesses another individual's ability and progress over time.
4LAKIDS GIVES THE MAYOR HIGH MARKS IN POLITICAL HARDBALL IN TAKING OVER THE DISTRICT LAST WEEK – but his work habits and cooperation grades leave much to be desired. His antics – bordering on bullying - in occupying the superintendent's chair in the boardroom last Tuesday afternoon after the vote (but while the board was in session) probably merits a visit with the dean.
There will be challenges to the board's action, his board's action. There is talk of a civil rights lawsuit. A legal challenge if not a work-action from labor. Questions whether the board can so easily undo the expressed will of the voters who voted for Prop BB and Measures K, R, Y & Q. Constitutional challenges await over whether schools and taxpayers' money can be distributed outside the public schools system.
See CAL CONSTITUTION - ART IX §6 3, also §8, following
The truth is that charter or other outside operators operating neighborhood public schools will not be operating charter schools under the charter law – it's a whole new hybrid - invented to fill a need that doesn't exist.
MEANWHILE, ACROSS THE FREEWAY, the mayor's key staff seems to be finding employment and themselves elsewhere. Chief Bratton. The fire chief. The mayor's chief of staff and his chief policy advisor. The new budget director is a policy person, not a finance person. And the feds seem to be closing in on the SEIU, The Voter Project, "M.C." and alleged shenanigans at city hall. Stay tuned.
CHOICE IS A POLARIZING WORD IN THE POLITICAL VERNACULAR. To progressives 'a woman's right to choose' is sacrosanct; to conservatives it's anathema. 'School Choice' used to mean vouchers – with the right enthusiastic and the left headed for the courts. More recently school choice was about a parent's right under No Child Left Behind to leave a poorly performing school in favor of a better one. LAUSD never supported this – but also never acted to close, convert or transform chronically underperforming (i.e.: 'failing') schools.
A succession of LAUSD superintendents and boards of education opted to wait out/outwait NCLB. Now NCLB, not reauthorized, seemingly twists in the wind. But it will return under another name; most of its provisions and certainly its knee-jerk dependence on standardized test scores will survive …filtered by Arne Duncan and Barack Obama's conception that Chicago is the paradigm of urban education reform. This (mis)conception echoes that of George W. Bush and his Secretaries of Ed, Rod Paige & Margaret Spellings -- who (mis)thought that Houston had the answers. (In one sense, they did – and they apparently shared them with the test takers before the test!)
THE CHOICE OFFERED UNDER MS. FLORES AGUILAR'S "PUBLIC SCHOOL CHOICE" RESOLUTION IS ILLUSORY. The charter school model (parents choose their child's school) is incompatible with the neighborhood school model (all students attend their local school per attendance catchment areas). The lesson of the Belmont Zone of Choice (open enrollment among a variety of schools within a greater geographic area) has apparently been lost completely. The YFA resolution commits the District to continue attendance area boundaries - if anything perpetuating lack-of-choice.
The Board of Ed chooses between operators who choose to apply. Yes, the resolution promises to involve parents and teachers and the community in the decision making process - but their role is advisory. The superintendent RECOMMENDS; the Board of Ed DECIDES. Whose 'Choice' is that? How many 6 to 1 votes will it take before we realize what's going on?
I suppose operators get to choose whether to honor collective bargaining agreements; under some interpretations of the plan they may get to choose which education standards and provisions of the Ed Code they choose to observe.
Bill Ring, in last week's 4LAKids wrote: "…. true public school choice means I have a choice as a parent as to the school my child will attend."
"Me."
"I choose."
(Bill wasn't allowed into the Boardroom Tuesday. There wasn't room for him or his radical ideas.)
FINALLY, NCLB and its antecedent and successor, the once-and-future Elementary and Secondary Education Act (ESEA) applies only to Title One Schools, schools at 40% or more enrollment below the federal poverty line. If a school is brave or well funded or Sarah Palin libertarian enough it can keep the Feds at bay by turning down their filthy lucre. But here's the rub (and I apologize in advance for qualifying 'unique'): LAUSD and California are almost unique in putting high schools and into Title One. Most school districts nationwide do not apply for Title One for high schools, 77% of Title One goes to preschool and K-6 programs, middle schools/intermediate schools/junior highs make up most of the rest.
While LAUSD and California going after TI brings added funding to the District it also makes our schools subject to outside/all-knowing federal scrutiny - and the mandate of PI status. The standards in NCLB were not intended to apply to high schools – they may actually be unachievable because of this!
My argument here isn't that the bar is too high – my argument is that it's the wrong bar!
And it subjects LAUSD and California schools and teachers and students to standards no one else chose – (that word again) to meet – administered by the same wonderful folks who thought that Houston was a miracle and now think Chicago… or New York …or Denver… (paradigms held up in the YFA resolution) hold the key to the golden door.
"But I'm just a soul whose intentions are good.
Oh Lord; please don't let me be misunderstood."
¡Onward/Hasta adelante!
-smf
PS: The small print from the lawyers - From the YFA Resolution:
Resolved further, That the Superintendent will work with the Office of General Counsel to ensure compliance with state and federal laws and regulations, comprehensive labor agreements, the Modified Consent Decree and other court orders, and that innovation, reorganization and restructuring of schools must be accomplished in accordance with these mandates;
(smf: This correctly identifies that state law takes precedent and mandates that the Superintendent and General Counsel must ensure compliance. I do not see how Counsel can ensure this in light of the following and the precedence of Mendoza v. State of California [aka LAUSD v. Villaraigosa] 07 S.O.S. 1900)
CALIFORNIA CONSTITUTION ARTICLE IX EDUCATION
§6. 3 - No school or college or any other part of the Public School System shall be, directly or indirectly, transferred from the Public School System or placed under the jurisdiction of any authority other than one included within the Public School System.
(smf: Art 9 §8 1's language is stronger and more limiting - "or any school not under the exclusive control of the officers of the public schools" 'Exclusive control' is pretty specific. It would seem to me that the action forbidden to the legislature under Mendoza v. Villaraigosa in Justice Croskey's opinion: "nor may it transfer authority over part of the school system to entities outside of the public school system" would extend to the LAUSD Board.)
§8. No public money shall ever be appropriated for the support of any sectarian or denominational school, or any school not under the exclusive control of the officers of the public schools; nor shall any sectarian or denominational doctrine be taught, or instruction thereon be permitted, directly or indirectly, in any of the common schools of this State.
HEADS HE WINS/TAILS KIDS LOSE: Two sides of a bad story
▲SCHOOLS CHOICE VOTE REPRESENTS NEW START FOR LOS ANGELES SCHOOLS
LA Daily News Editorial
27 August -- THE Los Angeles Unified School District has taken many wrong turns over the last few decades. Tuesday, finally, it took a right turn toward what could lead to an education renaissance in Los Angeles.
Surprisingly (!)* , nearly all of the members of the LAUSD's Board of Education voted to approve a controversial - and startling innovative - proposal by board Vice President Yolie Flores Aguilar to allow outside operators to compete with the district for the right to run 50 new schools and many underperforming ones.
Why this is surprising is because in recent years, the school board has lacked any real backbone when it came to adopting honest reform measures. This was due mainly to the power of the political unions and the L.A. establishment, hoping to squash any action that might limit their powers, and the near complete disconnection of the community from the schools.
We applaud the school board members for having the courage to stand up to opposition. This measure puts educational choices back in the hands of the community, which is where they always belonged.
But while this is a hopeful development, it is hardly a panacea for local education. Charter schools are not the solution to, but a symptom of the long illness of public education in Los Angeles and California.
Nor does the resolution represent a takeover by charter schools, as the opposition has characterized it. Certainly, getting a chance to compete with a bloated and clumsy public school district could be a boon for charter school operator who don't have an enormous and convoluted bureaucracy and angry special interests on its back.
However, it's fair to say that charter schools were already in the process of taking over schools. Decades of failing to address parent concerns and deal with falling student achievement had prompted an exodus of students from traditional schools to charters and private schools. Over the last five years, at least, LAUSD has started each school year with significantly fewer students than the previous year - and not all of those were dropouts.
In other words, an unsanctioned, but purely organic takeover was - and is - already in the works.
Indeed, the schools choice plan opens the doors to anyone with a good academic plan - including and especially LAUSD. Hopefully, this will prompt the district to rise to the challenge to improve education. Competition in any arena is healthy and productive. Any student can tell you that.
This could be a new start not only for local education, but for LAUSD itself. There's no reason that the nation's second largest school district can't be the winner in an education competition. And if it can't, then it should get out of the way.
* smf: Surprisingly? The LADN is surprised that the best school board money can buy voted the way they were told?
______________________________________________________
▼L.A. MAYOR'S SCHOOL VICTORY AN EMPTY ONE
LA Daily News Editorial by Earl Ofari Hutchinson | Daily News Op-Ed
27 August -- IF anyone thought that Mayor Antonio Villaraigosa had given up on his long-standing delusion that he can run schools better than anyone else, the L.A. Board of Education's decision on Tuesday to hand over anywhere from 50 to 250 schools to any and all comers should slap them back to reality. Many of those comers will almost certainly be those that meet with the mayor's approval.
The schools have always been the political jewel in the crown for Villaraigosa. He believes that transforming Los Angeles Unified School District from the national poster district for chronically underserved schools, miserable test scores and skyhigh dropout rates into a model of student achievement, excellence and teacher professionalism will enshrine his political legacy.
During his first term, Villaraigosa wasted months and squandered millions of dollars in legal wrangles trying to grab control of the schools. The courts told the mayor no dice. But the intrepid Villaraigosa was undaunted by the legal smackdown. He handpicked and bankrolled a slew of candidates to get a near majority on the school board.
His school board allies dutifully turned a handful of terribly performing schools over to the mayor's stewardship. But this only fed Villaraigosa's still-burning desire to be the LAUSD's white knight. Tuesday's decision by the board to allow charter schools and other school operators to bid for the right to run new and underperforming schools gave him a bigger piece of the school action.
The problem with all this is that there's little evidence that charter schools under Villaraigosa's watch, or anyone else's, can attain the miracle of turning low-grade public schools around.
The Stanford University's Center for Research report on charter school performance released in June found that more charter schools performed at a subpar level than many traditional public schools. Even more damning, the study found that students in predominantly black and Hispanic charter schools on average did worse than black and Hispanic students in regular public schools. The one arguable exception was that the poorest students and those with limited English skills did better in charter schools.
But even this notable improvement had more to do with the abysmal failure of the public schools they came from to provide resources, quality teachers and the mandate of full parent involvement. Also, the best of the crop of charter schools shine because they have the luxury to cherrypick the best and brightest of the students from the poorest schools. And they have myriad ways to get rid of the students who are the least academically desirable.
Handing over dozens of public schools to individuals and interest groups with questionable educational experience and unproven track records - not to mention with minimal controls over who and how they hire and fire - carries grave risks. L.A. teachers union officials have screamed at the top of their lungs that teachers will be the biggest losers if charter schools become the norm in L.A. Villaraigosa and charter school supporters slough off the criticism as a case of a union desperately trying to maintain an overpaid, overprotected and outdated teacher work force.
The union's argument, though, ignores two issues about charter schools. One, that charter schools miss as often, or more, than they hit in ratcheting up student achievement levels. Second, it ignores the fact that the L.A, schools have bombed in large part because of poverty,
immigration, language difficulties and gross underfunding.
The mayor's cheerleading and orchestration of his school board allies and sign-waving parents groups to get an even bigger hand in bossing the L.A. schools paid off with a victory. But given Villaraigosa's yet-to-be-proven remake of the L.A. schools he already runs, the victory will be prove to be pyrrhic one.
• Earl Ofari Hutchinson is an author, political analyst and contributor to the Daily News' Friendly Fire blog. His radio show can be heard on KTYM 1460-AM.
CALIFORNIANS LOSE $1 BILLION FROM UNCONSTITUTIONAL BOND SALES
By David Dietz and Karen Gullo | Bloomberg.com
Aug. 26 (Bloomberg) -- With the temperature reaching 100 degrees Fahrenheit on an April afternoon, Alan Polee peers through a window into the locked-up gym at Vanguard Middle School in Compton, California. The cream-colored building is shut because of a decaying roof.
At Vanguard, 15 miles south of downtown Los Angeles, children play outdoors, no matter the temperature, on rutted fields and basketball courts with broken backboards.
“We shouldn’t have these conditions in this day and age,” says Polee, 46, a Los Angeles city truck driver who has sent five children to the Compton schools. “You wonder what’s going on.”
The Compton Unified School District could have repaired the gym. In 2006, the district refinanced $50.8 million in taxpayer- approved bonds, in a move its bankers said would save the district money. In the process, officials took out $6.5 million in cash, which they said would be used for school construction and repairs.
School board member Micah Ali says Vanguard’s gym and rundown facilities at other schools weren’t fixed. A Compton audit couldn’t track how school construction money was spent. In the meantime, total debt owed by taxpayers until 2022, instead of being reduced, has gone up by 15 percent.
Throughout California, the largest and most fiscally troubled state in the U.S., about 200 school districts have done similar refinancing deals -- all of which have been condemned by Attorney General and former Governor Jerry Brown as unconstitutional.
BAN ON DEALS
The Compton school board didn’t seek voter approval for the deal. From 2002 to 2007, California school districts collected a total of $1 billion for construction during a bond refinancing spree set off by falling interest rates.
None of these deals should have been done, Brown says. The constitution bans school districts from taking on additional debt in a refinancing of taxpayer-approved bonds without a public vote.
In every case, the prohibited transactions added to school district debt and increased property taxes for at least the next decade, bond records show. Banks pitched the deals to schools on the premise that refinancing would save taxpayers money and provide extra cash.
The deals were dominated by UBS AG and Piper Jaffray Cos., which collected fees up to four times the U.S. average for bond sales, public records show.
“This was a hell of a cute scheme,” says Lee Buffington, treasurer of San Mateo County, just south of San Francisco. “These guys had a gold mine going and thought nobody was watching.”
FINANCING FRILLS
Some districts spent millions of dollars from refinancing not to upgrade classrooms but to purchase administration buildings and build sports stadiums.
Those decisions overrode requests from school board members and parents to support more urgent needs -- such as fixing leaky roofs, replacing faulty electrical systems, modernizing science labs and increasing security at schools where student violence had flared.
The Moreno Valley Unified School District, a 39-school system in Southern California, used 90 percent of its $6.5 million in cash to build a 3,000-seat outdoor stadium equipped with a wireless videotaping system for football games.
Librada Murillo, a mother of three children in the district, says school officials didn’t ask parents for advice. She blames board members for building a stadium when schools needed new bathrooms and security systems.
“We have a right to know this information,” she told the school board in 2007. “What the school board has been doing is not legal.”
NO-BID DEALS
Most districts arranged refinancings without competitive bidding, bond records show. The added taxpayer burdens come as communities across the country try to dig themselves out of debt quagmires brought on by the purchase of exotic financial contracts.
The U.S. Justice Department for the past two years has been conducting the largest-ever criminal investigation of public finance in the nation.
Jefferson County, Alabama, the state’s most populous county, has been on the brink of bankruptcy for more than a year, unable to meet payments on $3 billion in interest-rate swaps sold by a group of banks headed by JPMorgan Chase & Co. JPMorgan declined to comment.
California, where state and local governing bodies issue more bonds than anywhere in the U.S. outside the federal government, has already had its share of debt fiascoes. In 1994, Orange County, home of Disneyland, went bankrupt in what still stands as the biggest municipal failure in U.S. history.
FISCAL MESS
Now, the state is trying to escape from its own fiscal mess. Governor Arnold Schwarzenegger in July closed a $24 billion budget gap with cuts ranging from trims in child welfare services to furloughs for state employees. He faces more reductions unless the economy recovers.
Banks told California school officials that refinancing made sense because the new debt would cost less than the old bonds, according to district documents and tape recordings of school board meetings. Such promises are misleading, says San Mateo Treasurer Buffington.
If there are any savings, they typically wouldn’t occur for 15 to 20 years. In many cases, a district replaced a 23-year general obligation bond -- voter-approved debt backed by property taxes -- with debt of 15 to 20 years.
State law requires lower total debt when school districts refinance old taxpayer-approved bonds. To accomplish this, banks sell bonds at lower interest rates compared with old ones, and for shorter terms.
TAX HIKES
That decreases debt compared with the old bonds because property owners pay less interest over a shorter period of time.
However, that type of financing leads to immediate property tax increases, in many cases for 20 years, because annual payments to bondholders are larger than they had been with the longer-term bonds, transaction records show. Once the refinancing is paid off, if tax rates don’t rise, property owners would see lower real estate taxes.
Attorney General Brown said in a January legal opinion that a possible benefit to taxpayers that could come in about two decades is “irrelevant.” What counts, he said, is that taxpayers have been improperly hit with higher taxes now.
For the Compton deal, county finance officials analyzed the amount property owners would have to pay bondholders after the 2006 school refinancing. In the three years following the transaction, the finance office doubled Compton’s real estate tax rate on those bonds.
MORE DECLINES
The economic meltdown that began in 2007 may add to taxpayer burdens of paying off cash-out refinancings. The state Legislative Analyst’s Office has forecast a 3.5 percent decline in property values in California in the next year, which might force counties to increase tax rates.
Attorney General Brown wrote in his opinion that school districts are prohibited from using a refinancing “for any purpose other than refunding the district’s targeted indebtedness.” Brown hasn’t taken any actions against banks or school districts. He said taxpayers could file lawsuits in their communities.
Brown, 71, is campaigning to be elected governor again after holding the office from 1975 to 1983.
LOST SAVINGS
San Mateo Treasurer Buffington says millions of dollars in new debt owed by California taxpayers could have been avoided if Brown or his predecessor Bill Lockyer had moved faster on complaints and halted cash-out refinancings.
Scott Gerber, Brown’s spokesman, says the legal opinion stopped the practice.
“Individual school districts may still take action to address past wrongdoing related to the practice,” Gerber says. “If evidence of widespread wrong-doing emerges, the Attorney General’s office will look into it and determine the most appropriate course of action.”
Lockyer declined to comment.
The rewards to banks for managing cash-out deals trickled down to lawyers and insurers. Total fees paid by schools -- as a percentage of the cash they received -- reached 41 percent in the Acalanes Union High School District, a suburban system east of San Francisco. Fees came to 82 percent in the Ravenswood City School District near Silicon Valley.
In the San Mateo Union High School District, 20 miles (32 kilometers) south of San Francisco, fees totaled 117 percent of the $500,000 the school system got in cash on a $56 million refinancing in 2004. Advisers led by UBS arranged the financing and took $582,747 for their efforts.
‘VERY ANGRY’
“Fees like that make you sad and very angry,” says Christopher Taylor, former executive director of the Municipal Securities Rulemaking Board, an industry-tied regulator in Alexandria, Virginia. “It’s unbelievable greed.”
The public doesn’t know that cash-out refinancings increase tax burdens because of lax notice by school officials, a local government oversight group said last year.
The San Mateo County Civil Grand Jury, which makes recommendations about government improvements, found that student needs were cheated because fees ate up substantial portions of cash proceeds. The jury criticized school districts for giving insufficient notice to the public.
“The main concern was about the notification of voters and the transparency of the process,” says jury foreperson Virginia Chang Kiraly. “Taxpayers wound up on the hook for more than they voted for.”
‘VALID AND BINDING’
UBS and Piper Jaffray teamed up on at least 32 of the 50 largest refinancing deals in 2004 and 2005 with a single bond lawyer, David Casnocha of San Francisco-based Stradling Yocca Carlson & Rauth. He wrote legal opinions vouching for deals from 2002 to 2007 that brought districts cash windfalls of up to $30 million.
“The bonds constitute valid and binding general obligations,” Casnocha wrote in legal opinions that backed the sale of cash-out deals. Casnocha, UBS and Piper Jaffray declined to comment.
In Compton, no school board member asked for details when a cash-out refinancing came up on a meeting agenda in March 2006.
Compton, a community of 96,000, is struggling to improve schools and public safety. Over a four-year period that ended in 2008, half of Compton’s high school students dropped out, more than twice the state average.
BARRED WINDOWS
While the city homicide rate in 2008 was the lowest in 25 years, Compton battles gang violence that’s been glorified in rap songs about the community. Compton streets are lined with a mix of palm trees and check-cashing outlets, fast food chains and liquor stores with barred windows.
In the early months of 2006, the Compton school system ran into a financial fix. It had nearly exhausted a $200 million construction fund, with many schools still in need of repair. RBC Capital Markets Corp., which had handled four previous Compton debt sales, came up with an answer: refinance old debt and deliver $6.5 million in upfront cash.
New York-based RBC, part of Toronto-based Royal Bank of Canada, managed the transaction. The lead banker, Los Angeles- based managing director Roderick Carter, 54, had experience in such deals. In 2005, he handled four refinancings, of $46.8 million to $75.7 million, that provided districts with a total of $20 million in cash, according to bond documents.
The transactions earned RBC $1.6 million, the records show. At an evening meeting in Compton in March 2006, the seven-member school board took a total of five minutes to approve the refinancing, a videotape of the session shows.
‘IN THEIR THROATS’
Just one trustee, Mae Thomas, a financial analyst at a Los Angeles hospital, objected among the six voting members. She said the community hadn’t been consulted about what to do with the $6.5 million.
“Why don’t we have hearings so the community can have input on these bonds?” Thomas asked. “We sit up here and shove it in their throats.”
The new bonds shortened the maturity of the district’s debt by seven years, to 2022 from 2029. The 10-year interest rate on the new bonds dropped to 4.66 percent from 5.25 percent. Still total debt increased to $58.2 million, from $50.8 million. As a result, county officials set higher tax rates.
Compton property owners are being billed a total of $3.7 million for 2009, 46 percent more than the $2.5 million they would have faced for the old bonds, district records show. If the school district doesn’t borrow more money, the public could see a drop in real estate tax bills in 2022, when the new bonds are paid off.
‘SAVES MONEY’
Compton board members didn’t delve into the workings of the refinancing or ask about fees, which totaled $912,126. RBC collected $749,588. David Huff, a Los Angeles lawyer who gives legal advice to the district, recommended that the board approve the transaction.
“This is sound fiscal management,” he said at the board meeting. “As your counsel, I cannot think of a reason why not to do it. It saves money.”
In an e-mail, Huff stands by his statement at the 2006 board meeting. He says taxpayers will save in the long run. Former School Superintendent Jesse Gonzales and former district business manager Teresa Santamaria, who backed the refinancing, declined to comment.
RBC says its fees on the Compton refinancing met market levels for bond sales.
‘MULTIPLE LAW FIRMS’
“Refinancings were completed at client direction by virtually every major underwriting firm, with written legal opinions from multiple law firms affirming their compliance with state law,” spokesman Kevin Foster says.
At the time Compton was scrambling to rescue its construction program, the district moved into a new $10 million administration building. It was funded by lease revenue arranged through the Los Angeles County Schools Pooled Financing Program. When board members attend meetings, they sit in high-backed burgundy leather chairs that cost $750 each, public records show.
While school districts such as Compton did just a single refinancing, the Acalanes district in the San Francisco Bay area was hungrier. The school board used the technique four times in 2004 and 2005. Acalanes, a district populated mostly by white- collar professionals, collected cash totaling $3.8 million.
Its bank, Piper Jaffray, and bond lawyer, Casnocha, assured the district that the transactions violated no laws, according to bond documents.
INCREASED DEBT
In the largest sale in 2005, Acalanes refinanced $46.4 million in 2002 bonds. Yields on the 10-year portion of the new 20-year bonds dropped to 4.45 percent, from 5.62 percent, according to data compiled by Bloomberg. Still, the debt increased to $48.7 million after the district took cash of $1.2 million and paid costs of $663,048, or 55 percent of the new money.
Piper Jaffray collected $450,866, a fee equal to $10 for each $1,000 issued, about three times the national average. The new 20-year bonds required a jump in annual payments to $2.2 million a year from $1.2 million in the first two years of the debt, beginning in 2005, bond documents show.
County tax officials more than tripled the tax rate on the refinancing in the first two years after the transaction. The public could pay out less after 20 years, when the bonds are paid off, if the county holds property tax rates steady.
In the four Acalanes sales, the district spent an average of 41 percent of its upfront cash -- $1.6 million -- on fees, bond documents show.
‘Absolutely Ludicrous’
“That’s absolutely ludicrous,” says Ken Hambrick, chairman of the Alliance of Contra Costa Taxpayers, a county organization that watches local government spending. “No one was apparently aware of this.”
Christopher Learned, who handled all of the transactions as the district’s chief financial officer, declined to comment.
In Southern California, the Moreno Valley Unified School District needed improvements ranging from upgraded roofs to new security systems in 2006, according to school records.
Moreno Valley, a community 75 miles east of Los Angeles, has a violent crime rate that’s increased each year since 2005, according to Federal Bureau of Investigation statistics. In 2007, a student was shot and killed within a block of a city high school.
The district, with 35,000 students, decided on a refinancing for upgrades, which allowed it to get $6.5 million from Kansas City, Missouri-based bank George K. Baum & Co., records show.
School officials decided to use most of the cash from the transaction -- $5.8 million -- to build the new stadium at a district high school.
‘EXTREME VIOLENCE’
Chris Huhs, a former parent-teacher association president at a Moreno Valley school, says security and academic needs overrode the need for a sports stadium.
“Providing the high school with a stadium is ludicrous,” she told the board before it voted on the deal in 2007. “We have extreme violence at that school.”
During school deliberations about the deal, advisers told school officials that Attorney General Brown was considering the legality of cash-out refinancings. Moreno Valley’s lawyers, Newport Beach, California-based Bowie Arneson Wiles & Giannone, said Brown’s opinion wouldn’t jeopardize the debt.
“The bonds are valid, binding and enforceable,” the lawyers wrote.
The board approved the deal, refinancing $43 million in bonds issued in 2004. Three of the five board members backed it.
‘A LOOPHOLE’
“I felt it was a loophole,” says Victoria Baca, a trustee who balked. “You get free money without voter approval and without taxpayer knowledge? It’s crafty, and no one understands it.”
Robert Crank, head of business services at Moreno Valley Unified, says the district’s legal counsel approved the deal and taxpayers weren’t kept in the dark because all school board meetings are televised.
“We have funds in the pipeline to complete the other projects,” Crank says.
Moreno Valley homeowners today are paying $1 million more on the district’s debt compared with the original bonds, according to an analysis prepared for the district by Causey Demgen & Moore Inc., Denver-based financial consultants.
$1 MILLION MORE
Instead of owing just under $2 million in annual taxes, property owners are on the hook for $3 million, the firm found. The interest rate on a new 10-year bond is 3.91 percent, down from the 4.15 percent on the old debt, Bloomberg data show.
Property owners have to wait until 2029 to learn if the deal then decreases their taxes.
The board paid the bank and advisers fees totaling $725,104, which equaled about 11 percent of the upfront cash and $17 per $1,000 of bonds sold. Baum’s cut was $481,139, and the rest went to attorneys, credit-rating companies Standard & Poor’s and Fitch Ratings and bond insurers.
Charles Youtz, senior vice president and manager of Baum’s California public finance practice who worked with Moreno Valley on the deal, didn’t respond to messages seeking comment.
In Northern California, 15 miles from San Francisco, the 21-school San Mateo-Foster City Unified School District came up with a novel maneuver to raise construction cash from a refinancing in 2006.
OLD GROCERY STORE
The district, home of the headquarters of Franklin Resources Inc., manager of the Franklin and Templeton mutual funds, has a median home value of $469,200.
That’s more than twice the national average. The district moved its executive offices out of an old grocery store it was renting for $300,000 a year to a 34,000-square-foot (3,160- square-meter) building in Foster City, on San Francisco Bay.
San Francisco-based Orrick Herrington & Sutcliffe LLP, the nation’s leading legal adviser on municipal debt, had concluded that the cash-out financings of the type done by Acalanes and Compton were illegal, says John Hartenstein, a lawyer at the firm.
So the firm devised a technique to avoid a district’s direct receipt of cash. Working with school systems such as San Mateo-Foster City, Orrick created a public entity affiliated with a district, known as a joint powers authority, or JPA, to provide cash through a bond swap to use for school projects.
$30 MILLION MORE
In 2006, the San Mateo-Foster City district sold $76 million in bonds to refinance old debt. The so-called San Mateo School Facilities Financing Authority, created by Orrick, purchased the securities with money the authority raised from selling $83 million in revenue bonds.
The authority then provided the $5.7 million for the administration building and school repairs. Piper Jaffray collected $600,000 to underwrite the bond deal. Paying off the new bonds will cost taxpayers $30 million more by 2023 than it would have if the old debt hadn’t been refinanced.
The interest rate on a new 10-year bond is 3.8 percent, down from 5.1 percent on the debt it replaced. If the district issues no other debt before 2031, the deal would save taxpayers $3.1 million over 33 years.
“The district received an unqualified legal opinion from Orrick Herrington & Sutcliffe in regards to the bond issuance,” says Micaela Ochoa, chief business official at San Mateo-Foster City Unified.
‘SCHEME IS THE SAME’
In his January opinion, Brown said the JPA approach isn’t justified under the law. Such transactions violate California’s constitution and tax laws, the attorney general said.
“The JPA scheme is the same as a cash-out,” Brown said.
San Mateo Treasurer Buffington says he’s disturbed that advisers who supported the deals have collected extraordinarily high fees with impunity.
“I don’t think they should be allowed to just walk away,” he says.
Before California school districts succumb again to these kinds of transactions, officials need to better scrutinize bank pitches and taxpayer costs, says Robert Brooks, a finance professor at the University of Alabama.
“Issuers have to wake up to their fiduciary responsibility to manage the public money responsibly,” he says.
Polee, the truck driver in Compton, stands on a grime- crusted breezeway near the closed Vanguard gym. He compares the school’s condition to the new $10 million school administration building with leather seats.
“The community gets short shrift,” he says. “The bureaucrats live high on the hog.”
SCHOOL CHOICE SHAPING UP AS L.A. NEXT CIVIL RIGHTS FIGHT
by Betty Pleasant, Contributing Editor | L.A. Wave
Los Angeles school board member Marguerite LaMotte cast the lone dissenting vote Tuesday against the Public School Choice resolution approved by the board.
Thursday 27 August - As expected, Mayor Antonio Villaraigosa won the first round of the Rumble on Beaudry when the board of Los Angeles Unified School District voted Tuesday to effectively privatize the public school system.
Actually, Tuesday’s rumble was a three-card event as the school board tackled three highly controversial, viscerally charged issues that are pitting races against races, unions against bosses and property taxpayers against tax collectors ensconced in the temple of public office — all in the name of improving the quality of education delivered to LAUSD’s students.
This battle has been raging for six weeks and was precipitated by the John Ritter Elementary School’s Spanish-speaking only summer school, followed by the introduction of a school board resolution to give 50 brand new public schools to private operators, thus removing them from the control of the LAUSD, such as in the case with the Ritter School, and permitting Ritter School-type programming to spread throughout the district.
This thing has been boiling hot throughout the city. Sharp divides developed as African-Americans and Latinos met virtually around the clock in their respective communities on these issues. All Blacks and many Whites denounced the Ritter School situation; most Latinos and a handful of Blacks supported the “giveaway” resolution and all labor unions and most Whites opposed the handing off of public institutions to private entities — be they bona fide charter schools, politically connected private partnerships or anything else. For the record, the Ritter School is operated by Partnership for Los Angeles, an organization controlled by Villaraigosa.
In the ensuing weeks, sides switched back and forth, longtime allies fell out with one another, unusual Black folks were being called to the mayor’s office, side deals and threats were reportedly being made, every day you got a new name of someone you couldn’t trust, a myriad of amendments and changes to the resolutions were made, rejected, and made again and were still being made even as the board was taking its final vote.
After former school board and city council member Rita Walters and others spoke eloquently in support of the Ritter Resolution, the people won that first card when it was unanimously passed by the board. Formally called “A Resolution for Access and Equity for all Students in the School District,” the measure was authored by board members Marguerite LaMotte and Steven Zimmer and affirms the district’s insistence upon equity in all of its schools and establishes as policy a binding written agreement to that effect be included in every contract before any LAUSD school is given away to anybody.
The second card was a different story. Angry, raucous public comment went on for hours on the “giveaway” resolution, which was written by Villaraigosa-controlled board members Yolie Flores Aguilar, Monica Garcia and Richard Vladovic.
Public supporters of the resolution talked about how the schools are in such bad shape and how the quality of education being delivered is so low and how even though some improvement in the district’s schools have, indeed, been incremental over the past couple of years, the improvement is not occurring fast enough. They said bureaucracy-laden LAUSD does not operate with a sense of urgency when it comes to improving the quality of the education it delivers. The supporters said they wanted other entities to try their hand at educating the district’s students.
Opponents of the resolution attacked it on several fronts. They decried the fact that the resolution excluded the input and participation of long active parent groups, historic civil rights organizations, labor unions and other stakeholders in the operation of the public schools. They said the resolution, entitled, “Public School Choice: A New Way at LAUSD,” lacks accountability and they likened it to the catastrophic governmental deregulation of certain public utilities, cable TV businesses, public transportation and the banks.
Some opponents see the resolution as the catalyst that will cause us to fight the civil rights movement again, and former school board member and Assemblywoman Jackie Goldberg received a standing ovation when she angrily denounced the resolution as “a right-wing ploy to destroy urban schools.” Goldberg told the board members, “I know you’re not right-wing, but you’re carrying out their agenda.”
Goldberg said she participated in the creation of a quarter of a billion dollars in bond funds to build charter schools. “This resolution is a back-door attempt for them to get more.” She told the board: “If the charter schools have learned something you need to know, then you need to make it LAUSD policy. This resolution is the start of the destruction of the LAUSD.” In conclusion, she said: “You will be sued!”
She’s not the only one talking about suing the school board. Villaraigosa was stopped by the courts three years ago to the day when he first tried to take over the school district. Well aware that the mayor’s people on the board were prepared to vote in his favor again, the ACLU has been in meetings over the past few weeks with the African American Education Task Force about legal action to stop him again, and the labor unions went running to their lawyers after the board voted 6-1 to pass the resolution. LaMotte was the only dissenting vote.
Former School Superintendent David Brewer — the one responsible for the rise in student test scores and the decrease in school drop out rates — called me from Virginia Wednesday morning. Brewer, who was ousted by the mayor, had some unpleasant words to say about the passage of the resolution. “It was clearly political,” Brewer said. “Los Angeles is all about power and control and nothing about attaining the highest possible educational achievement of its students.”
Late in the afternoon — after all the protestors went home — the board turned to the third card on Tuesday’s fight. All of us who pay taxes lost that one. It dealt with the issuance of general obligation bonds under measures K, R and Y and it approved significant increases in our property taxes to pay for completion of 51 schools — the very schools the board just voted to give away!!
No, this ain’t over. This rumble has just begun.
HIGHLIGHTS, LOWLIGHTS & THE NEWS THAT DOESN'T FIT: The Rest of the Stories from Other Sources
LATE HIGH SCHOOL GRADS HAVE THEIR DAY
TERRY CAMPA, FORMER O'MELVENY ELEMENTARY SCHOOL PRINCIPAL DIES
New Report: LISTENING TO LATINAS – BARRIERS TO HIGH SCHOOL GRADUATION
REPORT URGES CALIFORNIA TO EASE COMMUNITY COLLEGE TRANSFER PROCESS
IN EDUCATION REFORM, SOME STATES RACE FROM THE BOTTOM: According to a report by the New Teacher Project, state laws have disqualified some states from winning Race to the Top money
¿OFF-LOAD? Homeschool blog gets it right in the least number of words: "..and the Los Angeles Unified School District [LAUSD] decided to off-load over 200 schools bought and paid for with tax dollars to applicants to operate as Charters."
ROONEY GOES TO PRISON: Ex-LAUSD administrator pleads out in molestation case
TOPANGA UNBUSED: Service May be Cancelled for Pali High, Paul Revere Service Reinstated
PLAN B/ROUND 1: The Mayor Has His Way – A New Way with LAUSD - By smf for 4LAKids
An invitation to a party most of us weren't invited to
REFORMING L.A.'s SCHOOLS: L.A. Unified's board took a major step forward in passing an initiative to open up the operation of new schools to competitive bidding.
LA Times Editorial
A LETTER TO THE BOARD OF ED FROM A PARENT WHOSE CHILD ATTENDS A SCHOOL IN MS. LAMOTTE'S DISTRICT AND RESIDES & VOTES IN MS. GALATZAN'S
Today in Sacramento: SCHOOL DAYS
RAW FEEDBACK FROM COMMUNITY MEETING IN LOCAL DISTRICT 3
THE RESOLUTION AS AMENDED, HOT OF THE PRESS: Public School Choice: A New Way at LAUSD, v.2.0
WHY SCHOOL CHOICE PLAN IS A BAD IDEA FOR OUR DISTRICT
OpEd in the Daily News By Robert D. Skeels
L.A. UNIFIED’S CHANCE FOR CHANGE: LA Times Editorial
LAUSD TO CONSIDER NEW SCHOOLS TO BE PRIVATELY RUN
KCBS – TV Online
GETTING PINKED: Waiting for the LAUSD Layoff Slip
By Cassandra McGrath | L.A. Weekly
What can YOU do?
• E-mail, call or write your school board member:
Yolie.Flores.Aguilar@lausd.net • 213-241-6383
Tamar.Galatzan@lausd.net • 213-241-6386
Monica.Garcia@lausd.net • 213-241-6180
Marguerite.LaMotte@lausd.net • 213-241-6382
Nury.Martinez@lausd.net • 213-241-6388
Richard.Vladovic@lausd.net • 213-241-6385
Steve.Zimmer@lausd.net • 213-241-6387
...or your city councilperson, mayor, the governor, member of congress, senator - or the president. Tell them what you really think! • There are 26 mayors and five county supervisors representing jurisdictions within LAUSD, the mayor of LA can be reached at mayor@lacity.org • 213.978.0600
• Call or e-mail Governor Schwarzenegger: 213-897-0322 e-mail: http://www.govmail.ca.gov/
• Open the dialogue. Write a letter to the editor. Circulate these thoughts. Talk to the principal and teachers at your local school.
• Speak with your friends, neighbors and coworkers. Stay on top of education issues. Don't take my word for it!
• Get involved at your neighborhood school. Join your PTA. Serve on a School Site Council. Be there for a child.
• If you are eligible to become a citizen, BECOME ONE.
• If you a a citizen, REGISTER TO VOTE.
• If you are registered, VOTE LIKE THE FUTURE DEPENDS ON IT.
| |  |
| Scott Folsom is a parent leader in LAUSD. He is Past President of Los Angeles Tenth District PTSA and represents PTA on the LAUSD Construction Bond Citizen's Oversight Committee and the BOC on the Board of Education Facilities Committee. He is the former president of his neighborhood council. He is a Health Commissioner, Legislation Team member and a member of the Board of Managers of the California State PTA. He serves on numerous school district advisory and policy committees and has served a PTA officer and governance council member at three LAUSD schools. He is the recipient of the UTLA/AFT 2009 "WHO" Gold Award for his support of education and public schools - an honor he hopes to someday deserve. • In this forum his opinions are his own and your opinions and feedback are invited. Quoted and/or cited content copyright © the original author and/or publisher. All other material copyright © 4LAKids.
• FAIR USE NOTICE: This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. 4LAKids makes such material available in an effort to advance understanding of education issues vital to parents, teachers, students and community members in a democracy. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.
• To SUBSCRIBE e-mail: 4LAKids-subscribe@topica.email-publisher.com - or -TO ADD YOUR OR ANOTHER'S NAME TO THE 4LAKids SUBSCRIPTION LIST E-MAIL smfolsom@aol.com with "SUBSCRIBE" AS THE SUBJECT. Thank you. | | | | | |
