The 1997 Modernization Bond
On June 3, 1997, ABCUSD voters approved a bond measure to issue up to $59 million in bonds. Five bonds were issued from
December 1997 to May 2010. The 2003 Series A bonds were used to refund the outstanding 1997 Series A bonds. The 2010
Series A bonds were used to refund some of the outstanding Series B current interest bonds. The total cost of Series ABC
was originally estimated to be about $90 million. It ended up being about $165 million. As of 6/30/2018, the remaining
debt service for all of the outstanding 1997 school bonds is about $108 million, according to LA County Treasurer and
Tax Collector's office. In other words, after 20 years, ABCUSD property owners have only paid off $57 million, and will
continue to pay off this debt at the rate of $29 per $100,000 assessed property value each year until 2035.
|Series||Issue Date||Final Mature||Original Principal|
in million dollars
in million dollars
in million dollars
|1997 Series A current interest||12/01/1997||08/01/2018||20.00, 2.20 actual||3.67||5.87|
|Series B current interest||04/01/2000||08/01/2016||16.70, 6.10 actual||8.28||14.38|
|Series B capital appreciation||08/01/2024||8.30||22.59||30.89|
|Series C capital appreciation||01/10/2001||08/01/2034||14.00||57.15||71.15|
|2003 Series A current interest||05/01/2003||08/01/2022||18.74||11.51||30.25|
|2010 Series A current interest||05/12/2010||08/01/2016||10.67||1.40||12.07|
Here are the total assessed property values of ABCUSD in 2014 and 2018, and the outstanding balance of the 1997 school bond
as of Aug 2, 2018.
The $59 million raised through sales of this modernization bond was matched dollar for dollar by the State treasury.
With funds from some other sources, ABCUSD raised a total of $135 million for its modernization projects at various
Construction projects soon began. Each time a new project completed, there was a celebration party hailing the
modernization of yet another school site. The entire program was completed in 2004. It's not clear to this day
exactly what modernmization projects were conducted for what school at what cost with what kind of warranty.
An earlier record we've obtained shows a breakdown of dollar amounts spent on each school site, without any
Despite of the money spent, discordance persisted questioning whether the school modernization really took place. In
May, 2007, J.C. Tafoya of Lakewood wrote to United HOA, stating, among other things
9. Why do the schools look the same as they did before modernization? Has anyone seen Kennedy High, Oxford Academy
or Los Alamitos High? Drive around and take a look. Where did the $135 million go?
10. What guarantee do the parents have the alleged rent income will go to kids? The lottery funds don't, the 6 percent
$6 million COLA didn't, the modernization money didn't do much. Title One and school improvement funds don't seem to impact
the kids. However, teachers and administrators are among the highest paid in the state.
Around the same time, an anonymous letter was sent to our mailbox. It appeared to have come from someone familiar with
internal financial affairs of the school district. It says in part
...This school district does not have a good track record for servicing school sites, especially when it comes to money.
There are already complaints that schools at the south end of the district are being neglected and in bad disrepair. The
modernization project a few years ago does not seem to be worth the $135 million spent on it. In fact, there has never been a
specific public audit on how money was spent on that project.
In 2001, every district employee got a 10% pay raise. One year later, the school board voted to cut 10% from school site
funding - money intended for our children. It was blamed on the governor not delivering the $5 million he promised. When the
governor did deliver the money, it went to salaries anyway.
While it's difficult to corroborate allegations in these letters with official records, board member and CPA Cecy Groom
pressed hard for an official audit report. She got none. She also asked about the district-wide 10% pay raise in 2001
and the 10% school site funding reduction in 2002. While there is no evidence connecting these events with the 1997 bond
money, some people find the timing suspicious.
Fast forward to July 15, 2014, the once much celebrated school modernization was reduced to a series of repairs,
corrections and replacements of various systems.
Without an official record of all the contracts and money transactions involved, it's hard to tell whether the
repairs listed here are worth the $135 million spent on them.
We will probably never find out what really happened to the 1997 modernization bond. The only thing we
know for sure is that each year we pay $29 per $100,000 assessed value of our properties in order to retire that debt, and
we will continue to do so for the next 17 years.
Now ABC school district wants to borrow over 4 times as much money as it did in 1997 and almost triple our school bond
tax. Will this be a rehash of the school modernization saga of 1997? Will there be another massive pay raise several years
down the road? Will the new modernization become a series of repairs, corrections and replacements again some time in the
future? Will it also fall into disrepair the way the previous modernization effort did? Will the total cost of the
proposed school bond mushroom to nearly 3 times its principal value? No one can answer these questions,
unless the school district can clarify what really happened to the 1997 modernization bond.
By the way, our calls for an independent audit of the entire 1997 school modernization program have fallen completely on