United Homeowners Alliance
A California Community Organization for Artesia, Cerritos and Surrounding Areas
United, We Safeguard Our Homes and Our Community.

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United HOA
16407 Greenlake Lane
Cerritos, CA 90703
ID #1293711

Voices from the Media

Failure of ABC District's Measure AA
May Not Be a Loss

Editorial, Press Telegram, November 10, 2014

ABC Unified school board vice president Lynda Johnson cast an unpopular vote earlier against placing a $195 million bond to upgrade deteriorating schools on the ballot.

Her vocal opposition and that of others may have saved the district that includes Cerritos, Artesia, Norwalk, La Mirada and parts of Long Beach hundreds of millions in headaches.

It also momentarily interrupted the plans of a group of financiers, architects and others who belong to a sophisticated behind-the-scenes machine that propels school projects around the country — a group that often avoids scrutiny but has powerful sway over a district's financial health and property owners' tax bills.

Although voters didn't pass Measure AA — it fell more than 12 percentage points short — it's a reminder to all voters to keep watch of where and how bond money is spent.

Two years before the issue came to a head at the Cerritos headquarters of ABC, it came under increased scrutiny across the state after media reports revealed that some school districts were paying back 10 to 20 times the amount they originally borrowed. Long-term capital appreciation bonds allow school districts to postpone repayment for years, or decades, while interest compounds along the way.

In one case documented by the Orange County Register, the firm George K. Baum issued a capital appreciation for 23 times the principal at San Bernardino County's Rim of the World.

That's not legal anymore.

The California Legislature last year slapped new rules on districts aimed at reducing abuse of capital appreciation bonds, and capped them to $4 interest for every $1 borrowed.

But the players are all the same and rates set after the cap was approved are still high.

Baum backed the bond measure in ABC, contributing $15,000 to the Yes on Measure AA campaign. It wasn't the only contribution received by groups with a clear financial interest. Architecture firms, consultants and others who sought to benefit from the massive bond piled on.

There's nothing illegal there, but it's a window into how things work when it comes to school financing. Pay-to-play operations have helped spur K-12 building and it's left a deep cost for many.

A 2012 investigation by California Watch found that financial firms donated $1.8 million to successful school bond measures in California over a five-year period. Many of those districts then turned around and hired those firms. The practice looks far from dead.

Johnson opposed the measure because she and others complained the district — nationally recognized for its academic achievement — rushed through the process to get the bond measure on the ballot and didn't get enough community input for a thoughtful analysis of needs.

Superintendent Mary Sieu countered this had been in the works. In January, the board approved a study and survey of 500 registered voters. That study was conducted by Dale Scott Co., a firm that specializes in getting school bond measures passed. Another needs assessment was performed by a firm that offered its service, to be paid if the bond was passed.

While the bond issue didn't pass in the ABC district, voters across Los Angeles County on Nov. 4 approved more than $1 billion worth of K-12 school bonds.

Taxpayers, voters and official watchdogs would be wise to watch how those contracts are doled out, who benefits and how much is really paid.

Nobody wants to be stuck with a house that isn't worth what was paid for it. The same should go for school districts.


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