Tag Archive for Sacramento City Unified School District

The Great Resurrection of 2013! Elected Board of Sacramento City Unified School District Schedules Vote on Dormant Project Labor Agreement

It’s the Great Resurrection of 2013! Someone remembered the ancient Project Labor Agreement implemented for construction at the Sacramento City Unified School District funded by borrowed money authorized by bond measures approved by voters in 1999 and 2002.

September 12, 2013 Board Meeting
6:30 p.m. Open Session

 

See the original 2005 version of this Project Labor Agreement: Sacramento City Unified School District Project Labor Agreement Measures E and I. Also, see the 2009 extension of this Project Labor Agreement: Sacramento City Unified School District Project Labor Agreement Measures E and I Amendment. According to the staff report there will be another Project Labor Agreement implemented for future district construction, presumably for projects funded by borrowed money authorized by Measures Q and R, approved by voters in November 2012.

If the Sacramento City Unified School District required its construction contractors to sign a Project Labor Agreement as a condition of work, why not follow this outstanding example of fiscally responsible government and impose a Project Labor Agreement on the Sacramento Kings Arena? There will certainly be a show in support of Project Labor Agreements at the board meeting on Thursday, September 12.

The Coalition for Fair Employment in Construction has issued an appropriately cynical press release about the scheduled vote to extend the Project Labor Agreement at Sacramento City Unified School District.

September 9, 2013
FOR IMMEDIATE RELEASE
Contact: Eric Christen, (858) 431-6337
Sacramento School Board Schedules Sham Vote on Dormant Project Labor Agreement as Media Stunt
Creates Forum for Union Officials and Union-Backed Politicians to Defend Kings Arena Deal

Today the Coalition for Fair Employment in Construction accused the elected board of the Sacramento City Unified School District of engineering an unnecessary forum for Sacramento union leaders and union-backed politicians to promote Project Labor Agreements.

“Board members of the Sacramento City Unified School District suddenly saw a desperate need to extend a dormant Project Labor Agreement for four months?” asked Eric Christen, executive director of the Coalition for Fair Employment in Construction.

“This silly vote is about the Sacramento Kings arena, not about helping children to learn how to read and write.”

The September 12 school board agenda includes an item to extend for four months a Project Labor Agreement implemented in 2005 for long-completed construction programs funded by Measure E (1999) and Measure I (2002). A staff report indicates plans for a new Project Labor Agreement for future construction, which will be funded by Measures Q and R (2012).

The proposal is obviously under consideration within a larger political context.

On September 4, a public extravaganza at Downtown Plaza organized with unions by Mayor Kevin Johnson’s office to celebrate a Project Labor Agreement on the new Kings arena was undermined when opponents of the union deal exercised their First Amendment rights and showed up to challenge the government propaganda.

“Behind the scenes, everyone acknowledges that the mayor’s press conference for the Kings Arena Project Labor Agreement was a public relations disaster,” said Christen. “One veteran Sacramento political consultant emailed us to say ‘What transpired on Wednesday was one of the best impromptu media events I’ve seen in many years.’”

“Both supporters and opponents of public funding for the Kings arena were disgusted by the political payoff to the unions. Union leaders need a public forum to regain control of their message. They’ve chosen the Sacramento City Unified School District – not a government renowned for its outstanding management and high degree of fiscal responsibility.”

The Coalition for Fair Employment in Construction will oppose the Project Labor Agreement resolution.

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Sacramento City Unified School District Superintendent Latest School Official to Use Public Resources to Campaign for $414 Million Bond Measures Q and R

The Fair and Open Competition – Sacramento committee – the primary organized opposition to Measures Q and R in Sacramento – submitted a complaint this afternoon (October 22, 2012) to the board of trustees of the Sacramento City Unified School District objecting to the latest example of using school district resources to campaign for Measures Q and R on the November 6, 2012 ballot. The letter demands that the school district cease and desist from use of school district resources to campaign for these bond measures.

According to the email, “Superintendent [Jonathan P.] Raymond is illegally using school district resources to campaign in favor of Measures Q and R.” The letter refers to and includes an email received at 11:23 a.m. on Friday, October 19, 2012 from Superintendent Raymond to “All SCUSD Users” entitled “Letter to Staff – October 19, 2012.”

Superintendent Raymond writes that schools need updating, and Measures Q and R would provide the funding to upgrade and renovate the facilities. He claims that “The cost of failing to make a move in the direction of the future is huge.” He then urges recipients to “learn more about Measures Q and R” and “remember to vote on November 6.” Just in case staff cannot figure out the subtle message, the superintendent happens to mention that the Sacramento City Teachers Association and the Service Employees International Union (SEIU) endorsed Measures Q and R. (Do the will of your union!)

I’m sure the school district will defend the email with the same argument it uses on the Sacramento City Unified School District web site page for Measures Q and R: “SCUSD cannot tell people how to vote, and SCUSD employees are precluded by law from using tax-supported resources, time or equipment to lobby either for or against any ballot measure. SCUSD can, however, share factual information about a ballot measure’s impact.”

The FACTUAL INFORMATION is that the measurable cost for the future will be huge if voters approve Measures Q and R, while the measurable cost if the voters reject Measures Q and R will be nothing beyond how much the district has already spent to develop the bond measures and place them on the November 6, 2012 ballot.

These two measures authorize the school board to borrow $414 million by selling bonds. To its credit, the Sacramento News & Review, in its pro-bond measure article Homework Improvement, actually informed its readers how a bond works and provided an estimate of the interest that taxpayers will pay on these bonds:

Each requires 55 percent approval by voters. And each would be paid back over time by additional taxes on area homes and commercial property. The district says the measure will cost the average homeowner about about $7 a month on their property taxes.

As with any financing, there’s interest, and the amount of money that has to be paid back is much higher than the amount borrowed. The district estimates that the bonds will ultimately cost taxpayers $734 million over 25 years, in exchange for $414 million borrowed today.

This is not the first time the school district has been accused of using public resources to promote Measures Q and R. I’m hearing reports from Sacramento voters that officials of the Sacramento City Unified School District are testing the limits and exceeding the limits of the use of public resources to promote a Yes vote on Measures Q and R. In addition, the California Taxpayers Association reported the following campaign antics at the Sacramento City Unified School District in its article “Public Education Officials Using School Resources to Campaign for Tax and Bond Measures”:

In the Sacramento City Unified School District, School Board Member Patrick Kennedy addressed a mandatory meeting for parents at Leonardo da Vinci K-8 School on September 12, and used his entire presentation to urge support for Proposition 30 and two local school bonds. He did not mention Molly Munger’s tax initiative, Proposition 38, which is focused on directing more money to schools, nor did he discuss how the local bond proposals (Measure Q and Measure R) would increase taxes for property owners in the district. The school’s September 4 newsletter, distributed by the school to all parents, also included a message urging support for the two bond measures, with no details to educate parents about the proposals.

I suspect the school district’s use of public resources to promote Measures Q and R are an indication that supporters of the bond measures (and their political consultants) are concerned that voters might reject them on November 6, 2012. For the official, comprehensive arguments against the bond measure, see the web site Vote NO on Sacramento’s MEASURES Q and R: Borrowing $414 Million from Investors, Paying It Back with Interest.

An Overlooked Feature of Bond Measures for School Districts: Fees to Underwriters and Financial Service Firms

Under contract to Fair and Open Competition – Sacramento, I’ve developed a modest web site presenting an argument against Measures Q and R, two proposed bond measures at the Sacramento City Unified School District. It’s not a pretty web site, but it’s packed with information obtained from primary source material – information not available anywhere else. See Vote No on Sacramento’s Measures Q and R.

If voters in the school district approve these ballot measures at the November 6, 2012 election, the school board of Sac City Unified will have authority to borrow up to $414 million for construction by selling bonds to investors. Property holders in the district will pay that back – with interest – through taxes. Current debt for the school district’s two previous bond measures totals $522 million. Basically, these proposed new bond measures will create a billion-dollar debt for this school district.

During my research, I decided to investigate how much the district has paid in fees to underwriters (bond brokers) and other financial service firms that assess fees when bonds are prepared and sold. The total comes to almost $6 million.

Bond Issue Financial Transaction Fees
Official Statement – Sacramento City Unified School District – $50,000,000 – General Obligation Bonds, Election of 1999, Series A 2000 $404,375.42
Official Statement – Sacramento City Unified School District – $52,310,000 – General Obligation Refunding Bonds 2001 $592,524.77
Official Statement – Sacramento City Unified School District – $45,000,000 – General Obligation Bonds, Election of 1999, Series B 2001 $394,463.50
Official Statement – Sacramento City Unified School District – $45,000,000 – General Obligation Bonds, Election of 1999, Series C 2002 $486,543.56
Official Statement – Sacramento City Unified School District – $80,000,000 – General Obligation Bonds, Election of 2002, Series A 2003 $483,000.00
Official Statement – Sacramento City Unified School District – $64,997,966.35 – General Obligation Bonds, Election of 1999, Series D 2004 $615,158.17
Official Statement – Sacramento City Unified School District – $80,000,000.00 – General Obligation Bonds, Election of 2002, Series 2005 $737,700.00
Official Statement – Sacramento City Unified School District – $64,997,966.35 – General Obligation Bonds, Election of 2002, Series 2007 $757,134.42
Official Statement – Sacramento City Unified School District – $79,585,000 – General Obligation Refunding Bonds 2011 $522,897.60
Official Statement – Sacramento City Unified School District – $113,245,000 – General Obligation Refunding Bonds 2012 $849,939.95
Total Fees $5,843,737.39

Supporters of Measures Q and R might defend these fees by pointing out they only comprise 1.4 percent of the total amount of $420 million borrowed under the authority of Measures E (1999) and Measures I (2002), and the fees paid for the sale of the three refunding bond series were offset by the resulting reduced cost of interest payments. Fair enough, but don’t claim in your ballot arguments for Measures Q and R that “Every penny from Measures Q and R will stay in our community” and “ALL of the money raised by these measures will stay in our community.” That’s just not true. Set aside the issue of interest payments to wealthy individuals and institutional investors in New York City and other financial centers – the $5.8 million in transaction fees is proof that some of the money did NOT stay in the community.

I suspect such statements from proponents reflect a lack of understanding of municipal bonds or a cynical recognition that ordinary voters don’t understand municipal bonds.

One thing I did not research was whether or not the underwriters who assessed these fees were donors to the campaigns to pass Measure E (1999) and Measure I (2002). Here is another excerpt from the Vote No on Sacramento’s Measures Q and R web site:


Learn How Bond Brokers, Bond Dealers, Bond Underwriters Spend a Little Money to Make a LOT of Money Selling Bonds for California School Districts.

Not all bond brokers improperly influence school boards. In fact, some have high integrity and are speaking out against the inappropriate conduct of some underwriters in their industry.

But clearly things have gotten out of control since California voters narrowly approved Proposition 39 in November 2000. Borrowed money began gushing into California school districts, and everyone wanted a piece of the action.

In fact, a September 13, 2012 letter to the Municipal Securities Rulemaking Board from the California Association of County Treasurers and Tax Collectors urged the Board to consider a complete prohibition on brokers, dealers, and other municipal finance professionals from making political contributions to campaigns of local governments (such as the Sacramento City Unified School District) to get voter approval to borrow money from investors by selling bonds. The letter identifies the origin of the problem as Proposition 39.

The issue of bond brokers being major donors to campaigns to pass bond measures has not gained much attention, but it should. A specialty publication –The Bond Buyer – and a news service – California Watch – have been the leaders on investigating this obscure but significant scheme. Here are some articles that reveal the problem:

Brokers’ Gifts That Keep Giving – The Bond Buyer – January 13, 2012

When broker-dealers give money to California school bond campaigns, it appears to be money well spent. A review of campaign finance records by The Bond Buyer found a nearly perfect correlation between broker-dealer contributions to California school bond efforts in 2010 and their underwriting subsequent bond sales…

With Campaign Donations, Bond Underwriters Also Secure Contracts –California Watch – May 3, 2012

Leading financial firms over the past five years donated $1.8 million to successful school bond measures in California, and in almost every instance, school district officials hired those same underwriters to sell the bonds for a profit, a California Watch review has found…

Critics Struggle to End ‘Pay to Play’ in School Bonds – California Watch – May 14, 2012

Critics of the practice in which financial firms help pass school bonds that they profit from are continuing to push for reforms, but so far have faced resistance and failure. In California, underwriting companies hired by school districts to sell bonds often make campaign contributions to help convince voters to pass the bond measures…

Some California FAs [Financial Advisors] Use Pay-to-Play Tactics, Critics Say –The Bond Buyer – May 24, 2012

Firms that work as financial advisors helping California school districts issue bonds after serving as campaign consultants on the preceding bond measure have a conflict of interest and are engaged in a form of “pay-to-play,” critics say. Such firms, a small subset of the financial advisor sector in California, walk the school districts through the bond election process, then help the them select and negotiate prices with underwriters and bond counsel for the subsequent sale. In many cases, they are paid both by the political action committee formed to pass the bond measure, which receives contributions from underwriters and the bond counsel, and then by the district…

Underwriters Paying to Pass Bond Issues Face Scrutiny – Business Week – May 24, 2012

Over the past five years, underwriters gave $1.8 million to successful school-bond campaigns in California and got almost all the work selling the approved bonds, California Watch reported earlier this month.

Underwriter Bought Meals For Poway Board – San Diego Union-Tribune – September 1, 2012

The underwriter of Poway Unified’s controversial $105 million bond deal hosted $2,200 in dinners for the school district’s officials in recent years — most of which they accepted and initially failed to report on state-mandated disclosure forms. In March, the officials belatedly disclosed the meals dating back several years, as the District Attorney’s Office prosecution of South Bay school board members for failing to report such meals made the news…

Muni Groups Urge More Action on Bond Ballot Campaigns – The Bond Buyer – September 18, 2012

Municipal analysts and other muni market participants are urging the Municipal Securities Rulemaking Board to strengthen a proposal to tighten bond-ballot campaign contribution reporting requirements for dealers. In comment letters filed in recent days, several participants urged the board to do more to attack corruption and protect the voting public, with some suggesting there should be an outright ban on such contributions rather than disclosure requirements.

California Capital Appreciation Bonds Have Unintended Consequences – The Bond Buyer – September 20, 2012

The recent controversy over the way some California school districts use capital appreciation bonds may reflect the law of unintended consequences…

Feds Urged to Crack Down on Donations to Bond Measures – California Watch – September 21, 2012

Critics of political donations to school bond campaigns from companies that profit from the bonds are urging federal regulators to take bolder steps against what they call a “pay to play” practice.

A Compilation of Construction Trade Union Project Labor Agreements for K-12 School and Community College Districts in Solano and Sacramento Counties

Two California Urban School Districts Notorious for Project Labor Agreements Team Up With Construction Unions to Seek Voter Approval for Construction Bond Measures

Two California urban school districts notorious for requiring their construction contractors to sign Project Labor Agreements (PLAs) will be asking voters to approve huge bond measures at the November 6, 2012 election. The elected board members of the San Diego Unified School District and the Sacramento City Unified School District expect that voters turning out to support President Barack Obama’s re-election will also vote for new taxes on property owners to fund school construction. Campaign support for these bond measures will come from construction unions, who will control the work because the school boards are requiring construction companies to sign Project Labor Agreements with unions as a condition of work.

Voters have overwhelmingly approved bond measures in these two districts in the past, but government-mandated Project Labor Agreements were not an issue in those elections. The big question now: will advocates of fiscal responsibility develop an organized and effective campaign to offset the campaign resources of the unions and the subtle support of the school districts?

SAN DIEGO UNIFIED SCHOOL DISTRICT

Last night (July 24, 2012), the Board of Education of the San Diego Unified School District approved a resolution to place a $2.8 billion bond measure on the November 6, 2012 ballot. This plot to get more taxpayer funding for construction has been in the works since the board’s November 1, 2011 meeting, at which the board directed staff to study the feasibility of a new capital facilities bond measure. The board received the results of the feasibility study on February 14, 2012, and of course the bond measure was highly feasible.

This is the third time in 15 years that the San Diego Unified School District has asked voters to approve billion-dollar bond measures. On November 3, 1998, 78% of voters approved the $1.51 billion Proposition MM, under which construction was awarded under fair and open bid competition, despite union lobbying for the school district to mandate that construction contractors sign a Project Labor Agreement.

Not knowing at the time that construction unions would be given control of the work, 69% of voters approved the $2.1 billion Proposition S on November 4, 2008. A Project Labor Agreement was sprung by the school board in January 2009 after union special interests won a seat in the same election and attained 3-2 majority control. The final version of the Project Labor Agreement was approved in July 2009 on a 3-2 vote, and the two board members who voted against it are no longer on the board.

In contrast to 2008, San Diego voters in the November 2012 election will be fully aware that the school board has given unions control of most of the work funded by the proposed $2.8 billion bond measure. To lock in the Project Labor Agreement for additional work funded by future bond measures, the school board voted 5-0 at the July 24, 2012 meeting for a resolution that expands the scope of the Project Labor Agreement for all projects that exceed $1 million and are paid for in whole or in part with future local bond funds.

Usually school boards are coy about their plans to mandate a Project Labor Agreement until after voters approve a bond measure. In this case, voters will be considering the wisdom of government-mandated Project Labor Agreements as well as the wisdom of taxing the citizens and businesses of San Diego an additional $2.8 billion (plus billions more in interest) for school construction.

SACRAMENTO CITY UNIFIED SCHOOL DISTRICT

On July 19, the Board of Trustees of the Sacramento City Unified School District approved a resolution to place a $346 million bond measure on the November 6, 2012 ballot. This plot to get more taxpayer funding for construction has been in the works since the board’s January 19, 2012 meeting, at which the board authorized the development of a Sustainable Facilities Master Plan. A feasibility study for this bond measure, including polling of voters, is ongoing, but you can bet that the bond measure will be found to be highly feasible.

This is the third time in 15 years that the Sacramento City Unified School District has asked voters to approve multi-million-dollar bond measures. On October 19, 1999, 79% voters approved the $195 million Measure E in a special election. On November 5, 2002, 67% of voters approved the $225 million Measure I.

The board of the Sacramento City Unified School District voted 5-1 on September 1, 2005 to require all contractors to sign a Project Labor Agreement with construction unions in order to work on projects worth $1 million or more funded by the remaining $170 million authorized by Measure E (1999) and Measure I (2002). On September 4, 2009, the board voted 5-0 to extend the district’s Project Labor Agreement on all Sacramento City Unified School District projects worth $1 million or more for another four years. International Brotherhood of Electrical Workers (IBEW) Local No. 340 union official and board member Patrick Kennedy did not vote, in order to avoid a conflict-of-interest. See the amended and extended Project Labor Agreement here.

The school board for the Sacramento City Unified School District has considered Project Labor Agreements three times since 2000.  The change in voting patterns symbolizes the change in the political climate of California over the past 15 years.

  • 2000          Board voted 4-3 to reject a PLA.
  • 2005          Board voted 5-1 to approve a PLA. (Actual vote count was 5-2.)
  • 2009          Board voted 5-0 to renew a PLA. (Actual vote count was 7-0.)