Tag Archive for San Diego County Taxpayers Association

Foolishness That Won’t Be Stopped: California’s K-12 School Districts Use Borrowed Money from Bond Sales to Buy iPads and Other Technological Gadgets

The web site www.EdSource.org (“Engaging Californians on Key Education Challenges”) has an article today (December 18, 2012) entitled Districts Face Questions in Spending Long-Term Bonds for Short-Lived Technology. It’s a good summary of how some K-12 school districts in California are using language in Proposition 39 to justify spending borrowed money from bond sales to “equip” schools with computers and other technological products.

Money borrowed through bond sales is typically paid back with interest over a long period of time – much longer than the useful life of computers. Aren’t you glad you didn’t take out a 30-year bank loan to pay for your Radio Shack TRS-80?

Chris Reed had a short piece posted in the December 9, 2012 www.CalWatchdog.com entitled Will School Finance Scams Be Addressed? One of Two at Best. He predicts the California state legislature will restrict the ability of educational districts to sell Capital Appreciation Bonds (CABs), but will not prevent educational districts from using bond proceeds to buy technological products.

Proposition Z was and still is the Zombie Tax.

Proposition Z was and still is the Zombie Tax.

The most prominent recent controversy about California school districts using borrowed money from bond sales to buy technology occurred during the fall 2012 campaign to pass the $2.4 billion Proposition Z bond measure for the San Diego Unified School District. The San Diego County Taxpayers Association led the charge in pointing out how the school district was spending bond proceeds on iPads. In the October 9, 2012 article Is School Bond Money Going to iPads Over Repairs? Fact Check, Voice of San Diego reported the following:

As of mid-September, the district says it had spent more than $379 million of its Prop. S funds. About 11 percent of that has been used to buy iPads, computers and other technologies, according to figures released by school officials.

While the article never actually stated the amount, 11 percent of $379 million is $42 million.

In a subsequent October 25, 2012 article $2,500 iPads? Fact Check, Voice of San Diego reported these findings:

A display case at San Diego Unified School District administrative headquarters highlighting the Proposition S bond measure. The school board has not yet directed district personnel to enhance the display with the original signed Project Labor Agreement negotiated with union officials.

A display case at San Diego Unified School District administrative headquarters highlights the Proposition S bond measure.

The school district used some money collected under Proposition S, the bond approved in 2008, to invest in classroom technology upgrades, including more than 21,500 iPads and nearly 77,800 laptops. More purchases are planned next year…

The iPad purchases came in two phases. First, the district used a series of highly controversial 40-year bonds to buy 10,729 iPads. The district says each iPad cost $420 plus another $116.50 for three-year warranties and accessories. After reviewing bond documents, we calculated that the district will pay an average of about 7.6 times that amount once the final bill comes due. That means a single iPad will cost $4,077.

The district’s second purchase of nearly 10,800 iPads will be less burdensome. The next set of bonds came with a bill that’s an average of about 5.1 times the original cost. Our math shows the district can expect to pay about $2,731 per device for iPads purchased in the second wave.

San Diego voters didn’t care: 61.80% of them voted for Proposition Z on November 6, 2012 and guaranteed that the San Diego Unified School District will have the authority from the 2008 Proposition S and the 2012 Proposition Z to borrow millions of dollars more to spend on iPads.

Besides the bond investors, the people making money on this activity are investors in Apple, Inc. I tweeted the following about the www.EdSource.org article:

California school districts using borrowed $ from construction bond sales to buy computers. (What’s Apple’s position?)

Finally, Jack Weir, a member of the Pleasant Hill City Council and an activist in several community and taxpayer groups in Contra Costa County, emailed a provocative response to the leadership of the Contra Costa Taxpayers Association in response to the www.EdSource.org article:

From:Jack Weir
Sent:Tuesday, December 18, 2012 9:26 AM
To: xxxx
Subject: Re: Should schools be using bond money for technology which is so short lived?

As Alicia Minyen, Anton Jungherr and other CalBOC board members have amply demonstrated, school bond programs are largely out of control – literally.  Mt. Diablo and West County districts have abused Prop 39 on a major scale, although there are far more egregious examples elsewhere in the state.  The new Mt. Diablo board is committed to address their Measure C issues, but will have little corrective latitude.  Dismantling the massive damned solar canopy won’t unring the bell.

There is a whole industry of bond counsels and consultants that work this field, operating in tandem with teachers unions and Democrat politicians that advocate milking the school construction programs to wring additional operational (compensation) funding from local property-owning taxpayers.

After ten years of wrestling with the problem of bringing public (government) education into the 21st century, it is clear to me that nothing short of a whole new paradigm is needed.  And, to get there, we should be asking broad future-focused questions, such as:

> Do we really need brick and mortar facilities dedicated exclusively to classroom teaching?  (Ditto brick and mortar “libraries.”)
> Does it make sense to continue to load ten year-olds with 50 back-breaking pounds of paper books*, when most have (or should have) access to digital devices and the internet?  Within five years, every bit of data and information needed for a good education will be available on the “cloud,” accessible only via digital devices.  Other countries (and states) will leap-frog traditional educational models and kick our economic asses.  Take a look at what India did to bring education into its remote rural villages 25 years ago, and now their kids are coming here to work on H-1B programs.
> Who should pay for K-12 education?  “Free” education ain’t; certainly not to taxpayers, who currently gain a pathetic return on their “investment.”
> What’s the right role for taxpayer advocates in the political forum going forward?

It’s time to start over.
Jack

Based on the results of the November 6, 2012 elections, Californians don’t want to start over. They like the current paradigm, in which the kids get to use “free” iPads.


* Note from Kevin Dayton: regarding the weight of paper textbooks, Assembly Bill 2532, signed into law by Governor Gray Davis in 2002, required the California Board of Education, on or before July 1, 2004, to adopt maximum weight standards for elementary and secondary school textbooks. The California Board of Education subsequently adopted regulations concerning textbook weight standards.

California Local Election Report: Construction Bond Measures for School Districts and Community College Districts – Four That Obviously Deserve a NO Vote

California’s elected school boards and community college boards have put 106 measures on local ballots for the November 6, 2012 election asking voters to authorize borrowing money for construction through bond sales. At least four of these proposed bond measures are so stunningly misguided that citizens in these districts should take democratic action, defy the well-funded Establishment, and reject the debt with a NO vote.

Below, I list and explain the four districts where voters should Close the Spigot of taxpayer money to the elected boards. First, some general background about educational facility bond measures on the November 6, 2012 ballot:

CALIFORNIA – 106 Bond Measures for Construction at Educational Districts

A web site – www.californiacityfinance.com – lists 106 school construction bond measures on the November 2012 ballot in California. An article from School Services of California and reprinted on September 26, 2012 by the Coalition for Adequate School Housing (CASH) confirms there are 106 proposed bond measures. That article also notes that 106 is the highest number of California school bond measures ever considered in an election. It also claims that voters authorize the sale of bonds in California school districts about 70% of the time.

The number of bond measures presented to voters throughout California has trended relentlessly upwards since November 2000, when 53.4% of California voters narrowly approved Proposition 39, which dropped the voter threshold for approval of educational construction bond measures from 66.67% to 55%. This was the start of California’s massive accumulation of debt for educational construction at the state and local levels of government.

A few professional political consulting firms (such as Tramutola Advisors, based in Oakland, and TBWB Strategies, based in San Francisco) specialize in the business of convincing voters to vote Yes for school bond measures. They are adept at emotive messaging (“it’s all about the kids”) and at exploiting technical loopholes to leverage public funds as much as legally possible to develop and promote the bond measures.

Funding for the campaigns to pass the bond measures is collected from banks, bond brokers (underwriters), and other financial service corporations that make money from bond transactions. This has generated some criticism; see Vote No on Sacramento’s Measures Q and R web site for a compilation of 2012 news articles about bond underwriters and campaign contributions.

Bond measures also generate business for the construction industry. A perusal of contributors to bond measures usually reveals architects, engineers, contractors and construction trade associations, and construction trade unions.

Have YOU checked the list of contributors to campaigns to pass bond measures in your K-12 school and community college district?

Rarely does significant opposition develop against proposed bond measures, as shown by how often official voter information guides outright lack an opposition statement to a proposed bond measure. When there is organized opposition, it usually centers around a regional taxpayers association, with help from the local Libertarian Party or Tea Party organizations. Generally, opposition campaigns are passionate, but amateurish. They usually don’t have any money to spend on getting their message out to voters.

PROFESSIONALIZING OPPOSITION WITH CALIFORNIA’S “OPERATION CLOSE THE SPIGOT” 

Earlier this year, I circulated a proposal for “Operation Close the Spigot,” a program to have a well-funded, coordinated opposition campaign statewide against the most egregious bond measures proposed for California K-12 school districts and community college districts. While a formal organization has not yet emerged to close the spigot of taxpayer funding, my agitation on this issue – like my agitation for charter cities – has inspired some promising grassroots movement for local individuals and organizations to gather together and make a more serious effort to inform voters about the huge debt burden accumulating on Californians as a result of the parade of bond measures.

As the November 6, 2012 election approaches, here are the most promising developments for organized opposition against four foolish proposed educational construction bond measures in California.

1. SACRAMENTO CITY UNIFIED SCHOOL DISTRICT – $414 Million Measures Q and R

The “Fair and Open Competition – Sacramento” committee that had organized in 2011 to enact Fair and Open Competition ordinances in the City of Sacramento and the County of Sacramento reorganized its leadership and membership and decided to expose the foolhardiness of the Sacramento City Unified School District’s proposal to borrow another $414 million by selling bonds. (District taxpayers currently owe $522 million from the last two bond measures.) This group was inspired to oppose Measures Q and R on the November 2012 ballot because the school board requires its construction contractors to sign a Project Labor Agreement with unions to work on Sacramento City Unified School District contracts. In fact, the leading spokesperson to pass Measures Q and R is school board member Patrick Kennedy, who has been and may still be employed by Sacramento construction trade unions or affiliated entities.

The Sacramento City Unified School District sold notorious Capital Appreciation Bonds to bury future generations in debt. These are bond issues for which investors collect a huge amount of compound interest when the bonds mature, rather than getting interest payments at regular intervals and then getting the principal back when the bonds mature.

Fair and Open Competition – Sacramento submitted excellent arguments against Measure Q and against Measure R for the official voter information guide. They tried to discourage Sacramento area business groups from knee-jerk “it’s for the kids” endorsements of Measures Q and R. Finally, they established a web site to make a logical, fact-based case against borrowing more money through bond sales to investors. As I declared in a Tweet yesterday, “Never before has a campaign web site so thoroughly analyzed and hammered a California school construction bond measure: http://fairandopencompetitionsacramento.com.”

The Sacramento Bee’s editorial board has not taken a position yet on Measures Q and R. On October 14, 2012, the Sacramento Bee endorsed Measures Q and R (Sacramento City Unified School Bonds Are a Smart Investment for Students), with the Project Labor Agreement policy as the only negative reference:

Opponents object to the district’s use of project labor agreements for large projects – as has this editorial board. But the district points out that only 14 of 74 projects since 2005 have had project labor agreements. Union and nonunion shops get a chance to bid on the vast majority of projects under $1 million.

2. WEST CONTRA COSTA UNIFIED SCHOOL DISTRICT – $360 Million Measure E

The Official Statement for the West Contra Costa Unified School District’s latest bond sale contains some harsh facts about this fiscally irresponsible, mismanaged school district in an economically struggling area. Residents and businesses in this school district have taken on a staggering amount of debt through construction – $1.77 billion to date by borrowing money from five bond measures since 1998. (A sixth attempt failed in 2003.) Five is not enough, so now there is the $360 million Measure E.

Chevron owns 13.1% of the assessed property value of this district, and what will happen when Chevron finally decides to shut down its Richmond refining facility? (I’ve been predicting for 14 years it will become a distribution center for fuels refined in Mexico.) And Chevron is not the only problem with the school board’s rosy expectations for future tax collection. In 2009-10, total property value tax assessment in the district dropped 12.3%, and it dropped another 7.7% in 2010-11. (It was up 1.1% in 2011-12, but that’s not a good rationale to take on more debt.)

Bond Measures for West Contra Costa Unified School District

Authorized Bond Amount. Does Not Include Interest and Fees. Does Not Include State Matching Grants.

Date of Election

Ballot Designation

Outcome

$40 million June 2, 1998 Measure E Approved by 76.0% of voters
$150 million November 7, 2000 Measure M Approved by 77.5% of voters
$300 million March 5, 2002 Measure D Approved by 71.6% of voters
$450 Million September 16, 2003 Measure C Rejected in a special election because only 59.1% of voters approved the bond measure, which needed two-thirds voter approval
$400 million November 8, 2005 Measure J Approved by 56.9% of voters
$380 million June 8, 2010 Measure D Approved by 62.6% of voters
$1.27 billion Total from five bond measures from 1998 to the present.
$360 million November 6, 2012 Approved for consideration by district voters through a resolution of the school board on August 1, 2012

No surprise, the school board requires its construction contractors to sign a Project Labor Agreement with unions to work on West Contra Costa Unified School District projects. It was the first school district in Northern California to adopt a Project Labor Agreement, leading the way for followers such as the Vallejo City Unified School District, the East Side Union High School District (in San Jose), and the Oakland Unified School District. (By the way, Oakland USD and East Side Union HSD also have big bond measures on the November 2012 ballot.)

Of course, the West Contra Costa Unified School District sold Capital Appreciation Bonds to bury future generations in debt. One school board member – Charles Ramsey – even recognized the risk, but voted for the West Contra Costa Unified School District to sell Capital Appreciation Bonds anyway.

The Contra Costa Taxpayers Association is leading the opposition to Measure E and submitted excellent arguments against West Contra Costa Unified School District’s Measure E for the official voter information guide. Opposition also includes a small group of local activists who understand the debt implications of this latest bond measure. Unfortunately, the web presence of opposition arguments to Measure E is sparse. A local political and community activist, Charley Cowens, writes a blog called Mystery Education Theater 3000 about this district, which his kids went through, and there is also a blog called West Contra Costa Unified School District Quality Improvement Project. This is a tough place to advocate for fiscal responsibility.

Today (October 13, 2012), the Contra Costa Times newspaper endorsed four bond measures in San Francisco’s East Bay (Four School Bond Measures that We Believe Should Pass), but held off on discussing West Contra Costa Unified School District: “Five East Bay school districts seek voter approval Nov. 6 for bond measures to fund school construction. We recommend passage of four. We will consider the fifth, West Contra Costa’s Measure E, on Monday.” It looks like this district’s proposed bond measure will get a special editorial from the Contra Costa Times on Monday, October 15, 2012.

UPDATE: The Contra Costa Times slammed the proposed bond sales through Measure E at the West Contra Costa Unified School District: see Yes on Measure G, No on Measure E in West County – Contra Costa Times – October 15, 2012. The editorial points out that the official ballot information for Measure E neglects essential information for voters to consider (business as usual), including the huge outstanding debt obligations from five previous bond measures, the projected tax burden in a few years of $290 per $100,000 of property value, and the projection for repayment in 40 years at disproportionately high interest rates. The editorial concludes with this blunt statement:

District leaders say they need the additional bond money to complete their school construction program. That’s what they said 2½ years ago for the last bond measure. They claimed then that they needed more because rising construction costs had eroded their purchasing power. In today’s economy, that excuse won’t work. We endorsed the successful 2010 measure. But we warned that would be the last time. We meant it. As far as we are concerned, this train has run out of track. Vote no on Measure E.

3. SAN DIEGO UNIFIED SCHOOL DISTRICT – $2.8 Billion Proposition Z

No, that $2.8 billion jaw-dropping figure is not a typographical error. It represents the unapologetic arrogance of a union-controlled school board that is spending itself close to bankruptcy; in the meantime, let the good times roll!

In November 2008, voters in the San Diego Unified School District approved a ballot measure (Proposition S) authorizing the school board to borrow a whopping $2.1 billion for construction by selling bonds to investors. With a new pro-union majority also elected to the school board, the board (on a 3-2 vote) subsequently required construction companies to sign a Project Labor Agreement to work on San Diego Unified School District construction projects of more than $1 million funded by Proposition S. Unions now have total control of the San Diego school board, which has already voted 5-0 for a union Project Labor Agreement on construction funded by the proposed Proposition Z.

Of course, the San Diego Unified School District sold Capital Appreciation Bonds to bury future generations in debt. The board passed a resolution claiming they wouldn’t sell any more Capital Appreciation Bonds. (See my article Board of San Diego Unified School District Senses Voters May Reject $2.8 Billion Bond Measure (Proposition Z) Because of Board’s Past Use of Capital Appreciation Bonds.) Now the Voice of San Diego reports (on October 12, 2012 in School Officials Pitch Prop. Z As The Only Alternative to Exotic Loans) that school district officials are claiming the San Diego Unified School District will have to sell MORE Capital Appreciation Bonds if voters reject Proposition Z. Unbelievable!

The San Diego County Taxpayers Association jumped on Proposition Z right away as unworthy of voter support. This particular taxpayers’ organization in San Diego extensively researches ballot measures and is very cautious about taking opposition positions.

The San Diego Union-Tribune editorial board has urged voters to reject Proposition Z: Vote No on San Diego School Bond: It Props Up a Broken Status QuoSan Diego Union-Tribune – September 22, 2012.

4. SOLANO COMMUNITY COLLEGE DISTRICT – $348 Million Measure Q

The $124.5 million Measure G bond approved by Solano County voters in 2002 was not enough for the businesses and individuals who feed off money borrowed through bond sales. Especially interested in this new proposed $348 million bond measure are construction unions who obtained monopoly control of Measure G work with a Project Labor Agreement on Solano Community College District projects.

Stunningly, one of the board members – Catherine Ritch (representing Fairfield) – voted NO on putting the bond measure on the November ballot. Ritch was appointed to the Solano Community College District Governing Board in March 2012. She is not running in 2012 for a full term, so she could actually vote based on what is right for the people rather than for what is politically expedient. She also has a professional background as a legislative and administrative government analyst, so she was evidently too informed to be hoodwinked by this scheme.

The Fairfield Daily Republic newspaper was not impressed with the 6-1 vote to ask voters to borrow $348 million by selling bonds. In an August 5, 2012 editorial entitled “Board Appears Set for Local Tax Measures,” the Daily Republic said the following:

Solano Community College jumped on the tax bandwagon this week when trustees voted 6-1 to place a $348 million property tax measure on the November ballot. Trustee Catherine Ritch voted no, and for good reason. She said the finer points of the proposal had not been laid out completely for the board to consider, and called for the board to take “a deep breath” before approving the staff recommendation.

The Central Solano Citizen/Taxpayer Group is opposing Measure Q, as reported in Opponents Mobilize Against Local Tax MeasuresFairfield Daily Republic – October 4, 2012.

In an October 13, 2012 opinion piece in the Vallejo Times-Herald (We Deserve the Entire Story on Measure Q), Eric Christen of the Coalition for Fair Employment in Construction considered the cost increases caused by the Project Labor Agreement on construction funded by Measure G:

…now this same college [Solano Community College District], which still has governing it three of the board members who voted for the PLA [Project Labor Agreement], wants almost $350 million for another bond measure. The reason? Measure G wasn’t large enough to cover the college’s needs. Do you think they could have used that extra $24 million they wasted under a PLA?

The SCCD Governing Board should be honest about whether or not a PLA will be used on this bond should it pass. Voters should have all the information possible before voting to put themselves another $350 million in debt, especially if what they get for that debt is reduced in value in order to placate union special interests. Every candidate running for the board should also be asked whether they would vote to have a PLA placed on Measure Q.

Board members and candidates won’t answer that question. Although the answer is YES to a Project Labor Agreement, Solano County voters won’t support Measure Q if they learn that unions will get a costly government-mandated monopoly on the work.

Solano Community College District sold $1,584,811.70 in Capital Appreciation Bonds in 2005 as part of a large package of refunding bonds. Will the college board do it again on a much larger scale when they have authority from voters to sell $348 million instead of $124.5 million in bonds?

A FINAL QUESTION: Why Should You Care?

As a beleaguered Californian bombarded by bad economic and political news every day, you may now be cynically asking, “Why should I care?” You might have these thoughts:

  • If you live in or pay property taxes to one of these four educational districts, you have probably assumed that any local community opposition to the bond measure will be weak, ineffective, and easily crushed by the bank-and-union funded campaign machine that supports it.
  • If you don’t live in nor own property in one of these four educational districts, you may conclude that citizens who choose to live there accept or are resigned to seeing their school districts waste taxpayers’ money. It’s not your problem – you live elsewhere.
  • And if you live in California but don’t own any property, you may assume that these ballot measures don’t apply to you, because you don’t pay the property taxes for the principal and interest that goes to bond investors, nor the fees to financial service companies for issuing the bonds. You think you have no financial interest in the matter.

Well, you SHOULD care, for four reasons:

  1. Imagine the power of the message voters would send to the state’s political leadership if they rejected huge bond measures to pay for construction in these districts. By using their democratic power and defeating these bond measures, California citizens would nudge their elected officials toward more accountability to the taxpayers instead of the financial industry and union lobbyists.
  2. Voter rejection of bond measures in these four districts would repudiate thoughtless borrowing, taxing, and spending, including the sale of Capital Appreciation Bonds and the adoption of public policies such as Project Labor Agreements that impose costly union monopolies on taxpayer-funded construction.
  3. Voters might encourage some relatively thoughtful school board members in these four districts and other school districts to stand up to the most absurd demands from union lobbyists for more money and more laws. (Surely there are elected board members in school districts who honestly want to focus on student academic performance and aren’t warped by selfish ambitions for higher office.)
  4. Finally, voters would send a message to every California school board member that “it’s for the children” is no longer a sufficient message in itself to collect more taxes for the purpose of repaying money borrowed with interest and fees from investment banks and insurance companies.

Californians need to realize that EVERYONE in the state pays for construction in these three large school districts. The obscure State Allocation Board regularly provides matching grants for construction projects at school districts with proceeds from bond sales authorized by three past statewide propositions totaling $35.8 billion:

Even renters and consumers pay for bond measures. Property owners consider property taxes as a cost of doing business. The tax burden “trickles down” to all Californians.

In addition, Californians need to start thinking about how some of the largest beneficiaries of these bond measures are investment banks, brokerage firms, and other corporate providers of financial services. The so-called “One Percent” makes good money off of Californians’ emotional desire to “help the children.” School districts borrow money now and arrange for property owners to pay it back, along with significant interest payments and financial transaction fees.

Future generations of Californians are going to be crushed under the burdens of debt repayments for the school construction programs of today. For example, the debt of the San Diego Unified School District for school construction bonds was listed in May 2012 at $4.7 billion. It’s time to Close the Spigot and protect those future generations.

Signing the Union Project Labor Agreement to Work at the San Diego Unified School District Is a Perilous Exercise

UPDATE, September 7, 2012: I found a letter embedded in one of the grievance files that actually belongs to another grievance not provided to me by the SDUSD (I’ve added it to the list below), and I’ve learned about another grievance not provided to me by the SDUSD. I will be asking the school district to do a second check of their files, so my compilation of grievances is complete.


In the past 18 months, a few small construction companies have contacted me after unions tangled them up in costly and confusing contractual issues related to working under the Project Labor Agreement imposed by the board of education of the San Diego Unified School District. Contractors must sign this Project Labor Agreement with the San Diego Unified School District and unions in the San Diego County Building and Construction Trades Council to work on construction projects of $1 million or more funded by bonds sold under the authority of Proposition S, approved by voters in November 2008.

The school board approved this union agreement in 2009 on a 3-2 vote, to the great jubilation of union officials. As a result of a subsequent 5-0 vote of a new school board in July 2012, the union agreement will also apply to construction funded by bonds sold under the authority of Proposition Z, if voters approve that $2.8 billion bond measure on the November 6, 2012 ballot. (The San Diego County Taxpayers Association is opposed to Proposition Z.)

To ascertain the extent of the difficulties that small contractors can experience when signing this Project Labor Agreement, I requested the following records from the San Diego Unified School District:

All records generated by the SDUSD or provided to the SDUSD since July 28, 2009 concerning disputes and grievances between and/or among contractors and unions and the district that have been addressed under Article VI of the Project Stabilization Agreement (Work Stoppages and Lockouts), Article VIII of the Project Stabilization Agreement (Work Assignments and Jurisdictional Disputes), Article IX of the Project Stabilization Agreement (Management Rights), and Article X of the Project Stabilization Agreement (Settlements of Grievances and Disputes). For example, please provide all records, including grievances, concerning disputes between the Operating Engineers union and the Laborers union over trade jurisdiction.

I obtained the records in person at the school district headquarters last week. (The main receptionist and the staff at Legal Services were quite helpful, even though I arrived at 4:55 p.m.)

Unions have filed TEN at least ELEVEN grievances under the Project Labor Agreement as of the end of July 2012. Nine At least ten were against construction companies, and one was against the school district.

The San Diego Unified School District has compiled a log listing the grievances filed by unions under the Project Labor Agreement. This log does not completely match up with the actual documents. The list and summary below is based on the actual documents provided by the school district about the grievances:

Operating Engineers Union Local No. 12 went after Crown Fence Company for having a worker on the job site who was not referred from the union hiring hall. The union demanded $64.54 per hour worked by the employee to be paid into a union trust fund. See SDUSD PLA Grievance Crown Fence Company.

Ironworkers Union Local No. 229 went after Triton Structural Concrete claiming that the company improperly assigned bleacher construction to trades other than the Ironworkers. In the end, the union decided to “respectfully withdraw the grievance” so the bleachers could be finished on schedule for mid-September 2011. It appears that Worldbridge Technologies may have also been involved in this dispute. See SDUSD PLA Grievance Triton Structural Concrete.

Operating Engineers Union Local No. 12 went after FenceCorp., Inc.  for having a worker on the job site who was not referred from the union hiring hall. The union demanded $64.54 per hour worked by the employee to be paid into a union trust fund. See SDUSD PLA Grievance FenceCorp, Inc.

Plumbers and Pipefitters Union Local No. 230 went after Rand Engineering claiming that the company improperly assigned “installation of piping for potable water, sewer, and storm drain” as work under the Laborers jurisdiction rather than the Plumbers and Pipefitters jurisdiction. It appears that Quality Plumbing may have also been involved in this dispute. See SDUSD PLA Grievance Rand Engineering.

Plumbers and Pipefitters Union Local No. 230 went after Bert W. Salas, Inc. claiming that the company improperly assigned “installation of piping for potable water, sewer, and storm drain” as work under the Laborers jurisdiction rather than the Plumbers and Pipefitters jurisdiction. The two unions fought over the assignment, the Project Labor Agreement administrator Parsons Construction, Inc. became involved, and there was an arbitration hearing. See SDUSD PLA Grievance Bert W. Salas, Inc.

The United Union of Roofers, Waterproofers and Allied Workers Local Union No. 45 went after A Good Roofer, Inc. because the company did not submit its fringe benefit package to the Project Labor Coordinator for evaluation to determine if it was equivalent or better than the union package. The Roofers union demanded that A Good Roofer, Inc. pay employee fringe benefits (as designated in the union collective bargaining agreement) to the applicable union trust funds, along with interest, costs, and liquidated damages. See SDUSD PLA Grievance – A Good Roofer, Inc.

International Brotherhood of Electrical Workers (IBEW) Union Local No. 569 went after Logical Choice Technologies claiming that certain work performed by the company’s employees was covered under the scope of the Project Labor Agreement. The contractor contended that the work was excluded under Section 2.3 of the union agreement. The dispute went to arbitration and lawyers became involved. See SDUSD PLA Grievance Logical Choice Technologies.

The United Union of Roofers, Waterproofers and Allied Workers Local Union No. 45 went after Mark Beamish Waterproofing claiming that the company improperly assigned “installation of Polyguard below-grade waterproofing” as work under the Painters union jurisdiction rather than the Waterproofers union jurisdiction. The two unions fought over the assignment, the Project Labor Agreement administrator Parsons Construction, Inc. became involved, and lawyers were called in. See SDUSD PLA Grievance Mark Beamish Waterproofing.

The United Union of Roofers, Waterproofers and Allied Workers Local Union No. 45 went after Roger H. Proulx claiming that the company improperly assigned waterproofing work to the Laborers union. The company changed the classification of the work. See SDUSD PLA Grievance Roger H. Proulx.

NEW ADDITION: The Laborers International Union of North America (LIUNA) Local No. 89 went after Mission Valley Landscape claiming that the company improperly assigned work to the Landscaping and Irrigation (Plumbers) Union Local No. 345. See SDUSD PLA Grievance Mission Valley Landscape.

The San Diego County Building and Construction Trades Council went after the San Diego Unified School District claiming it improperly determined under Section 5.2 of the Project Labor Agreement that Standard Electronics had a fringe benefit program equivalent to the program administered by the International Brotherhood of Electrical Workers (IBEW) Union Local No. 569. See SDUSD PLA Grievance SDUSD & Standard Electronics.

This is more evidence for non-union contractors (especially subcontractors in certain trades) that signing a Project Labor Agreement as a condition of winning a job can be a perilous exercise. It can result in significant financial losses or even going out of business if the public entity withholds payments to your company as the grievance is adjudicated.

For taxpayers, why do you vote for school board members who focus on requiring contractors to sign Project Labor Agreements with unions? What do the grievance procedures of Project Labor Agreements have to do with educating students?

Keep in mind that the board of education of the San Diego Unified School District was authorized by voters in 2008 to borrow money for school construction by selling $2.1 billion in bonds to investors, who will make money on the interest. The school district has sold Capital Appreciation Bonds, which accrue a huge amount of compounded interest to be paid back as taxes by future generations of district residents. It now wants approval from voters in November 2012 to borrow another $2.8 billion from investors by selling bonds, to be paid back later with interest. Overhanging it all is the school board’s mandate that construction companies sign an agreement with unions as a condition of work.

Board of San Diego Unified School District Senses Voters May Reject $2.8 Billion Bond Measure (Proposition Z) Because of Board’s Past Use of Capital Appreciation Bonds

“Board of Education” is displayed on the outside of the board’s meeting room at San Diego Unified School District headquarters. Oversized portraits of board members have not been hung – yet.

The board of education of the San Diego Unified School District wants permission from voters on November 6, 2012 to borrow more money for school construction by selling another $2.8 billion worth of bonds to investors. (The $2.8 billion amount does not include interest payments and transaction fees.) The ballot measure is designated as Proposition Z.

In November 2008, 68.71% of voters in the school district approved the $2.1 billion Proposition S. This bond measure remains controversial because the newly elected pro-union majority subsequently voted 3-2 to require construction contractors to sign a Project Labor Agreement (PLA) with unions for projects of $1 million or more funded wholly or in part by Proposition S.

The current school board – now made up of five pro-union board members – recognized that the proposed Proposition Z bond measure would inevitably draw opposition because of the Project Labor Agreement on projects funded by Proposition S. They made a political calculation and voted on July 24, 2012 to apply the Project Labor Agreement to Proposition Z as well as Proposition S. This locked in the campaign support of the San Diego County Building and Construction Trades Council for a tough campaign. (Proposition Z is already opposed by the San Diego County Taxpayers Association.)

But now a new and unexpected campaign vulnerability looms for the San Diego Unified School District’s proposed $2.8 billion Proposition Z: the sale of Capital Appreciation Bonds.

One of the school districts bordering the San Diego Unified School District – the Poway Unified School District – is now getting national news attention because its board decided in 2011 to borrow $105,000,150 by selling Capital Appreciation Bonds. Taxpayers will need to pay investors $981,562,329 by 2052. See page 12 of the Poway Unified School District’s Proposition C Bond Building Fund Annual Audit Report, January 31, 2012.

The San Diego Unified School District was also in on the Capital Appreciation Bond racket, big-time.

For example, the San Diego Unified School District board of education voted on March 24, 2009 to authorize what became a sale of $131,157,580.95 in Capital Appreciation Bonds for Proposition S. To complicate matters, $73,168,837.40 of those bonds (but not the other $57,988,743.55) would convert to the more traditional current interest bonds in 2019. The interest on borrowing that $131 million would total $273,994,919.05 by 2033, with the interest backloaded to the end of the maturity period, of course. Based on this 2011 San Diego Unified School District annual audit report, it would be accurate to say that taxpayers are paying $405 million through 2033 to borrow $131 million in 2009 through the “2008 Series A” bond sales.

Perhaps the school board let this happen because it was preoccupied with negotiating the Project Labor Agreement to fulfill the demands of construction union lobbyists. Either that, or it just didn’t care about how the specifics of its bond sales would affect future taxpayers.

Even worse is the $163,869,784 that the San Diego Unified School District borrowed from investors through the “2008 Series C” bond sales. Interest on that $164 million will total $740,360,216 by the time the bonds mature in 2050. It would be accurate to say that taxpayers are paying $904 million through 2050 to borrow $164 million in 2010 through the “2008 Series C” bond sales.

That’s $1.3 billion to borrow $295 million. Not as bad as the Poway Unified School District, but it’s unlikely many voters in the district would have voted for Proposition S if they understood what it would truly cost taxpayers to borrow money for school construction.

And you can’t blame the voters. The people who approved Proposition S in November 2008 didn’t know that the district would sell Capital Appreciation Bonds, rather than the traditional “current interest bonds” for which interest is paid out twice a year to investors. (Actually, I’ll make a guess that most people who voted for Proposition S couldn’t explain a bond if they were asked – they just wanted to help the kids.)

Now the board of education for the San Diego Unified School District needs to neutralize the Capital Appreciation Bond issue before it sinks the proposed Proposition Z. The board president John Lee Evans has declared that the board will consider a resolution stating it will not sell any more Capital Appreciation Bonds.

SD Unified to Consider Bond Restrictions – San Diego Union-Tribune – August 23, 2012

City Schools Prez Pledges No Exotic Financing on New Bond – Voice of San Diego – August 23, 2012

Don’t Be Fooled! Meet Some Sneaky Fake Taxpayer Groups In California

In November 2000, California voters approved Proposition 39, which allows school districts to seek voter approval for school construction bonds at a 55% threshold instead of a two-thirds threshold. One of the conditions in Proposition 39 required of school districts seeking the 55% threshold for passage is to establish a Citizens Bond Oversight Committee, with the requirement that “One member shall be active in a bona fide taxpayers’ organization.” (See California Education Code Section 15282.)

I scoffed at that provision and figured it wouldn’t be long before the California Labor Federation, AFL-CIO and its regional affiliates created their own “bona fide taxpayers’ organizations” to undermine bond oversight committees and make sure taxpayers remain a generous source of revenue for the government and the people who live off of it.

That has surely happened with the case of the Middle Class Taxpayers Association in San Diego, one of two obviously phony taxpayer organizations that float about nowadays to provide cover for the union tax-and-spend agenda.

The Middle Class Taxpayers Association in San Diego – FAKE!

The Middle Class Taxpayers Association, formed in 2011 in San Diego, betrays its true agenda with the code words in its mission, as reported in the leftist Ocean Beach Rag: “MCTA will focus on pocket-books issues such as healthcare coverage, housing affordability, quality of life, small business development, asset building, moral public budgeting, employment self-sufficiency, lifetime education, retirement security, and consumer safety.” (They forgot to include “investment” in this list.) In other words, more taxes, more programs, more spending.

A post on the web site of the San Diego County Republican Party claims that “the ‘Middle Class Taxpayers Association’ isn’t a new voice for responsible stewardship of our tax dollars. It’s a front group shilling for the San Diego (Central) Labor Council. The Labor Council doesn’t even try to hide its involvement.” No surprise, the Middle Class Taxpayers Association opposes Proposition A (Fair and Open Competition) and Proposition B (City Employee Pension Reform) on the June 5 ballot in the City of San Diego.

In the summer of 2011, the Governing Board of the Southwestern Community College District in Chula Vista declined to reappoint Rebecca Kelley, the representative of the San Diego County Taxpayers Association, to its Citizens’ Bond Oversight Committee for the $389 million Proposition R bond measure, instead placing a representative of the Middle Class Taxpayers Association on the oversight committee.

That so-called taxpayers’ representative is Matt Kriz, political director of International Union of Painters and Allied Trades, District Council 36 and Local 831. As reported earlier by the Dayton Public Policy Institute, the board of directors of the Southwestern Community College District is about to vote on a policy to require contractors to sign a Project Labor Agreement with construction unions to work on projects funded by Proposition R. Even the college newspaper was able to make the connection:

Builder Decries Loss of Oversight Members: SWC Board Replaced Two on Prop. R Committee over the Summer – Southwestern College Sun newspaper – October 7, 2011

Also, see Breaking: Labor Corruption…SD Labor Council Seeks to Oust Taxpayer Advocate from Oversight Committee – posted on San Diego Rostra by Ryan Purdy – July 12, 2011

The real taxpayers’ organization in San Diego County is the San Diego County Taxpayers Association. In addition, Richard Rider’s San Diego Tax Fighters is a reliable source of information on local fiscal responsibility.

The Contra Costa County Senior Taxpayers Group – FAKE!

I only checked the existence of this phony organization when construction union officials handed me a letter from the Richmond-based “Contra Costa County Senior Taxpayers Group” on May 18 outside an event hosted by the Contra Costa Taxpayers Association. The letter reiterated union-backed attacks on a study showing that school construction in California is 13%-15% more expensive when a school district requires contractors to sign a Project Labor Agreement with unions.

Using web searches, I only find one example of the Contra Costa County Senior Taxpayers Group involved in policy issues: on June 18, 2009, Susan Swift – the executive director of the Contra Costa County Senior Taxpayers Group – spoke to the Brentwood City Council in support of a requirement for contractors to sign a Project Labor Agreement to work on the Brentwood Civic Center. (The union requirement was approved on a 3-2 vote.) Swift is a former staffer to two San Francisco Bay Area Democrat state legislators and received the endorsements of numerous Democrat politicians and unions when she ran unsuccessfully for Director of the West Contra Costa Healthcare District in 2004.

The real taxpayers’ organization in Contra Costa County is the Contra Costa Taxpayers Association. There is also a small group called the Alliance of Contra Costa Taxpayers, which still seems to pop up occasionally to oppose new taxes but whose web site has been neglected for several years.

The Mother Lode Taxpayers Association – BONA FIDE or a POLITICAL FRONT?

I was reminded last week of my old 2000 prediction about fake taxpayer groups when I read about the controversy concerning the legitimacy of the Mother Lode Taxpayers Association, a group founded in 2010 that established a Political Action Committee on April 12, 2012 for independent campaign expenditures in support of Frank Bigelow, a Republican candidate for the 5th Assembly District facing off in the June 5 primary against former Assemblyman Rico Oller.

Now, I’m guessing that Frank Bigelow (just like Rico Oller) would be a solid vote for fiscal responsibility in the California State Assembly. But I wouldn’t regard the three donors to the Mother Lode Taxpayers Association’s Political Action Committee to be special interest groups known for their philosophical resistance to relentless tax increases and government expansion. It received $150,000 from the California Real Estate Independent Expenditure Committee, $75,000 from the California Dental Association Independent Expenditure PAC, and $10,000 from the California Cattlemen’s Association PAC (CATTLE PAC).

The Howard Jarvis Taxpayers Association (which endorsed Rico Oller) issued a press release noting “fake taxpayer groups like this undermine legitimate taxpayer organizations…” Yet, I notice that the web site for the Mother Lode Taxpayers Association has been active in other local campaigns in the past three years: see here. The executive director, Heidi Morton, is active in Republican and conservative causes in Tuolumne County.

So is the Mother Lode Taxpayers Association bona fide or not? I hope so, and I hope it will join the other legitimate taxpayer associations in California in the lonely fight for fiscal responsibility.

A Fairly Trustworthy List of Taxpayer Organizations in California

I don’t know every listed group, but I believe the National Taxpayers Union (based in Washington, D.C.) has posted a fairly accurate list of bona fide taxpayer groups in California: California is the Best Example of How to Run a State’s Economy into the Ground.