Tag Archive for San Diego Unified School District

California Bill Would Allow Contractors and Workers to Maintain Their Existing Health Insurance Under a Project Labor Agreement

Assemblyman Jim Patterson (R-Fresno) has introduced Assembly Bill 842 in the California legislature. Here is the Legislative Counsel’s digest of this bill:

AB 842 “would provide that a contractor that bids on or has been awarded work covered by a Project Labor Agreement that provides health care coverage to workers on the project that is the subject of the agreement, that includes essential health benefits, as described in the PPACA [federal Patient Protection and Affordable Care Act], and that provides evidence of that coverage to the entity awarding the contract, is exempt from a requirement to pay into a trust or custodial benefit plan for health and welfare or similar benefits for those workers an amount equal to the amount that the contractor would have been required to pay into that trust or custodial benefit plan for health care costs for those workers.”

In other words, a non-union employer that has a bone fide health insurance benefit program equivalent to or better than what is offered by the applicable multi-employer union-affiliated trust for the same trade in the same geographic region does not have to pay the health insurance component to the union trust fund. It can make employer payments to the company health insurance program on behalf of its employees. The company does not need to pay to both the union program and ALSO its own company program (the costly “double payments” dilemma) so that its employees can maintain their existing health insurance.

What does this mean in practice? The Salinas Taxpayers Association took a position in support of AB 842 because the bill was relevant to Project Labor Agreement controversies in Salinas. Here is the Salinas Taxpayers Association letter on Assembly Bill 842:

Salinas Taxpayers Association - Support AB 842 - Project Labor Agreement Equivalent Fringe Health Benefits - April 15, 2015

Salinas Taxpayers Association - Support AB 842 - Project Labor Agreement Equivalent Fringe Health Benefits - April 15, 2015

 

Several of the more than 200 government-mandated Project Labor Agreements imposed in California have included such language for not just health insurance but for ALL legitimate fringe benefits. One prominent example is the San Diego Unified School District. A Project Labor Agreement administrator was given the authority to determine if non-union contractors provided equivalent benefit plans. (Below, see the relevant language from the Project Labor Agreement.)

Note that unions (as well as labor compliance programs or personnel) monitor contractors that claim equivalent fringe benefit plans. Unions have also challenged decisions of PLA administrators concluding that non-union contractors have equivalent benefits. Two examples at San Diego Unified School District:

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.

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.

Here is the language from the San Diego Unified School District Project Labor Agreement:

Section 5.2 Benefits. (a) Contractors shall pay contributions to the established employee benefit funds in the amounts designated in the appropriate Schedule A; and make all employee ­authorized deductions in the amounts designated in the appropriate Schedule A: provided, however, that the Contractor and Unions agree that only such bona fide employee benefits as accrue to the direct benefit of the employees (such as pension and annuity, health and welfare, vacation, apprenticeship, and training funds) shall be included in this requirement and required to be paid by the Contractor on the Project; and provided further, however, that such contributions shall not exceed the contribution amounts set forth in the applicable prevailing wage determination.

Unless otherwise required by law, Contractors who have fringe benefits for their core workforce equal to or better than those designated in the Schedule A do not have to pay the fringe benefit contribution designated in the Schedule A on the core work force and may utilize their own fringe benefits. The Project Labor Coordinator will be responsible for determining whether the benefits are equal to or better than those designated in the Schedule A’s. Contractors must submit their fringe benefit packages to the Project Labor Coordinator for evaluation prior to bidding. Contractors may only take credit against the prevailing wage in accordance with the Prevailing Wage Statute and the difference between the hourly cost, if any, of the fringe benefit provided and the hourly cost of the applicable fringe benefit portion of the wage determination must be paid to the worker as wages. Benefits designated in the Schedule A will be paid on all employees dispatched by the Union.

(b) Where applicable, the Contractor adopts and agrees to be bound by the written terms of the applicable, legally established, trust agreement(s) specifying the detailed basis on which payments are to be made into, and benefits paid out of, such trust funds for its employees. The Contractor authorizes the Parties to such trust funds to appoint trustees and successors’ trustees to administer the trust funds and hereby ratifies and accepts the trustees so appointed as if made by the Contractor.

(c) Each Contractor and Subcontractor is required to certify to the Project Labor Coordinator that it has paid all benefit contributions due and owing to the appropriate Trust(s) or fringe benefit programs prior to the receipt of its final payment and/or retention. Further, upon timely notification by a Union to the Project Labor Coordinator, the Project Labor Coordinator shall work with any Contractor or Subcontractor who is delinquent in payments to assure that proper benefit contributions are made, to the extent of requesting the District or the prime Contractor to withhold payments otherwise due such Contractor, until such contributions have been made or otherwise guaranteed.

This example shows that Assembly Bill 842 proposes a feasible policy. In fact, AB 842 could be expanded to encompass ALL bone fide fringe benefit plans and not just health insurance. Nevertheless, expect the State Building and Construction Trades Council of California and individual unions to oppose the bill.

Oxnard Union High School District Has Five Days to Negotiate a Project Labor Agreement for a $40 Million New High School

Last night (November 20, 2013), the board of trustees for the Oxnard Union School District in Ventura County bickered with the school district administration and each other over the terms and conditions of a proposed Project Labor Agreement for a $40 million new school (Rancho Campana High School).

News Coverage: Tension Marks School Building Plans – Ventura County Star – November 22, 2013

Certain members of the school board have been pushing for a Project Labor Agreement at the behest of union lobbyists since their October 9, 2013 meeting. The school district awarded a lease-leaseback contract on October 23, 2013.

The board set a special meeting for Monday, November 25 at 5:00 p.m. to approve a final negotiated version of a Project Labor Agreement. Staff was told to clear their schedules to meet with union officials and representatives of the winning general contractor (S.C. Anderson, Inc.) until a deal is reached.

This morning, I sent this email to Oxnard Union High School District board members, administrators, and the chairman of the Citizens’ Bond Oversight Committee:


From: Kevin Dayton
Sent: Thursday, November 21, 2013 9:34 AM
To: xxxx
Subject: Oxnard Union HSD Project Labor Agreement Negotiating Terms: San Diego USD Versus Los Angeles USD

Dear Oxnard Union High School District Board Members, Administrators, and Appointed Citizen Leaders:

As indicated during the November 20, 2013 board meeting, a majority of trustees for the Oxnard Union High School District wants to emulate the San Diego Unified School District and the Los Angeles Unified School District when implementing a requirement for construction contractors to sign a Project Labor Agreement with unions as a condition of winning a contract for $40 million in upcoming construction.

You may not be aware that the Project Labor Agreements for San Diego Unified School District and Los Angeles Unified School District have some fundamental differences related to employer fringe benefit payments. San Diego USD provides some limited flexibility for non-union contractors, while Los Angeles USD is highly restrictive and makes no concessions to non-union construction benefit plans. Below are links to those PLAs and then some analysis of them.

San Diego Unified School District Project Labor Agreement (on school district web site)

Los Angeles Unified School District Project Labor Agreement (The LAUSD “Facilities Services Division website is currently experiencing a temporary problem and working to correct it,” so this link is to the copy on my web site.)

Links to All 189 Project Labor Agreements for Government Projects or Sets of Projects in California Since 1993 (posted on my web site)

By the way, you may need to check with the Tri-Counties Building and Construction Trades Council, AFL-CIO to confirm that the finalized proposed Project Labor Agreement for your school district needs to be approved by officials at the national headquarters of the Building and Construction Trades Department, AFL-CIO in Washington, D.C.

You’re welcome to contact me with any technical questions about Project Labor Agreements, although I am BIASED against such a costly and anti-competitive government regulatory mandate on bidders for taxpayer-funded contracts. (And really, you should be too.)

Kevin Dayton
President and CEO
Labor Issues Solutions, LLC
(916) 439-2159

P.S. – links to your district’s oversight committee documents get a screen that says “THIS IS SOMEWHAT EMBARRASSING, ISN’T IT? It seems we can’t find what you’re looking for. Perhaps searching can help.”


San Diego Unified School District Project Labor Agreement

At the San Diego Unified School District, the Project Labor Agreement (“Project Stabilization Agreement”) allows a construction contractor to pay employee fringe benefits into its own existing employee benefit plan, provided that the plan is determined to be equivalent to the  union plans to which the contractor would otherwise send payments. A third-party Coordinator or Administrator determines whether or not the programs are equal or better than the union programs.

Here is the language from the San Diego USD Project Labor Agreement:

Section 5.2 Benefits. (a) Contractors shall pay contributions to the established employee benefit funds in the amounts designated in the appropriate Schedule A; and make all employee ­authorized deductions in the amounts designated in the appropriate Schedule A: provided, however, that the Contractor and Unions agree that only such bona fide employee benefits as accrue to the direct benefit of the employees (such as pension and annuity, health and welfare, vacation, apprenticeship, and training funds) shall be included in this requirement and required to be paid by the Contractor on the Project; and provided further, however, that such contributions shall not exceed the contribution amounts set forth in the applicable prevailing wage determination.

Unless otherwise required by law, Contractors who have fringe benefits for their core workforce equal to or better than those designated in the Schedule A do not have to pay the fringe benefit contribution designated in the Schedule A on the core work force and may utilize their own fringe benefits. The Project Labor Coordinator will be responsible for determining whether the benefits are equal to or better than those designated in the Schedule A’s. Contractors must submit their fringe benefit packages to the Project Labor Coordinator for evaluation prior to bidding. Contractors may only take credit against the prevailing wage in accordance with the Prevailing Wage Statute and the difference between the hourly cost, if any, of the fringe benefit provided and the hourly cost of the applicable fringe benefit portion of the wage determination must be paid to the worker as wages. Benefits designated in the Schedule A will be paid on all employees dispatched by the Union.

(b) Where applicable, the Contractor adopts and agrees to be bound by the written terms of the applicable, legally established, trust agreement(s) specifying the detailed basis on which payments are to be made into, and benefits paid out of, such trust funds for its employees. The Contractor authorizes the Parties to such trust funds to appoint trustees and successors’ trustees to administer the trust funds and hereby ratifies and accepts the trustees so appointed as if made by the Contractor.

(c) Each Contractor and Subcontractor is required to certify to the Project Labor Coordinator that it has paid all benefit contributions due and owing to the appropriate Trust(s) or fringe benefit programs prior to the receipt of its final payment and/or retention. Further, upon timely notification by a Union to the Project Labor Coordinator, the Project Labor Coordinator shall work with any Contractor or Subcontractor who is delinquent in payments to assure that proper benefit contributions are made, to the extent of requesting the District or the prime Contractor to withhold payments otherwise due such Contractor, until such contributions have been made or otherwise guaranteed.

These Project Labor Agreements also explicitly exempt non-union contractors from making employer payments classified as “Other” under California Labor Code §1773.1(a)(7-9) to labor-management committee trust funds or other similar funds.

Los Angeles Unified School District Project Labor Agreement

At the Los Angeles Unified School District, the Project Labor Agreement (“Project Stabilization Agreement”) requires a construction contractor to pay employee fringe benefits into union-affiliated trust funds, even if it has its own existing employee benefit plan that is equivalent to the union plan. When a contractor does not send the money to the union trust funds, the unions and their trust funds sue the school district and the contractor.

Here are some other problems with the Los Angeles USD Project Labor Agreement:

1.  Non-Union Workers in Los Angeles County Under Project Labor Agreement Have Bank Accounts Opened for Them at IBEW Credit Union

Attached is the excerpt from the collective bargaining agreement for the IBEW Local No. 11 about workers’ pay deposited into an account set up for them at the IBEW Local No. 11 credit union, and the signature card for non-union electricians working under the PLA at Los Angeles USD authorizing deposit of pay there and withdrawals for dues payments. Here are links to the documentation:  Master Labor Agreement Provisions for IBEW Credit Union; Forms to Open a Bank Account in Your Name at the IBEW Credit Union.

Why is this PLA requirement offensive? Workers should have the right to choose how they invest the money they earned.  Requiring a percentage of workers’ paychecks to be deposited in a specific credit union takes away that right.  The basis for a successful free market economy is the right of individuals to make their own economic choices.  In addition, workers should not be forced to have their paychecks deposited in a specific bank – they may object to that bank because of how it invests its deposits or how it uses their personal information.  Finally, forcing a percentage of workers’ paychecks to be deposited in a specific bank gives the bank a guaranteed inflow of money, thus taking away the bank’s incentive to provide the best products and services to attract potential depositors.  In addition, this guaranteed inflow may encourage the bank to take excessive risks or make foolhardy investment decisions.

2.  Union Forces Contractors to Pay Journeymen Wages and Benefits to Non-Union Apprentices under Project Labor Agreement in Los Angeles County

A non-union contractor signed a Project Labor Agreement that was part of the bid specifications for a project at the Los Angeles Unified School District (LAUSD).  The contractor requested apprentices from the applicable International Brotherhood of Electrical Workers (IBEW) union program, but then requested apprentices from a non-union program after the IBEW program failed to dispatch apprentices.  The non-union program provided 17 apprentices, who received the appropriate on-the-job training on the project.  Subsequently, the IBEW and its related trust funds sued the contractor in federal court, contending that the contractor should have paid journeymen wages and benefits to the apprentices because they were not dispatched from the applicable union apprenticeship program as specified in the Project Labor Agreement.

On November 3, 2009, a district court judge ruled that the Project Labor Agreement required apprentices to come from union programs.  The judge awarded the union $272,738.63 in underpaid trust contributions, including interest of $55,940.34, along with liquidated damages of $55,940.34 and additional auditor fees of $7,177.50.

Contractors working on public works projects in California must comply with Title 8, Section 230.1 http://www.dir.ca.gov/t8/230_1.html of the California Code of Regulations.  That regulation states “If the apprenticeship committee from which apprentice dispatch(es) are requested does not dispatch apprentices as requested, the contractor must request apprentice dispatch(es) from another committee providing training in the applicable craft or trade in the geographic area of the site of the public work, and must request apprentice dispatch(es) from each such committee, either consecutively or simultaneously, until the contractor has requested apprentice dispatches from each such committee in the geographic area.”  It seems that according to the IBEW, if a contractor working under a PLA does not get enough apprentices from the applicable union apprenticeship program and then complies with §230.1 by requesting and obtaining apprentices from an eligible non-union apprenticeship program,, then the contractor has to pay journeymen-level wages to those apprentices!

3.  Unions in Los Angeles County Can Obtain the Personal Information of Workers and Audit the Books of Contractors Who Sign a Project Labor Agreement

A California appellate court issued a decision on August 16, 2010 of great interest to contractors signing a Project Labor Agreement in Los Angeles County.

Since 2007, the International Brotherhood of Electrical Workers (IBEW) pension program has filed at least eight lawsuits to obtain pension payments from employers who had signed the Project Labor Agreement to work at the Los Angeles Unified School District.  When the pension program did not have employer contribution reports containing the personal information of the employees, it filed document subpoenas to obtain certified payroll records from LAUSD that exposed the names, addresses, and social security numbers of the employees.  An IBEW pension program official stated to the court that this was easier than auditing the contractor as a way to get the personal information.

LAUSD wanted to clarify in the courts whether or not the language in California Labor Code Section 1776(e) [see below] provided a “conditional privilege” or an “absolute privilege” of confidentiality in certified payroll records.  The appeals court ruled that LAUSD had to provide the personal information on the certified payroll records to the pension program.  It did not address a lower court ruling that §1776(e) was preempted by ERISA.

****Of interest: footnote 3 on page 5 confirms that the Project Labor Agreement at LAUSD requires signatory contractors to submit to the written terms of the applicable trust agreement, which means that in this case the IBEW has authorization to audit the books of non-union contractors.****

One way or another, the IBEW can and will obtain the personal information of employees working for contractors that are signatory to the LAUSD PLA.

4.  Unrelenting Harassment of the Non-Signatory Electrical Contractors in the Los Angeles Unified School District’s $11 Billion of Construction Work: Subscription Agreements

Diana Limon, a compliance officer in Local 11, one of 9 IBEW members who joined 126 fellow unionists at graduation ceremonies. AFL-CIO President John Sweeney and Dr. Susan Schurman, President of the College, awarded the degrees.

“I encouraged Diana to attend, and I wanted to be there with her,” states Brungard. “She’s exceptional. She was apprentice of the year and then served as a foreman for a local contractor. I know how hard she worked. I know that what she learned at the NLC will make her an even more impressive leader.”

Limon, a Labor Studies major, says: “The positive learning environment and the commitment of my classmates to take their knowledge back to their organizations was phenomenal.” All seniors must complete a research project dealing with an issue affecting their union or the labor movement-to earn a B.A. degree. Limon’s paper focused on the process of getting non-union electrical contractors to subscribe to benefit trust funds established as part of a $11 billion Project Stabilization Agreement between the Orange County Building Trades and the employer, the Los Angeles Unified School District. Limon was awarded a distinguished paper award, along with IBEW members Eugene Parrington and Francis J. Cunningham. They presented the papers in a symposium prior to graduation. Abstracts for each paper are available online here. The papers will be permanently shelved in the George Meany Center library.

http://www.ibew.org/articles/04daily/0407/040707_laborcollege.htm

###

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.

Opponents of Project Labor Agreement for San Diego Unified School District Smack $2.8 Billion Proposition Z with 50,000 Mailers

The Coalition for Fair Employment in Construction continues its “School Bond Accountability Project” by sending out a mailer to 50,000 San Diego households reminding them that the Board of Education of the San Diego Unified School District requires construction contractors to sign a Project Labor Agreement with unions in order to work on certain projects funded by school district bond sales.

Coalition for Fair Employment in Construction No on Prop Z San Diego Unified School District Mailer - Front

Coalition for Fair Employment in Construction No on Prop Z San Diego Unified School District Mailer – Front

Coalition for Fair Employment in Construction No on Prop Z San Diego Unified School District Mailer - Back

Coalition for Fair Employment in Construction No on Prop Z San Diego Unified School District Mailer – Back

In November 2008, voters approved Proposition S, authorizing the Board of Education of the San Diego Unified School District to borrow $2.1 billion for construction (and apparently, iPads) by selling bonds to investors. Voters had no indication that the Board of Education would promptly make a deal with construction unions to give them a monopoly on construction with a Project Labor Agreement. (See San Diego Unified School District Proposition S Project Labor Agreement 2009.)

Project Labor Agreement Policies for San Diego Unified School District

1999 Union officials unsuccessfully lobby the school board and district officials to require contractors to sign a Project Labor Agreement for construction funded by Proposition MM.
May 26, 2009 Board votes 3-2 to approve a Project Labor Agreement for construction funded by Proposition S.
July 24, 2009 Board again votes 3-2 to approve a Project Labor Agreement for construction funded by Proposition S, replacing the first, defective agreement with a new agreement containing terms and conditions acceptable to the Carpenters Union.
July 24, 2012 July 24, 2012 – Board votes 5-0 for a resolution expanding the scope of the Project Labor Agreement to projects funded by future bond measures, thus imposing the Project Labor Agreement on projects funded by the proposed $2.8 billion bond measure on the November 6, 2012 ballot.

Administrative offices of the San Diego Unified School District.

Now the Board of Education wants to borrow another $2.8 billion! It wants voters to approve Proposition Z, authorizing more bond sales for construction. The Board of Education of the San Diego Unified School District also passed a resolution on a 5-0 vote committing to require contractors to sign a Project Labor Agreement with unions in order to work on projects funded by Proposition Z.

Read this list of contributors to the campaign to convince voters to let the San Diego Unified School District sink under another $2.8 billion (plus interest) in debt with Prop Z. It includes ONE San Francisco investment banker who has essentially funded 20% of the campaign.

The Coalition for Fair Employment in Construction sent this press release out today (November 1, 2012):

CFEC Mails 50,000 Taxpayers in San Diego Reminding Them How San Diego Unified Spends Bond Money Wastefully

San Diego, CA – 50,000 households within the San Diego Unified School District (SDUSD) will be receiving this mailer over the next couple of days reminding them how the San Diego Unified School District spends bond money.

Proposition S, a $2.1 billion school construction bond passed by voters in 2008, was placed under a union-crafted Project Labor Agreement (PLA) in early 2009. This payoff to the union bosses who financed school board members’ political campaigns has resulted in the district having 50% fewer bidders on projects while the costs of those projects are 20% higher than non-PLA projects.

SDUSD is paying $1 million annually just to oversee the PLA.

“SDUSD homeowners are currently on the hook for  $4.7 BILLION in debt for all previous bonds.  What they receive for that debt, however, is further reduced in value due to the PLA.” said CFEC’s Eric Christen.

What are homeowners getting for all of this wealth they are giving up?

iPads that cost you and me $500 but SDUSD pays $4,000 to be paid back over 40 years. This means current SDUSD students’ GRANDCHILDREN will still be paying off iPads that were thrown away 30 years before they were even born.

The facts regarding the failures of how Prop S money is spent certainly did not come from the District which has admitted that the records it keeps on how Prop S funds were spent are “incomplete” and essentially misleading.

“Voters need to know the fiscally reckless manner in which this District is spending billions in taxpayers dollars” added Christen. “This mailer will help accomplish this goal.”

To date approximately 20% of the money authorized to be spent under Prop S has in fact been spent.

Who’s Paying to Convince San Diego Voters to Take On $2.8 Billion of Additional Debt – Plus Interest – with Proposition Z?

As of this writing, the link for the October 20, 2012 Proposition Z campaign finance report is not working as provided by the County of San Diego Registrar of Voters Campaign Finance Disclosure Public Site. However, the June 30, 2012 Proposition Z campaign finance report, the September 30 Proposition Z campaign finance report, and three post-October 20, 2012 Proposition Z campaign finance reports are on the site. So here is a partial record of contributions to the campaign for Proposition Z, allowing the San Diego Unified School District Board of Education to borrow $2.8 billion by selling bonds to investors.

DONOR INTEREST AMOUNT
Irwin & Joan Jacobs Philanthropists $80,000
California Charter Schools Association Charter schools $32,500
San Diego County Building and Construction Trades Council Family Housing Corporation No. 1 Construction trade union – property owner $30,000
San Diego County Building and Construction Trades Council Family Housing Corporation No. 2 Construction trade union – property owner $30,000
Southern California Pipe Trades Council #16 Construction trade union $10,000
Laborers Local Union No. 89 Construction trade union $10,000
Plumbers Local Union No. 230 Construction trade union $10,000
Southwest Regional Council of Carpenters Construction trade union $10,000
San Diego Electrical Industry Labor Management Cooperation Committee Union-affiliated labor-management cooperation committee $10,000
PJHM Architects Architect – clients include K-12 school districts $10,000
Barney & Barney Insurance and employee benefits $7,500
CPM Ltd. (dba Manpower of San Diego) Temporary employment $5,000
CSDA Architects Architect $5,000
Gafcon Construction management $5,000
Harris & Associates Construction management/engineers $5,000
Mel Katz Manpower/Philanthropist $5,000
LPA, Inc. Architect $5,000
Mike Kooyman – Executive with PCM3 Construction management firm $5,000
Carl Schneider – Executive with SchneiderCM Construction management firm $2,500
BSE Engineering Engineering $1,250
IBI Group Architect/engineering $1,250
Operating Engineers Local Union No. 12 Construction trade union $1,000
Andy Berg –National Electrcal Contractors Association San Diego Chapter Unionized construction trade association $1,000
Amy Redding Philanthropist/school volunteer/parent of SDUSD student $1,000
Burkett & Wong Engineers Engineering $1,000
Blue Coast Consulting Inspectors – clients include K-12 school districts $500
Sylvia Avendano – executive with Owen Group Engineering $250
Johnson Consulting Engineers Engineering $250
Debra Preece – executive with Vector Resources Information technology – clients include K-12 school districts $250
Alison Whitelaw – executive with Platt/Whitelaw Architects Architect $250
TOTAL $285,500.00

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.

A Compilation of Construction Trade Union Project Labor Agreements for K-12 School and Community College Districts in Orange County, San Bernardino County, Riverside County, and San Diego County

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

First Swipe at San Diego Unified School District’s Proposed $2.8 Billion Bond Measure Under a Project Labor Agreement: San Diego Union-Tribune Opinion Piece – A Bond Is Not Free Money

Today’s San Diego Union-Tribune (August 3, 2012) includes a sharp opinion piece from Eric Christen, executive director of the Coalition for Fair Employment in Construction, entitled “School District’s Bond Measure Not ‘Free Money’.'”

He uses two arguments as a basis to oppose the proposed $2.8 billion bond measure for school construction that the San Diego Unified School District’s Board of Education placed on the November 6, 2012 ballot with a resolution at its July 24, 2012 meeting.

1. Bonds Are Not Free Money; They Are Borrowed Money. Property Owners Large and Small Pay Taxes So Investors Get Back the Principal Plus Interest and Transaction Fees.

Eric points out to uninformed and confused readers that voting for school bonds does NOT mean getting free money from the government. This is actually money obtained through arrangements with brokerage firms, borrowed from investment banks and insurance companies, and paid back through taxes assessed on property owners in the school district. People will pay back these bonds, along with the interest and transaction fees, when they pay their property tax bills to San Diego County.

Eric also points out that the dastardly “One Percent” invests in these bonds, and they want their money back, with interest and fees. They don’t do it for the children, either. They do it to get rich and stay rich.

How does this work in practice? As one example, the San Diego County Counsel’s Impartial Analysis of the $2.1 billion bond measure approved by voters as Proposition S in November 2008 for the San Diego Unified School District indicated that the interest rate for any bond authorized by Proposition S could be as high as 12 percent. In addition, the maturity period for any bond authorized by Proposition S could range from 25 years to 40 years.

In a future post, I will analyze the specific bond sales to date authorized by Proposition S.

Another interesting angle with the new proposed $2.8 billion bond is the possibility that the San Diego Unified School District may choose to sell Capital Appreciation Bonds (CABs), in which the investors get the principal plus compound interest in one lump sum at the end of the maturity period, rather than getting a regular interest payment. Meanwhile, the tax burden with these bonds is often backloaded to the end of the maturity period.

In other words, babies born in 2012 could be socked with huge property taxes if they own a house in San Diego from 2050 to 2060. (The current school board will probably be deceased and not accountable to the voters at that time for their decision in 2012.) I write about the growing, dangerous popularity of Capital Appreciation Bonds among California school districts in some of my earlier posts (here and here).

Unions Will Control the Construction with a Project Labor Agreement

While it’s future generations that may end up paying the bulk of this proposed new $2.8 billion school bond (costing perhaps $5 billion total, including the interest and transaction fees), the current generation of parents and students will see their construction program compromised by a government-mandated Project Labor Agreement that cuts bid competition and increases costs for the benefit of construction unions.

The Board of Education has already passed a resolution (also on July 24, 2012) indicating that contractors working on projects over $1 million under the proposed new bond will indeed be required by the school district to sign a Project Labor Agreement with unions as a condition of work. It is titled “Resolution Regarding Project Stabilization Agreement (PSA) for Future Local Bonds’ School Construction, Repairs, and Renovation and Addendum Three to PSA to Extend the PSA to Future Local Bonds.”

That can mean four schools for the price of five. For more information about measuring the cost of Project Labor Agreements, see the July 2011 study by the the National University System Institute for Policy Research about the costs of California school construction under Project Labor Agreements. By far the most comprehensive analysis of the cost of Project Labor Agreements on taxpayer-funded construction, the study had this conclusion:

Our research shows that PLAs are associated with higher construction costs. We found that costs are 13 to 15 percent higher when school districts construct a school under a PLA. In inflation-adjusted dollars, we found that the presence of a PLA is associated with costs that are $28.90 to $32.49 per square foot higher.

Will San Diego residents coming out to vote for President Barack Obama in the November election simply vote for another property tax increase for union-controlled construction at the San Diego Unified School District? The Board of Education is guessing they will.