State Treasurer Says Emery Broke the Law

First Charge of Law Breaking Surrounding Measure J

California State Treasurer says Emery Unified School District broke the law when the District accepted campaign cash for the 2010 school bond Measure J from the bond writing firm Caldwell, Flores & Winter and then awarded the same firm the bond writing contract after the election that paved the way to build the Emeryville Center of Community Life.  The Treasurer shows how school districts like Emery used this tactic to violate existing California laws forbidding such quid pro quo clandestine agreements.
Emery School Board members refused to comment on the allegations emanating from Sacramento Wednesday evening.
The Voice of San Diego highlights the story of Emery and other law breaking school districts up and down the state:

State Treasurer Will Probe School Bond Donations - Voice of San Diego: Education

State Treasurer Bill Lockyer will urge the state Attorney General Kamala Harris to clarify whether a raft of recent controversial school bond deals are legal.

Lockyer told Voice of San Diego Tuesday he wants to know whether bond underwriters are allowed to contract with districts to provide campaign services in the run-up to a bond campaign, in exchange for an exclusive right to buy the district's bonds if the campaign is successful. Lockyer said he thinks such arrangements are illegal under the existing law.

"It's troubling,"Lockyer said. "I think it may well violate current law that limits quid-pro-quo transactions."

(For a detailed look at what bond underwriters do, see this explainer.)

A recent Voice of San Diego investigation found a significant correlation between major donors to local school bond campaigns and the companies that won contracts to work on the bonds.

It found that almost every time an underwriter has given a large donation to a successful bond campaign since 2006, the same firm has also won a contract to buy the district's bonds once the bond measure passed.

Elsewhere in California, recent investigations have examined the relationship between underwriters and school districts. A report last month in the Orange County Register probed bond deals made between the Placentia-Yorba Linda Unified School District and underwriter George K. Baum & Co.

School districts in California are forbidden from using public money to fund bond measures.

Lockyer said he's concerned that districts are increasingly striking deals with underwriters that require the underwriters to donate to the campaigns. In exchange, the underwriters get lucrative, exclusive bond deals. That's essentially the same thing as using public money to campaign with, he said.

Lockyer, who was in San Diego Tuesday to address a group of school district finance officials, has drafted a letter to the attorney general but said it isn't yet complete. He showed me a draft on his iPhone, but said it was still being amended.

Lockyer's spokesman, Tom Dresslar, said the letter will focus on deals where districts have express contracts with underwriters to sell bonds to the firms in exchange for campaign services in the run-up to the election.

The state's top prosecutor has already warned districts about some bond sales.

A letter last year to the Poway Unified School District warned that Poway was crafting a deal that was against the law. The district went ahead with the deal anyway, borrowing $31 million in extra upfront cash that will eventually cost taxpayers about $219 million to pay back. (An element of Poway's deal that was examined in this VOSD investigation.)

Lockyer wasn't deterred by the fact that districts have ignored legal opinions from the attorney general in the past.

"Generally, people want to be law-abiding," he said. "Maybe there just needs to be more public awareness of the issue. This just needs an aggressive prosecutor."

Lockyer, along with San Diego County Treasurer and Tax Collector Dan McAllister, who joined the treasurer for a press conference, also called on local district attorneys around California to aggressively investigate school bond deals.

I called a spokesman for District Attorney Bonnie Dumanis, but haven't heard back. I will update this post if I do.

Will Carless is an investigative reporter at Voice of San Diego currently focused on local education. You can reach him at will.carless@voiceofsandiego.org or 619.550.5670.