October 7, 2013 
Sept. 11, 2013 | By Will Carless | voiceofsandiego.org

EXCERPT: More than a year after California school bonds first hit the headlines in a big way, state lawmakers have passed legislation tackling some of the industry's most serious problems.   Assembly Bill 182, which passed the state Senate last week, will now go to Gov. Jerry Brown's desk. ... (Gov. Signed Oct. 2, 2013)

     The bill outlaws some of the wackier trends that made the Poway Unified School District a poster child for irresponsible bond financing. School districts will no longer be allowed to borrow money at a price of $10 for $1, and school boards will be forbidden from borrowing money today and pushing off payments too far into the future.

     But the bill is a far cry from the comprehensive reform some fiscal hawks wanted. The California League of Bond Oversight Committees, a group that keeps an eye on municipal bond financing, plans to send the governor a letter pointing out several weaknesses in the law. ...


- It forbids school districts from borrowing money over more than 25 years.

- It limits the payback ratio on school and community college bonds to 4-to-1.

- It requires school districts to actually tell the public what they're doing.

(...how much taxpayers will pay in explicit detail aired during public meetings.)

- It forces districts to include escape clauses in their deals(...re-financeable.) 



- Districts can still make deals just like Poway's for the next six months.
- A 4-to-1 ratio is still a lot, and experts worry it will become the new norm. 

     ... But bond experts like Michale Day, president and co-founder of the California League of Bond Oversight Committees, caution that by enshrining a ratio into law, legislators could have created a new normal for bond deals that is much higher than it should be.    School districts should be able to get 25-year loans at a 2-to-1 ratio, just like homeowners, Day said. But the legislation might have the inadvertent effect of encouraging districts to take the first loan they find at a 4-to-1 payback, without shopping around. ...

     To read the complete article, please visit:  www.voiceofsandiego.org/2013/09/11/big-school-bond-bill-paves-the-way-for-change-with-caveats 

     To search for updates on California Assembly Bills and Senate Bills, see:

www.leginfo.ca.gov/bilinfo.html   or  www.leginfo.legislature.ca.gov

In a First, SEC Charges Indiana School District and Municipal Bond Underwriter with Fraud
August 14, 2013 | By Michael Wiener| www.hklaw.com
EXCERPT: The Securities and Exchange Commission (SEC) on July 29, 2013 charged a school district in Indiana and its municipal bond underwriter with falsely stating to bond investors that the school district had been properly providing annual financial information and notices required as part of its prior bond offerings in compliance with its previous continue disclosure agreements. According to the SEC, this marked the first time it had charged a municipal issuer, the underwriter and its principal with securities fraud for falsely claiming that it was compliant with annual disclosure obligations. 

     The underwriter agreed to pay nearly $580,000 to settle the SEC's charges, and the employee of the underwriter and the issuer also agreed to settlements, which include a one-year collateral bar and a permanent supervisory bar for the employee of the underwriter. ...



Securities and Exchange Commission Press Release:  
SEC Charges School District and Muni Bond Underwriter in Indiana with Defrauding Investors 

EXCERPT: ... "This is the first time the SEC has charged a municipal issuer with falsely claiming in a bond offering's official statement that it was fully compliant with the annual disclosure obligations it agreed to in prior offerings, and an underwriter and its principal for not doing the necessary research to attest to the truthfulness of that claim," said Andrew Ceresney, Co-Director of the Division of Enforcement.  "West Clark Community Schools defrauded bond investors by leading them to believe that it had provided the annual financial information contractually required in a prior bond offering, when in fact for five years they failed to submit the required information.  This case demonstrates that we will be vigilant in making sure municipal issuers and underwriters comply with their obligations."

     Elaine C. Greenberg, Chief of the Enforcement Division's Municipal Securities and Public Pensions Unit, added, "City Securities abused its role as municipal underwriter by fraudulently obtaining reimbursement from bond proceeds for expenses unrelated to the issuance of bonds.  Moreover, City Securities violated MSRB rules by providing representatives of municipal securities issuers with valuable and excessive gifts such as multi-day golf trips and tickets to various sporting events." ... 


August 8, 2013 | By Dorian Hargrove | www.sandiegoreader.com

EXCERPTED: California Supreme Court judges turned down San Diego Unified's request to review a previous court decision finding the use of Proposition S funds to install stadium lighting at Hoover High School violated the terms of the bond measure. ...

The decision is the district's second courtroom defeat in just four months time.

     This past March, the Ninth District Court of Appeals found that the $800,000 to put up the lights should not have come from Prop S funds. ...

     "The Supreme Court supported the Court of Appeals decision to uphold the integrity of voter approved bonds. They essentially admonished the School District for pulling the wool over the eyes of the voters and spending money on stadium lights instead of repairing classrooms as stated under the bond measure," stated the group's president and Talmadge resident Ron Anderson. ...

In This Issue
AB-182 Paves the Way for School Bond Change - With Caveats
SEC Charges Indiana School District and Municipal Bond Underwriter with Fraud
AB-182 Paves the Way for School Bond Change - With Caveats
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U-T Watchdog has been covering the release of grand jury transcripts in the South County corruption case brought by District Attorney Bonnie Dumanis involving more than 200 charges against 15 officials and contractors at two school districts and one community college.   
Mission Statement 

To promote school district accountability by improving the training and resources available to California's Proposition 39 School Bond Oversight Committees and educating the state legislature, local school boards and the public about the oversight and reporting powers these Citizens' Bond Oversight Committees (CBOCs) have, and to advocate on a state level, where appropriate, on issues of common concern to all CBOCs.

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