Poway Unified School District officials are exploring ways to increase transparency and financial literacy after an exorbitant bond deal sparked nationwide controversy.
Board members, however, have stopped short of declaring off-limits the type of bond at the center of the controversy—Capital Appreciation Bonds—even though other school districts have.
"We can be the constraint, and we can change much more rapidly than a policy or law can," board member Todd Gutschow said during a Monday night special meeting, echoing other members who said they want to keep their financing options open.
The board discussed 10 ways to change how it operates, including limiting the financial vehicles at the its disposal, putting video of meetings online and including easy-to-understand bond deal language on public meeting agendas.
In August, a Voice of San Diego report spotlighted PUSD's $105 million bond deal to fund school repairs that is projected to cost taxpayers nearly $1 billion to repay. The high repayment cost of this deal, though not the worst in the county or the state, has been the catalyst for local policy changes by other school districts and state-level talks of new legislation to restrict how school districts structure bond deals.
Though an independent investigation affirmed how officials secured the deal, board members vowed to see how they can perform better. Among the suggestions from staff and board members was setting limits independent of state laws about what types of bonds and terms the district can use.
"Why not take a preemptive role and show that we're at the forefront and we're leaders instead of just following what the state is dictating?" board member Kimberley Beatty asked.
But other board members and Superintendent John Collins said they were reluctant to cut access to options that may be needed in unknown future fiscal environments.
"We have just lived through one of those great big unknowns," Collins said, referring to the Great Recession.
Board member Penny Ranftle said she's "resentful" of those questioning the board's decisionmakng on the bond but not looking at the state and how it has "abdicated" its responsibility to fund education.
The district needs to "use every means available" to take care of its students, she said.
Gutschow argued that the board can limit itself and choose the option that is best for the school district at the time, depending on the financial environment, without policies some school districts are using to protect themselves from themselves.
Board president Marc Davis also suggested that since state legislation about school financing is still working its way through Sacramento, the district wait and see what happens before setting its own policies that may not be needed.
The ideas were only up for discussion and did not require a vote.
The 10 ideas:
- Annual board workshops on municipal finance training with experts.
- Annual review of outstanding bonds to review performance look for opportunities to refinance.
- Change financial adviser compensation—pay on a fee basis—to ensure unbiased advice.
- Require all bond votes to be discussed during at least two board meetings.
- Write about bonds on meeting agendas in "common English" so the average person can understand.
- The agendas would include green-colored sheets with the simple explanations.
- Video and/or audio record all meetings and upload the recordings to the website.
- Audio recordings are available now, but meetings are not videotaped. Board members expressed concern that if the meetings are videotaped, some community members and board members may grandstand. Collins also said he's worried about having audio recordings readily available on the website because people might use clips out of context to make people look bad. Staff will research what other school districts do.
- Make sure board receives comprehensive data before voting on bond issues.
- Setting policies that limit bond length, use of interim financing and/or issuing bond premium.
- The billion-dollar bond has a 40-year term, which many, including state officials, have said should no longer be allowed for school districts. Board president Marc Davis said the board can already instruct staff members to shorten recommended deal terms, even without a limiting policy.
- Create a "Superintendent's Facilities Financing Advisory Committee" chosen by Collins with the financing team, two board members and possibly community members with expertise in finance or school construction.
- The committee has already been created and met recently to discuss a planned K-8 campus.
- Require everyone who works on bond financing construction to sign off on the final loan documents.
Editor's Note: This story has been updated with the correct spelling of Kimberley Beatty's name.