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Will Citizens' Bond Oversight Committees Crumble Against Union Power?

Numerous local K-12 school districts and community college districts throughout California have entangled themselves in controversies over facilities construction funded by borrowed money obtained through bond sales. These controversies include the irresponsible sale of Capital Appreciation Bonds, inappropriate expenditures using bond proceeds, and questionable contracts for bond underwriting, construction program management, and project delivery. There has even been overt corruption.

An informed California taxpayer would probably conclude that stronger independent oversight is needed for bond finance and facilities construction at the state’s local educational districts. And, in fact, there is a structural check and balance now established in state law that can be assigned responsibility for greater oversight: the citizens’ bond oversight committees at school and college districts.

Construction Unions Resent Independent Oversight of Bond Measures

But the people of California should expect in 2016 to see their state government weaken – not strengthen – the powers of citizens’ bond oversight committees. These committees aren’t necessarily popular. Some district administrators and their lawyers and consultants apparently regard these committees as a meddling annoyance at best or an infuriating hinderance at worst. They certainly won’t object to weaker bond oversight committees.

But the sharpest distaste for citizens’ bond oversight committees comes from construction trade union officials. Oversight committees and their ability to independently evaluate policy proposals can sometimes undermine union efforts to implement policies such as Project Labor Agreements.

Independent citizens’ bond oversight committees have credibility with elected board members, the news media, and the public. They hold an official, formal role within a government to review policies and issue recommendations. They represent specific grassroots citizen constituencies in the community such as taxpayers, senior citizens, and parents. And they can generally review policies and make honest recommendations without worrying about political retaliation from special interests that provide campaign contributions, volunteers, and infrastructures.

Not surprisingly, citizens’ bond oversight committees usually don’t see an advantage in requiring construction contractors to sign a labor agreement with terms and conditions negotiated between union representatives and school district representatives. Why would a public agency want to impose a requirement in bid specifications that would obviously cut competition and raise costs of construction?

Bond Oversight Committees Were Meant to Protect the Interests of Taxpayers

In 2000, Governor Gray Davis and the Democrat-controlled California legislature enacted a state law mandating independent citizens’ bond oversight committees under certain conditions. This was part of a strategy to increase the passage rate for school and community college bond measures. Voters needed to be convinced that their interests as taxpayers would be protected even if the threshold for passage of school and college bond measures dropped from a two-thirds supermajority to a 55% supermajority.

The strategy worked. Voters approved a statewide ballot proposition reducing the threshold from two-thirds to 55%, and the passage rate for educational bond measures increased from 55% (from 1987 through 2000) to 82% (from 2001 through 2014). Educational districts were compelled to create and manage citizens’ bond oversight committees, although not always in compliance with state law.

The current purposes, functions, and organizational structure of these citizens’ bond oversight committees are outlined in California Education Code Section 15278-15282.

Citizens’ Bond Oversight Committees Object to Union Project Labor Agreements

There was no indication in 2000 that citizens’ bond oversight committees would object to government-imposed union monopolies for construction contracts. After all, the elected boards of only two local educational districts in California (the Los Angeles Unified School District and the West Contra Costa Unified School District) had considered Project Labor Agreement mandates at that time. The chaotic, raucous battles at California local governments over Project Labor Agreements had not yet become routine.

But as school and college bond measures became more frequent and much bigger in size after 2000, unions began aggressively lobbying school and college districts for Project Labor Agreements on facilities construction. Some citizens’ bond oversight committees were disturbed by this union pressure to change long-standing contracting policies (never mentioned during the bond measure campaigns) and decided they had a responsibility to make a recommendation on them. And the committees could cite state laws that gave them the authority to make such a recommendation:

1. California Education Code Section 15278 (b) states that “The citizens’ oversight committee shall actively review and report on the proper expenditure of taxpayers’ money for school construction.” Project Labor Agreements are never referenced in ballot language for bond measures (they are almost always implemented after voters approve the borrowing) and therefore it is debatable whether or not it is proper.

2. California Education Code Section 15278 (b)(5) says the citizens’ bond oversight committee has responsibility for “Reviewing efforts by the school district or community college district to maximize bond revenues by implementing cost-saving measures, including, but not limited to…” The reference to “but not limited too” was legislative intent for the Oversight Committee to have the authority to review matters such as unorthodox bidding requirements. Because unions (incredibly) claim PLAs are cost-saving measures, the bond oversight committees certainly have authority to review such proposals.

At the end of this article is a comprehensive list of actions taken by citizens’ bond oversight committees about Project Labor Agreements.

Unions May Try to Use the State Legislature to Neutralize Another Structural Check and Balance

What can unions do to suppress the independent activism of citizens’ bond oversight committees? Can the unions convince the legislature and Governor Brown to weaken citizens’ bond oversight committees, and can they do it without harming the ability of K-12 school and community college districts to win bond measures?

Opponents of Proposition 39 argued correctly in 2000 that the citizens’ bond oversight committee requirement used to promote Proposition 39 was based on a law passed by the legislature and would not be safely lodged in the California Constitution. That law could be repealed or amended by the legislature at any time.

That time is likely to be 2016.

The November 2016 ballot will include a $9 billion statewide bond measure. In addition, more than 150 school and college districts in California are expected to place a bond measure on the presidential primary and general election ballot. Unions want monopoly control of this work, and they don’t want to deal with continued flowering of local community resistance through bond oversight committees.

Since Governor Brown was elected in 2010, union lobbyists at the state capitol have diligently chipped away at structural checks and balances so they can realize the potential of a “one-party state” to achieve social change. For example, unions have been working for five years to neutralize powers granted to charter cities and other local governments under the California Constitution.

With the exception of political columnist Dan Walters, few political observers have highlighted this union-driven movement in California to centralize governance at the state capitol at the expense of local governments. In particular, construction union interests always seem able to preempt local control despite Governor Brown’s alleged support for the governance principle of “subsidiarity.”

Explaining the decision to strip power from citizens’ bond oversight committees will not be a challenge. Few Californians understand the cynicism and emptiness of policymaking at the California State Capitol. Unions will convince their legislative allies to justify weakened citizens’ bond oversight committees with arguments that they are broadening accountability and allowing educational districts to divert resources to the classroom.

And even if the citizens’ bond oversight committees are transformed into empty shells with no authority to review or make recommendations on anything of substance, voters are likely to continue approving 82% of bond measures (or perhaps 90% or higher in 2016 when Hillary Clinton is on the ballot). School and community college districts will continue to declare to voters in prominent ballot language that there will be independent citizens’ oversight of bond expenditures. Districts and their bond measure campaign consultants will assume – probably accurately – that 95% of voters won’t know the difference, and the other informed 5% had planned to vote against the bond measure anyway.

Watch for union-sponsored bills in 2016 that tackle their problem of independent citizens’ bond oversight committees.


History of Actions of Citizens’ Bond Oversight Committees on Project Labor Agreements

Although the Citizens Bond Oversight Committee at Los Angeles Unified School District – established locally through Proposition BB – was aware that the district and unions were negotiating a Project Labor Agreement in 1997-1999, the committee did not issue any statements or recommendations about it. This Project Labor Agreement preceded the passage of Proposition 39 in 2000.

From 2003 through 2006, five Citizens’ Bond Oversight Committees voted on recommendations concerning Project Labor Agreements:

1. San Jose Unified School District

On November 10, 2003, the Bond Oversight Committee for San Jose Unified School District voted 8-1 for the following motion: “At its meeting of November 10, the Measure F Oversight Committee was not convinced that adoption of a PLA would improve the efficiency of the expenditure of Measure F funds. The Oversight Committee therefore requests the Board of Education to refrain from adopting a PLA for Measure F.” The one vote against the resolution was an organizer for the local Carpenters union. In the end, the school board never voted on a negotiated Project Labor Agreement.

2. Fairfield-Suisun Unified School District

On February 24, 2004, the Bond Oversight Committee for Fairfield-Suisun Unified School District voted unanimously to recommend against approval of a PLA for future school construction. The school board subsequently voted 4-3 against negotiating a Project Labor Agreement.

3. Mt. Diablo Unified School District

On March 3, 2005, the Bond Oversight Committee for Mt. Diablo Unified School District voted 15-1 to recommend against approval of a PLA for future school construction. In the end, a Project Labor Agreement was imposed on some summer classroom renovation projects.

4. Sacramento City Unified School District

On August 3, 2005, members of the Bond Oversight Committee for Sacramento City Unified School District released a 15-page report backing their position that “since a problem does not seem to exist with regard to construction cost overruns, project delays or labor disputes within the district, and since clear and convincing evidence has not been submitted to substantiate the benefits of a Project Stabilization Agreement, the Citizens Bond Oversight Committee recommends that the Sacramento City Unified School District not enter into a Project Stabilization Agreement.” The school board subsequently voted 5-1 for a Project Labor Agreement.

5. Chabot-Las Positas Community College District

On July 25, 2006, the Bond Oversight Committee voted 4-2 to recommend to the board against using a PLA and to include this recommendation in the oversight committee’s annual report. District administrators and legal counsel argued that the oversight committee had no business making a recommendation. The college board voted 7-0 for a Project Labor Agreement.

By 2006, administrators and contract attorneys for school and college districts were obviously trying to suppress the desire of citizens’ bond oversight committees to review proposed Project Labor Agreements. A narrow legal interpretation about the role of bond oversight committees began circulating. This interpretation essentially confined the committees to a role of approving an annual report produced for the district showing that proceeds from bond sales were spent on construction and not on teacher and administrator salaries or general operating expenses.

From 2006 through 2015, numerous K-12 school and community college districts in California considered and approved Project Labor Agreements with unions. While some oversight committees received reports at their meetings from district staff about the proposed Project Labor Agreements, only four citizens bond oversight committees voted on a formal recommendation.

6. San Diego Unified School District

An editorial in the April 24, 2009 San Diego Union-Tribune reported on the district’s opposition to letting the bond oversight committee review Project Labor Agreements:

The policy was hastily adopted without any real scrutiny by district staffers. Voters were never told this costly requirement would be imposed before Proposition S was approved – or else they never would have approved it. But when members of the bond measure’s Independent Citizens Oversight Committee raised these and other issues, they were told to butt out. Mark Bresee, the school district’s general counsel, told committee members that their role as an “independent representative of all taxpayers” – Bresee’s term – didn’t mean they had a right to kibitz about the district’s possible adoption of a Project Labor Agreement…Thankfully, the bond oversight committee told Bresee and the school board majority to take a hike.

Then, as reported in the Voice of San Diego on May 26, 2009:

Staffers from San Diego Unified discouraged the bond oversight committee from weighing in on whether or not to adopt an agreement or how to do so, arguing that the research was so polarized and the question so political that there was no way to make a factual recommendation. The bond overseers disregarded their advice, then deadlocked on the issue of whether a contractor group should join the unions and the school district and the bargaining table.

That vote on May 21, 2009 was 4-4-1, and union officials had been prominent in contending that the oversight committee had no authority to discuss the issue. The board subsequently voted 3-2 for the Project Labor Agreement.

7. San Gabriel Unified School District

In 2010, the Bond Oversight Committee for recommended against a Project Labor Agreement. The board subsequently voted 3-2 for the Project Labor Agreement.

8. Oxnard Union High School District

On December 9, 2014, the district’s Citizens Bond Oversight Committee voted 4-1 to recommend that the board reject a Project Labor Agreement because of the likelihood of increased costs and other reasons. Nevertheless, the board voted 3-2 for a Project Labor Agreement.

9. San Bernardino Community College District

The bond oversight committee voted on December 12, 2014 to oppose the Project Labor Agreement, but the board voted 4-3 to approve it. Here is an excerpt from one of its reports:

More notable was the Board of Trustees passing a “Community Benefits Agreement” this December. This agreement is better known as a “Project Labor Agreement”, and these agreements give substantial advantages to union contractors vs. non-union contractors. The Bond Oversight Committee spent a significant amount of time and effort to determine if there was cost savings, as required under Section 5 of California Educational Code 15278. We gathered information from local businesses, trade groups, staff and other interested parties, and determined there was no clear cost savings, and a potentially significant (10-20%) cost increase with no benefit to the community. The committee made every attempt to communicate this decision to the Board, but we were not allowed to make our findings to the Board prior to the Board of Trustees voting to approve this agreement.

Despite consistent opposing arguments from student organizations and local stakeholders, as well as not taking the time to even hear the Citizens Bond Oversight Committee, regardless of our clear desire to present our well-researched findings and conclusion, the Community Benefits Agreement was approved. This rush to make a decision prior to hearing our report we find irresponsible, and we wish to make these actions known to the public.

Now, in 2015, citizens’ bond oversight committees in a high school district and a community college district in San Diego County want to hold meetings to discuss proposed proposed Project Labor Agreements and possibly make recommendations to the boards about the proposal. Union officials are unhappy about this. One request has been granted and one has been rejected.

10. Grossmont-Cuyamaca Community College District

At the Grossmont-Cuyamaca Community College District, the board voted 3-2 to delay a vote on negotiating a Project Labor Agreement in order to give the Bond Oversight Committee a chance to discuss the proposal and provide input to the board. That meeting is scheduled for November 12, 2015.

11. Sweetwater Union High School District

Despite repeated requests from representatives of its citizens’ bond oversight committee for a chance to make a recommendation, the board of the Sweetwater Union High School District shows no indication of letting that happen. As reported in the October 30, 2015 San Diego Union-Tribune, “Members of the Citizens’ Bond Oversight Committee criticized the board’s lack of transparency and called for a four-month moratorium to allow for study of the costs and benefits, to no avail.” The October 31, 2015 Chula Vista Star-News explained the view of one board member that the district has to pass the Project Labor Agreement in order for the bond oversight committee to know what’s in it:

Trustee Paula Hall brought the resolution to negotiate a project labor agreement forward. Hall said she has been having issues with her email so she didn’t get a chance to read the CBOC’s letter for a moratorium, but is aware of their concerns from them speaking out at previous board meetings. Hall said the board never sent the item to the CBOC because there is no information for them to look over as the board only passed a resolution. “There’s nothing to review,” she said. “There is no project labor agreement negotiated.”

It remains to be seen if the citizens’ bond oversight committee at Sweetwater Union High School District will ever get the chance to review a Project Labor Agreement and make a recommendation.


Kevin Dayton is the President & CEO of Labor Issues Solutions, LLC, and is the author of frequent postings about generally unreported California state and local policy issues at www.laborissuessolutions.com. Follow him on Twitter at @DaytonPubPolicy.

Unions Seek Control of Recent California School Bond Measures

Has California school and community college facility construction become a perpetual government stimulus program for politically-favored construction trade unions?

Prop 39 BannerFifteen years ago, it was obvious that many school and college districts in California needed new construction, modernization, or renovation of their facilities for the safety and comfort of students, teachers, administrators, and support staff. That’s why 53% of California voters approved Proposition 39 in November 2000. It reduced the threshold for voter approval of school bond measures from two-thirds to 55%, increasing the passage rate for educational bond measures from under 50% to more than 80%.

But the purpose of borrowing money for school construction seemed to evolve after the 2008 economic collapse and subsequent November 2008 election.

Debt started piling up from relentless and repeated bond sales to investors. The “need” for more construction seemed immeasurable and unquenchable. Scandals began to pop up as clever people began to figure out how to manipulate the loopholes and ambiguities in ten year-old state laws regarding finance and construction of educational facilities.

Meanwhile, construction trade unions became much more aggressive in trying to monopolize educational construction by lobbying elected school board members for Project Labor Agreements. And local school and college elected boards became much more willing to grant those union monopolies.

Local elected officials in California recognized that political circumstances had changed. To quote a San Diego Unified School District board member immediately before the 3-2 vote on May 26, 2009 for a Project Labor Agreement:

I think the bigger picture that people are realizing – and this is what scares some people – is that San Diego is changing, the United States is changing…this is a different city…we are looking at a different community.

What has resulted from this change? A lot of debt has been imposed on future generations of Californians.

The California Policy Center released a report in July 2015 entitled For the Kids: California Voters Must Become Wary of Borrowing Billions More from Wealthy Investors for Educational Construction. This report identified $146 billion in authorized borrowing from 2001 to 2014 for California educational facility construction and $200 billion in existing debt service from bonds sold to pay for California educational facility construction.

In response to this report, some taxpayer advocates have asserted that momentum for additional local educational bond measures is propelled by construction trade unions that see local education districts as ripe targets to accumulate a pool of guaranteed government work. Union leaders remain nervous about the state’s economic prospects. They don’t want a painful revival of membership unemployment rates of 25%-50% experienced from 2009 to 2012.

Is this argument valid?

Below is a list of all of the K-12 school and college bond measures approved by voters in the last four primary and general elections (in 2012 and 2014) that became targets of construction unions for a government-mandated Project Labor Agreement (PLA).

 

Bond Measures Approved by Voters in June 2012

 

Amount Authorized to Borrow Name of School or College District Voter Approval Percentage Project Labor Agreement Activity
West Valley-Mission Community College District

$350,000,000

59.8%

Board approves PLA for upcoming “pilot project” 8/20/13.

Milpitas Unified School District

$95,000,000

64.1%

Board approves PLA 12/11/12.

Bond Measures Approved by Voters in November 2012

 

San Diego Unified School District

$2,800,000,000

61.8%

PLA approved in 2009 extends to this bond measure.

Coast Community College District

$698,000,000

57.2%

Board votes 5/15/13 to end consideration of a PLA.

Oakland Unified School District

$475,000,000

84.4%

PLA approved in 2004 extends to this bond measure.

Santa Monica-Malibu Unified School District

$385,000,000

68.1%

Board discusses PLA 11/20/14.

Board votes for contract to negotiate PLA 4/16/15.

West Contra Costa Unified School District

$360,000,000

64.4%

PLA approved in 2000 extends to all bond measures.

Cerritos Community College District

$350,000,000

70.3%

Board discusses PLA 4/16/14 and 6/4/14.

Solano Community College District

$348,000,000

63.5%

Board approves PLA 12/4/13.

Sacramento City Unified School District

$346,000,000

70.1%

Board votes 1/23/14 to extend PLA approved in 2005 to this bond measure.

Rancho Santiago Community College District

$198,000,000

72.6%

Board approves PLA 3/24/14.

Alum Rock Union Elementary School District

$125,000,000

79.5%

Board approves PLA 6/18/13.

East Side Union High School District

$120,000,000

71.6%

Revised PLA approved in 2009 extends to this bond measure.

Lynwood Unified School District

$93,000,000

57.4%

Board approves PLA 2/12/13.

Inglewood Unified School District

$90,000,000

86.1%

Board approves PLA 10/26/12.

Chula Vista Elementary School District SFID No. 1

$90,000,000

68.8%

Board approves negotiations for a PLA 4/15/15.

Oxnard School District

$90,000,000

66.4%

Board approves PLA 6/24/15.

Sacramento City Unified School District

$68,000,000

67.9%

Board votes 1/23/14 to extend PLA approved in 2005 to this bond measure.

Antioch Unified School District SFID No. 1

$56,500,000

62.8%

Board approves PLA 11/13/13.

Whittier City Unified School District

$55,000,000

72.4%

Board approves PLA 1/13/15.

Washington Unified School District

$22,000,000

72.8%

Board imposed a union-backed apprenticeship requirement for contractors and used it to disqualify non-union company from contract.

Bond Measures Approved by Voters in June 2014

 

Fremont Unified School District

$650,000,000

61.2%

Board approves negotiations for a PLA 8/12/15.

Contra Costa Community College District

$450,000,000

57.6%

Board approves PLA 10/10/12 for all projects of $2 million or more.

Culver City Unified School District

$106,000,000

76.3%

Community Budget Advisory Committee discusses PLA 5/27/15.

Bond Measures Approved by Voters in November 2014

 

Santa Clara Unified School District

$419,000,000

69.4%

Board discusses PLA 3/26/15.

PLA discussion scheduled for 8/13/15.

Sonoma County Community College District

$410,000,000

63.1%

Union officials have openly declared intent to lobby for a PLA.

College administrators have met with legal counsel regarding PLA.

San Mateo County Community College District

$388,000,000

66.2%

Board discusses PLA 7/8/15.

Norwalk-La Mirada Unified School District

$375,000,000

57.4%

Board discusses PLA 3/25/15.

San Luis Obispo County Community College District (Cuesta)

$275,000,000

62.6%

Board discusses PLA 2/4/15.

Board voted down PLA negotiations at 3/4/15 meeting.

Hayward Unified School District

$229,000,000

77.4%

Board votes for PLA 6/24/15.

Vacaville Unified School District

$194,000,000

62.0%

Board discusses PLA 3/9/15.

Board votes for PLA negotiations 6/25/15.

Alameda Unified School District

$179,500,000

62.8%

PLA discussion scheduled for 8/11/15.

Santa Rosa High School District

$175,000,000

64.0%

Union officials have openly declared intent to lobby for a PLA.

Salinas Union High School District

$128,000,000

60.3%

Board discusses PLA 3/24/15 and 5/12/15.

Board votes for PLA negotiations 5/26/15.

East Side Union High School District

$113,200,000

67.9%

PLA that applied to Measures G and E amended – apparently administratively – to cover Measure I.

Azusa Unified School District

$92,000,000

56.2%

Board discusses PLA 3/17/15.

Pittsburg Unified School District

$85,000,000

68.5%

Ballot arguments against the bond measure focused on PLAs imposed on previous bond measures; supporters’ rebuttal defended the PLAs.

Berryessa Union School District

$77,000,000

69.3%

Board votes for contract to negotiate PLA 3/10/15.

Santa Rosa Elementary School District

$54,000,000

69.1%

Union officials have openly declared intent to lobby for a PLA.

Washington Unified School District

$49,800,000

67.4%

Board imposed a union-backed apprenticeship requirement for contractors and used to disqualify non-union company from contract.

Bassett Unified School District

$30,000,000

62.4%

Board voted for PLA negotiations 1/20/15.

 

Kevin Dayton is the President & CEO of Labor Issues Solutions, LLC, and is the author of frequent postings about generally unreported California state and local policy issues at www.laborissuessolutions.com. Follow him on Twitter at @DaytonPubPolicy.

Government Unions Need Property Tax Increases to Fund Unsustainable Pensions

Let’s be honest.  When politicians and pundits discuss the state budget, very little is about the impact on homeowners. Notwithstanding the fact that a person’s home is their most important asset, this lack of perspective is understandable. When people think about political issues impacting their status as homeowners, they are far more likely to focus on local taxation – fees for utilities, parcel taxes, local bond debt, etc.

But state finances in California can – and do – have a profound impact on one’s status as a homeowner and, unfortunately, it is rarely in a good way. First, homeowners should be aware that there is no bright line between local governments and the state. State laws on school finance, redevelopment, law enforcement, natural resources and transportation have a huge impact the budgets of cities, counties and special districts.

Take schools, for example. Because of California Supreme Court rulings in the 1970’s, local school districts have lost a great deal of local control over their budgets. (Contrary to urban legend, loss of local control had very little to do with Prop 13). Much of K-12 funding now comes from the state. And the amount of that funding has a lot to do with whether a local school district is “rich” or “poor.”

The complexity of the relationship between state and local governments leads some to tune out issues about the budget believing that it is not relevant to their lives. That would be a big mistake. Homeowners should be aware that this year’s proposed budget reflects a significant five percent increase over last year. Not only has state spending increased every year except one during the recession, that spending has gone up 30% in five years. California now has a $113 billion general fund budget and that doesn’t even include special funds and money from the federal government.

One of the driving forces behind higher state spending is an effort by Governor Brown and others to corral the massive obligations to the state’s pension funds and government retiree healthcare. Brown should be applauded for his efforts to reduce debt but some of us can’t help but feel he is trying to remove sand from a beach with a pair of tweezers.  California’s accumulated debt in all forms is staggering.  In a recent piece in the Wall Street Journal, Steven Malanga of the Manhattan Institute noted how unfunded pension costs, not just in California but nationwide, are gobbling up all of the new revenue coming in to state and local governments from the economic recovery and higher taxes.

And some of those tax hikes in other parts of country are huge. But here in California, we already have the highest income tax rate, the highest state sales tax rate and the highest gas tax in America.  In short, the tax and spend lobby is running out of options. So who is the last remaining target?  You guessed it:  Homeowners.

And the only thing standing in their way is Proposition 13.  While other states have some limited protections for homeowners, none are as effective as California’s landmark Proposition 13.

Homeowners need to be on guard.  All those proposals to lower the 2/3 vote on local parcel taxes and bonds repaid only by property owners are just the beginning.  As the demands to make good on California’s hundreds of billions worth of debt become clear, those who are blessed with home ownership need to pay attention, not only to local politics, but to the state budget as well.

Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.