In a recent study it was discovered that in 110 out of 111 cases, the bond underwriter who was the biggest campaign donor got the job of selling school bonds. California Watch recently wrote, "For donors [to bond campaigns], failure is rare. In only five cases out of 111 did an underwriter make a donation and fail to receive a contract to sell the bonds. In four of those, however, more than one underwriter made donations and the contract went to the firm that had contributed a larger amount to the campaign." (See second story below.) Susan Luzzaro fails to report whether Dale Scott & Co. has made campaign contributions to CVESD bond campaigns or to board incumbents. Chula Vista Elementary Schools Seek Funding, Hire Consultant
By Susan Luzzaro
San Diego Reader
May 19, 2012
Asking some South Bay voters to approve a school bond measure is a risky proposition. Bond-related corruption charges for Southwestern College and Sweetwater Union High School District have muddied the waters, but the Chula Vista Elementary School District feels confident enough to take the next step forward at the May 22 board meeting.
District spokesperson Anthony Millican said in a May 18 interview that the bond proposal will cover 31 of the district’s oldest schools located in the western portion of Chula Vista.
The district hopes to use the bond funding mainly for technology and infrastructure. One goal is to make the schools wireless for iPads or similar technological enhancements. “You can’t have 21st-century learning without 21st-century tools,” Millican said.
Some humdrum but necessary projects will include relocation of conduits underground, improving storm drainage, and replacing portable classrooms with permanent structures.
The district also hopes to give Rice Elementary School a makeover, aligning classrooms with the needs of the STEM (science, technology, engineering, and math) program.
Millican discussed the fact that the South Bay’s west-side student population has declined while the east side has grown to the point that a new school is being built. Millican said he believes Chula Vista’s bayfront development will boost the west-side student population.
According to an April 13 U-T article, “Nearly 65 percent of Chula Vista voters polled appeared amenable to a bond…” The San Francisco–based financial advisory firm Dale Scott & Co. conducted the survey.
Scott said in a May 18 interview that his company has been the financial advisor to the district since 1998.
In addition to the survey, Scott said the company will collect data, write the ballot language, and prepare the underlying financial assumptions for the bond measure.
A voting district has to be created as well; only the Chula Vistans who will be financing the bond through property taxes and receiving the benefits in their neighborhood schools will be voting.
The cost of Dale Scott's services will be rolled into the bond. Because the consultant's work won't be completed until the November election, the cost is an unknown. An April 13 U-T story said the company won't charge if the bond doesn't pass.
With campaign donations, bond underwriters also secure contracts
May 3, 2012
Leading financial firms over the past five years donated $1.8 million to successful school bond measures in California, and in almost every instance, school district officials hired those same underwriters to sell the bonds for a profit, a California Watch review has found.
The practice is especially pronounced in California, where underwriters gave 155 political contributions since 2007 to successful bond campaigns for school construction and repairs. One major underwriter, Piper Jaffray, has said it gets more requests for campaign contributions in California than in any other state where they do business.
The success rate of these underwriters is extremely high. In only five cases since 2007 has a campaign donor failed to receive a bond-selling contract from the school district.
School districts say they choose bond underwriters for their expertise and competitive rates and because they’ve served them well in the past. And underwriting firms say they contribute only after they’ve been hired to sell the bonds, avoiding any undue influence.
But critics say that no matter when the agreement is made, the campaign donations influence school districts’ business decisions. They argue that pre-arranged underwriting contracts bypass a truly competitive sale, leaving in doubt whether districts got the best possible deal.
“If this isn’t clear proof of pay to play, then pay to play doesn’t exist,” said Glenn Byers, Los Angeles County’s assistant treasurer, who oversees some school bond sales but doesn’t control the hiring of underwriters. “The timing of the payment is irrelevant. You paid and you got the job. That’s pay to play.”
Some states have banned the practice. Missouri, for one, outlaws donations to bond campaigns from companies with a financial interest in the bond sale.
In the past five years in California, five major underwriters donated $1.8 million to help pass 111 ballot measures, authorizing $15.5 billion in debt. A couple dozen other measures received underwriter contributions but failed at the ballot box.
Overwhelmingly, bond underwriters who donated to these campaigns were granted contracts by school districts.
In nearly all cases, the only underwriters that donated to a successful school bond campaign ended up working on the bond sale. Bond Buyer, a trade publication, found the same pattern in an earlier review of 2010 campaign contributions.
At times, multiple underwriting firms will donate to a single bond campaign. But even there, the success rate is high. In almost all cases in which multiple bond underwriters donated to the same campaign, they all were given contracts by the school district to market those bonds...
For donors, failure is rare. In only five cases out of 111 did an underwriter make a donation and fail to receive a contract to sell the bonds. In four of those, however, more than one underwriter made donations and the contract went to the firm that had contributed a larger amount to the campaign...
(Click HERE to see the rest of this very detailed article.)
San Bruno voters nixed a ballot measure after this very hopeful article was published on page 3 of The Daily Journal in San Mateo County:
"...[P]hone surveys were given to about 800 likely voters in the San Bruno Park Elementary School District recently about a possible parcel tax or bond measure. Both generated strong support,according to results by Dale Scott from San Francisco-based Dale Scott & Company that will be shared at tonight’s meeting. Moving forward could be the next step in a number of budget-related decisions as the district faces a deﬁcit over $1 million in coming school years. About 70.3 percent of people polled supported a parcel tax... above the two-thirds passage threshold required for the measure that could support programs..."
A San Bruno Patch reader commented:
"As I see it, one of the big lessons learned from the failed Measure O campaign is that Dale Scott & Company isn't the company you want to be taking political advice from as far as political campaigns in San Bruno are concerned."
Here is a report by Lozano Smith law firm regarding an investigation into allegations against Dale Scott & Co.:
Ironically, Lozano Smith was sanctioned by a federal judge in 2005 in a scathing 80-page decision in which he ordered all the firm's attorneys to take ethics training.
Some Lozano Smith attorneys then formed Fagan, Friedman and Fulfrost law firm, which represents CVESD.