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Extracted from Consolidated Report
This investigation was originally published as part of a larger consolidated report containing multiple investigations. View the consolidated PDF for the complete document.
Placer County Grand Jury
• 2008-2009
Final Report 2008–2009 Grand Jury At Gold Hill fewer than ten gravesites remain for sale. Once these sites are sold the
⚠️ Translation Notice: This content has been automatically translated. The original English text is the official version. Translation may contain errors.
⚠️ Este contenido ha sido traducido automáticamente. El texto original en inglés es la versión oficial. La traducción puede contener errores.
Findings 8 findings
F1
Page 90
The Attorney General’s recently published opinion makes it unlikely that any future cash out refundings will take place, unless case law develops from future lawsuits, or legislation, that overrides that opinion.
F2
Page 90
Even if the Attorney General’s opinion had not been issued, it is at best legally questionable for additional money for a capital project to be taken out of a bond refinancing beyond what was approved by voters.
F3
Page 90
Voters and taxpayers received virtually no communication from the school districts in the seven cases of bond refinancing examined by the Grand Jury, either before or after the decisions were made other than publicly noticed agendas.
F4
Page 90
Refinancing decisions may involve millions of dollars, but no requirement exists for communicating these decisions to taxpayers beyond minimal legal notice.
F5
Page 90
Especially because the documentation involved in refinancing a bond issue does not normally disclose explicitly the details about the bond proceeds and what is done with the money, refinancings present a high potential for abuse. This can include cash being taken out of the transaction without being authorized, excessive fees 67 Final Report 2008–2009 Grand Jury
F6
Page 91
No timely, reliable State oversight exists for the refinancing process. School boards generally accept the recommendations of district personnel, and these are generally guided significantly by the investment bankers and bond counsels whose opinions can be, by their nature, self-serving.
F7
Page 91
Existing State law does not require the office of the Treasurer to be involved early in the process of issuing GO bonds, or to be involved at all in bond refinancings. However, the Treasurer can provide valuable services to school districts regarding their proposed bond issues. The Treasurer’s office can offer an impartial viewpoint on alternatives and provide access to others in the financial community with different points of view. The Treasurer can help structure the many variables of a bond offering to be in the best interests of the district. The Treasurer can help evaluate the fee structure to ensure issuance costs are not excessive, and can help make sure that the terms of the proposed issue are well understood and do not include cash out provisions or other inappropriate features. A school district and its property taxpayers would benefit from taking advantage of the Treasurer’s knowledge, experience and capabilities. In the absence of any State statutes that require this communication to take place, this arrangement may best be established by mutually voluntary agreement.
F8
Page 91
The currently outstanding GO bonds in Placer County school districts represent a significant potential opportunity for taxpayers to benefit from refinancing those bonds when market conditions permit.
Recommendations 6
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R1Page 76School districts should do no cash out refundings in the future without voter approval.
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R2Page 76School districts should regularly survey their outstanding bond issues in light of then- current market decisions to determine if refinancing the bonds could benefit taxpayers. The districts should make use of their various bond company contacts as appropriate to obtain analysis and counsel regarding market conditions as they apply to their existing bonds.
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R3Page 77When a potential bond refinancing is being considered by a school district (and it will not go before the voters for a decision), the district should make a special effort to disclose the costs and benefits to the public. It should actively seek public input before and during the board meeting at which the decision is to be made. Once a 68 Final Report 2008–2009 Grand Jury
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R4Page 77Each school district should voluntarily provide the Treasurer’s office with all relevant documentation for future bond refinancings in the same manner as for original bond issues.
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R5Page 77Each of the school districts with currently outstanding refinanced bond issues should work with the Treasurer’s office to ensure that the documentation on file for those issues is complete.
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R6Page 77The County Treasurer should establish an annual program to communicate with County school districts to remind them about the potential benefits and costs of refinancing GO bonds depending on market conditions. The communication should include a request that the districts voluntarily review with the Treasurer’s office in advance the plans for any new issues and refinancing being considered.