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Poway Unified Seeks to Move on From Billion-Dollar Bond Controversy

Board members said they made the best decision they could at the time, and were the subjects of unwarranted media and public attacks.

Poway Unified officials are looking to move on from controversy over an expensive bond deal after reviewing a favorable investigation report.

During a three-hour meeting earlier this week, board members criticized the media and local critics, but acknowledged they might not have done enough research beforehand.

“With the benefit of hindsight it is clear to me that I personally should have asked more questions,” board member Todd Gutschow said at the tail of the special meeting.

The board meets again on Monday and is expected to begin discussing what to do next.

But this week the focus was on the backward-looking investigative report by Robert Price of ESI International Inc. Superintendent John Collins, who said he ordered the report to answer critics, criticized the media for questioning the legality and integrity of the district’s moves, and making “personal attacks” on the board over the billion-dollar bond.

The $105 million bond issuance for school repairs will cost taxpayers about $1 billion over 40 years. The report concluded that district staff, consultants and attorneys followed proper procedures and made appropriate decisions based on the market information they had in 2011 when the bonds were sold.

But district officials have been criticized for making a deal with such a long term but no provision to pay it off early (a “call” feature).

Price said the district’s chances of having enough revenue to pay off the bonds early seemed “very, very slim.”

“When I asked your consultants they looked at me like I had two heads,” Price said Monday, adding that some districts include a call just to say they have one. PUSD’s advisors didn’t want to take the risk of including the feature—and its added cost—if it wouldn’t be put to use, he said.

Price couldn’t say how much a call would have added to the bond’s cost, but board president Marc Davis previously estimated upwards of $100 million.

Board member Kimberley Beatty further pressed Price about the deal’s costs, asking whether the underwriting firm was acting in the best interest of the district or investors, and if the process had been competitive enough to ensure the district received the best interest rates and fees. Collins, however, shifted the conversation away from the district’s bond sales process by asking her to send him her questions for a response.

The superintendent and Davis also addressed a concern many have had about the lack of communication from district staff and board members since the bond deal controversy erupted in August after a Voice of San Diego report.

“Due to various [legal] threats that were made to the district, our legal counsel back in August advised us to cautiously limit our comments to the public,” Davis said, adding he now thinks it was the wrong choice to keep quiet.

Davis said the “vacuum of information caused people to believe we were doing something illicit” and that was not the case.

Collins said the media and public unjustly questioned the integrity of the district’s staff and Price, some on TV even calling district staff liars.

“It’s dead wrong. ...I say shame on you,” he said.

The real issue is how the state has “completely abdicated” its responsibility to fund appropriate facilities for students to learn in, he said.

“Nobody has suffered the way California has. ...You can’t expect children to attend school in dilapidated facilities and have the same learning opportunity as those in brand new facilities. It just doesn’t make sense,” he said.

“Every child in this district attends a quality, first-rate facility.”

Board member Penny Ranftle said having equal facilities across the district protects property values and makes the deal worth it for some parents, though she understands others may not feel that way.

“Will I apologize to you for fixing up our schools? I will not,” she said.

Board member Andy Patapow said district staff has spent “an incredible amount of time” on this issue and it’s time to refocus on educating students.

“I think we made the best possible choice at the time with the information we had and I don’t regret that at all,” he said. “Let’s move forward.”

Other notes:

  • Price said he chose not to speak to State Attorney General Kamala Harris about a letter her office sent to PUSD questioning the legality of using an added $21 million premium to cover costs. Instead, he spoke to district advisors and reviewed documents.
  • Price said County Treasurer-Tax Collector Dan McAllister would not speak to him for his report. However, when asked about this, McAllister sent Patch a letter he mailed to PUSD addressed to Collins and the board in September that he said served as his response to Price. In an email, Davis said he did see the letter, but it didn’t scratch “the surface of the questions I believe that Bob Price wanted to ask him face to face. It is too bad that he wouldn't do a formal sit down interview with him as all of the other involved parties did.” Price did not respond to emails or phone calls for a response. The letter is attached to this story.
  • Former board member Jeff Mangum also presented a report he and several others wrote about the deal. It can be found here.

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Editor's Note: This story has been updated with the correct spelling of Kimberley Beatty's name.

Tom Yarnall February 09, 2013 at 05:23 AM
Clariece, I find it amusing you are suggesting Mr. Collins be relieved of his duty, but are sensitive about discussing his salary. With your suggestion his salary would go to zero while I am only arguing the position be paid a fair amount to manage PUSD. I disagree with the Board that our district needs to pay the third highest salary, plus benefits, in the state, even though he may just be the best administrator in the state. I will leave that judgement to others because I really don't know how he has performed outside the bond issue.
Clariece Tally February 09, 2013 at 02:06 PM
Tom I'm not at all sensitive about discussing his salary and I agree it's too high. It's bringing up his foreclosure that is a bit of a cheap and easy shot.
Tom Yarnall February 09, 2013 at 05:45 PM
I agree and now wish I did not make my comment. I have nothing against Dr. Collins except for him being a prime mover on the bond fiasco, although it is disappointing to hear his "after the fact" arrogant attitude along with other Board members. My comment was only based on principle and not personality.
Joe St. Lucas February 11, 2013 at 05:31 PM
To me, a person's responsibility is to provide for his/her family. A person making almost $400K/yr and going into foreclosure is showing a mismanagement of personal finances. Was he suddenly unemployed and not able to make his payments on an unemployment check? NO. So why would he give a hoot about what he does with other people's (our) money and decisions? If my 401K advisor was having trouble making ends meet, why would I trust him/her with my retirement money? Same w. this guy. I can't trust him to make decisions that affect the lives of our school kids and MY money.
Tom Yarnall February 11, 2013 at 10:17 PM
Joe, without detail I would hesitate to criticize because of a foreclosure. There are thousands that have been and are being foreclosed. I know most of them were not qualified to buy in the first place, but there are many other reasons people are faced with foreclosure. For example, do we know that a person was strapped because of an emergency and had to take care for a terminally ill family member who did not have adequate insurance? Do we know they may have been deceived by an, apparent "expert" financial adviser? The list goes on and on and on. I agree with Clariece Tally, personal business is not my business. I will hold he and the Board responsible for exercising poor judgement when making decisions about the education of our children,and managing the school district, but not for their personal life, except for murder, rape or incest..

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