School Board Hires Forensic Accountant to Review Bond Transaction

The Poway Unified School District’s Board of Education has hired an outside accountant to review the details of a , Superintendent John Collins announced at Monday’s board meeting.

The transaction will undergo an independent review by a forensic accountant and former FBI official the board retained from ESI International, Collins said. The district won’t start paying off the bond until 2033.  

“We realize that it is not good enough to say that we think we acted in good faith or we believe we did with the best industry-expert advice and counsel. We want to take it a step further,” Collins said. “The district is not seeking validation of its actions. It is seeking answers to key questions that have been asked.”

Among the questions the forensic accounting review is tasked with answering are:

• Did the district act responsibly upon the market information it was given at the time of the decision?

• Was the district given advice and counsel based on the highest industry standards?

• Are there any issues of integrity with any parties involved in this transaction?

• Were the fees paid to the parties involved at—or perhaps below—industry standards?

• Were the processes that were followed acceptable industry standards?

Before announcing the forensic accounting review, Collins defended the actions of the board following the passing of Proposition C in 2008, which funded the completion of an extensive project to renovate two dozen school buildings. Critics, particularly in the media, have focused on a single transaction in a successful school-modernization program that lasted nearly a decade and coast half a billion dollars, Collins said.

Research has made clear that quality learning environments are linked to high student performance, Collins said.

“So it is in that light that the district administrative staff—starting with me, as superintendent—are disheartened that a few members of the media and a few members of our community have chosen to focus on one decision, the issue of capital appreciation bonds, and specifically the final issuance in 2011,” Collins said. “Which, it is true, is costly. But doing so without full knowledge of everything that went into those decisions and the discussions behind them.

“Not just during this single transaction, but throughout the life of the bond program, our district has worked closely and relied upon leading bond-industry experts and bond counsel to guide us through complicated financial structures that would help us achieve our goal: meeting the financial requirements set forth by the voters of the district,” Collins continued. “At all times we can say we achieved that goal.”

Board Clerk Marc Davis said he supports the forensic accounting review.

“I don’t know if anybody has dug into the nuts and bolts more than us up on this stand, and I feel very confident that the report will come back and tell us that we did a good job within the parameters that we had and were given by the voters and by the market at hand,” Davis said. “I welcome what’s transpiring and look forward to the report.”

When the forensic accounting review will be complete and how much it will cost was not announced at Monday’s meeting.