Previous bond oversight language was far stricter. It only allowed the use of long-term borrowing to pay for school buses if there were a reasonable expectation that they would last at least 20 years. But in Proposition 39’s wake — especially when operating funds were squeezed because of the state revenue plunge from 2008-2012 — bonds have been used for everything from graffiti cleanup, minor repairs and painting to purchases of short-lived laptops, iPads and other tablet computers.

SEC wades into LAUSD mess

But now regulators with the federal Securities & Exchange Commission are questioning the propriety of what California school bonds have been used to buy. Their angle isn’t the legality of these uses under state law. It’s whether these uses conform with what bond buyers were told — specifically when it comes to L.A. Unified’s troubled iPads-for-all program:

The federal agency is charged with protecting investors and maintaining fair, orderly and efficient markets. Its enforcement division frequently looks into “misrepresentation or omission of important information about securities,” according to the commission.

With the help of an outside law firm, L.A. Unified prepared a presentation, dated March 31, that outlined measures it took to inform the public and potential investors about how the taxpayer-approved bond funds would be spent. …

California law allows school construction bonds to be spent on technology; districts also list the intended uses of bond funds in ballot materials available to voters.

L.A. Unified clearly designated funds for technology, but did not mention tablets. At the time of the district’s most recent bond issue, in November 2008, iPads were still two years away from entering the marketplace.

But officials have maintained that tablets are a modern equivalent of the traditional computer lab and therefore a legal and appropriate use of bond funds.

That’s from the L.A. Times.

Boilerplate bond language used across state

Though the SEC probe is informal for now, it could have alarming implications for school districts throughout California that have used 30-year borrowing on short-lived electronics. That’s because the bond descriptions that LAUSD provided to potential buyers were boilerplate of the sort routinely used by all districts.

If the SEC decides the language is so vague as to be illegally deceptive, that would be a problem for dozens of school districts, only starting with LAUSD and the state’s second-largest district, San Diego Unified.

But a counter narrative is emerging that suggests the real problem is that all school districts are being unfairly tarred with skepticism over their bonds because of high-profile problems that Los Angeles Unified has had with its use of $1.3 billion in bond funds to buy iPads and laptops. George Skelton’s latest column — headlined “Don’t punish other districts for L.A. Unified’s problems” — makes this case.

However, those who pay attention to education issues (and/or Cal Watchdog) know that there are a wide range of scandals involving school bonds that go far beyond the controversial practice of using borrowed money to purchase short-lived technology. Here’s a short list:

Capital appreciation bonds

This is from a 2013 L.A. Times story:

But this in some ways is a sad day for the good guys. To a degree that many didn’t expect, Deasy has taken on the United Teachers Los Angeles, the union chapter that is so powerful that it dominates the broader strategic thinking of the California Teachers Association, the most powerful force in Sacramento. And it is the UTLA, not Deasy, that is primarily responsible for the long list of scandals and anti-student spectacles in Los Angeles Unified.

There could be 15 entries. But here’s the top three:

1. The Vergara case. In June, a Los Angeles Superior Court judge who analyzed the effect of teacher tenure laws on education in LAUSD’s struggling schools concluded that they resulted in treatment of minority students that was so unacceptable that it violated California constitutional guarantees of access to a quality education. The neediest students, Judge Rolf Treu held, usually had the weakest, least experienced teachers.

Minority mistreatment, as it turns out, is a theme …

2. The Mark Berndt debacle. The veteran white teacher at a 99 percent minority south Los Angeles elementary school was caught in 2011 feeding semen to his students, but the district had to pay him $40,000 to get him to resign — thanks to extraordinary job protections the UTLA demanded and won for teachers.

3. The L.A. Times’ expose — which came out two years before the Berndt scandal — of all the teachers who not only didn’t get fired but stayed on the job even after their depraved behavior was exposed.

Taunting a suicidal student? What’s the big deal?

The anecdotal lead on the first story in the expose was absolutely wrenching:

The eighth-grade boy held out his wrists for teacher Carlos Polanco to see.

He had just explained to Polanco and his history classmates at Virgil Middle School in Koreatown why he had been absent: He had been in the hospital after an attempt at suicide.

Polanco looked at the cuts and said they “were weak,” according to witness accounts in documents filed with the state. “Carve deeper next time,” he was said to have told the boy.

“Look,” Polanco allegedly said, “you can’t even kill yourself.”

The boy’s classmates joined in, with one advising how to cut a main artery, according to the witnesses.

“See,” Polanco was quoted as saying, “even he knows how to commit suicide better than you.”

The kicker: Polanco was a UTLA official, not just a member. And, after he got a vigorous defense from the UTLA, Polanco received only trivial punishment from LAUSD.

A teacher taunting a suicidal child is no big deal in a district run by a teachers union, you see.

“The old principle that bonds should only be spent on long-term capital improvements has given way to an anything-goes approach that uses borrowed funds paid back over 30 years to pay for what should be regular school expenses. Why? To make sure there is enough money in the operating fund to pay for teachers’ salaries and benefits.

“How is this possible? The old days in which rules were so tough that the California Education Code said bond funds could only be used for school buses if they lasted 20 years have given way to this fuzzy consensus about OK uses for borrowed funds:

“’The construction, reconstruction, rehabilitation, or replacement of school facilities, including the furnishing and equipping of school facilities.’”

Now multi-decade borrowing pays for routine maintenance, graffiti removal, painting and much more. This is, of course, crazy. But it’s so California.

The CTA will stomp on challenge to its hegemony

Good luck to Hagman. Here’s a prediction: At the committee hearing on Hagman’s bill, no Democratic lawmaker will even ask a question of a witness who supports it. The CTA will swat this down like it swatted away the attempts to streamline the firing of classroom sexual predators.

The rest of us? We should know our place.

Rule No. 1 of Golden State politics.

“The key to figuring out how California works is understanding that by far the most powerful forces in state politics are the California Teachers Association and the California Federation of Teachers and the 500,000 people they represent and collect dues from.”

“Another issue in the Los Angeles Unified School District‘s $1-billion effort to equip every student with an iPad surfaced Wednesday: Are parents liable if their child breaks or loses the tablet? ….

“Senior district officials acknowledged that they haven’t decided on consequences if the $700 iPads are lost or broken.

“‘It’s extremely disconcerting that the parent and student responsibility issue has not been hammered out, and that different parents and students received different information during the rollout,’ said Board of Education member Monica Ratliff, who chaired the meeting.”

Such incompetence in the private sector would lead to mass firings.

And paying for short-lived electronics with 30-year “construction bonds,” as L.A. Unified is doing, would lead to shareholder lawsuits alleging corporate irresponsibility in the private sector.

This public-sector incompetence is everywhere. Consider all the stories one reads about government problems with computers, such as the state’s inability to process unemployment checks. Why aren’t such stories common about big companies? Because in big companies, people get fired if they can’t take care of such basic problems.

“The iPads themselves might allow the kids to break out of the system and find Web sites that teach something original and good. But even if the LAUSD puts restrictions on what the kids can see, no doubt many kids also will find ways to ‘jailbreak’ the restrictions and gain access to pornography, racist sites and other things I don’t want my tax money supporting.”

That just happened:

“More than 300 students at three Los Angeles Unified high schools bypassed security measures to access unauthorized websites on their new district-issued iPads, prompting an immediate ban on taking the tablet computers home, officials said Tuesday.

“The breach was discovered Friday at Westchester High, Roosevelt High in Boyle Heights and the Valley Academy of Arts and Sciences in Granada Hills. Those campuses were among the first to receive the iPads in the first phase of a plan to equip every LAUSD student with one of the $678 tablets.”

But that’s just the first step. Soon, the kids will find a way to jailbreak the iPads in a way the schools can’t figure out.

But already, a key reason for spending our money on the iPads — doing homework and other research outside of school — has been canceled. If the iPads stay in school, it would be more cost-effective to get $200 laptops running Windows.

Or just go back to blackboards and books.

By Chris Reed

All over California, school districts are doing illogical, unethical, unseemly things with their finances.

Unconstitutional attempts to make parents pay for basic educational materials. Siphoning funds from federal school lunch programs for the operating budget. Most absurdly, using 30-year borrowing to pay for basics old (maintenance) and new (electronic teaching devices) in direct contravention of the historical use of “construction bonds” to pay for long-term capital improvements.

All of this is done because automatic “step” pay raises that most teachers get just for showing up create gigantic pressure on operating budgets in years in which the state doesn’t increase school funding significantly.

L.A. Unified’s assault on common sense

So when the state’s largest school district does this sort of crazy borrowing, one would assume that the state’s largest newspaper offers appropriate context in its coverage to explain why the district did so. Guess again. L.A. Times reporter Howard Blume gives NO CONTEXT AT ALL. Amazing. He didn’t even mention this angle until the 18th paragraph of a 21-paragraph story on the school board’s decision to spend $30 million on iPads that won’t be paid off until current LAUSD high schools are middle-aged:

“Chief Strategy Officer Matt Hill also noted that the funding is from facility bonds, which can’t be used to hire regular school staff.

“This source of funding also has been controversial because school bonds are typically used for construction and paid off over decades.”

Paying for 2013 laptops in 2043: Insane and unexplained

Does Blume explain why it’s “controversial,” namely that it’s insane that the district will still be paying for iPads in 2043 that have been lost, broken or stolen for 28 years? Nah. It’s just “controversial,” whatever that means.

What makes this particularly pathetic is that the Times editorial page and its (anti) business columnist Michael Hiltzik have for years gone after corporate malfeasance and bad behavior. That’s perfectly appropriate. But if this sort of stuff is unacceptable in the private sector, why is it OK in the public sector?

This is never explained. Instead, governmental financial shadiness is accepted by most of the media.

Why? Seriously. Why?

I won’t hold my breath on getting a response.

By Chris Reed

John & Ken of KFI 640 AM Los Angeles had me on Tuesday to talk about my CalWatchDog.com report on the L.A. Unified School District committing to spending $500 million in 30-year school “construction bonds” on iPads and shortlived electronics.

Here’s the CWD story.

Here’s the KFI interview; you’ll need to go about four minutes in before I come on.

By Chris Reed

The state Senate committee report last week showing districts stealing federal funds meant for school lunch programs came as no surprise to students of California’s education establishment. There’s a strange mentality afflicting school governance in this state, an odd combination of an anything-goes ethos and a righteous sense of entitlement.

That’s why in recent years we’ve seen school districts in California caught lying about dropout rates. And about attendance rates, which determine state funding. And also about local property tax receipts, which can reduce state school funding depending on their amount.

We’ve also seen school districts’ legal but appalling abuse of school bonds, which used to be “construction bonds” but are now about finding ways to free up money for the general fund. One version of bond abuse is borrowing at ridiculous long-term rates to avoid short-term headaches through CABs — capital appreciation bonds. The more common version, though, is use of 30-year conventional bonds to pay for routine maintenance and educational equipment such as laptops and iPads.

CalWatchdog has written about these amoral assaults on taxpayers on several occasions. Anyone who pays attention quickly figures out what the Sacramento press corps never makes clear to Californians: Goal number one in the Legislature and in nearly all local school districts is accommodating veteran teachers, which means a constant push to free up enough funds in district operating budgets so that teachers can get the automatic “step” raises that they typically receive just for showing up for 15 of their first 20 years on the job.

All the other stuff we hear about education in budget fights? It’s all show. Democratic legislators beholden to the CTA and CFT know what they must do each budget season: Keep the auto raises coming to veteran teachers and stymie any reform that might discomfit them.

The latest example of K-12 chicanery

Understand this history, and it’s no surprise that federally funded school lunch programs are being looted as well to free up funds for teacher auto raises:

“At least eight California school districts have misappropriated millions of dollars in funding intended to pay for meals for low-income students — the biggest culprit being the Los Angeles Unified School District, according to a state Senate watchdog group.

“The California Department of Education has ordered districts to pay back nearly $170 million in misused funds to their student meal programs, the California Senate Office of Oversight and Outcomes said Wednesday. L.A. Unified has been forced to pay back more than $158 million in misappropriations and unallowable charges that the district made over six years ending in 2011.

“State officials suspect the alleged misuse of funds could be more widespread across California school districts but the system is overburdened and has only a small team of investigators.”

I would bet anything that this “alleged misuse of funds” is far more widespread. The never-ending pressure to free up money in the general fund to pay for teachers’ auto raises is a constant up and down the Golden State. Whether that means deceiving the federal government, ripping off Sacramento, or lying to parents and students, so be it. It’s the California way.

A governor who wants to enable the abusers

The key subplot here, of course, is that Gov. Jerry Brown in recent days has again made clear he wants more local control of schools.

Yo, Jerry! Yo, gov! I have some questions!

Do you get out much?

Do you think that leopards change their spots?

Do you think local school boards are full of smart, tough advocates of students?

Yo, Jerry! Yo, gov! I have more questions!

Have you been awake for any sustained period over the last 30 years?

Do you understand how California schools operate, and to the benefit of whom?

Have you even heard of Mark Berndt?

Sheesh. If this is the smartest guy in California government, we are doomed.

By Chris Reed

The California media are finally beginning to figure out that school bonds are being abused, with money being borrowed on horrible terms or with funds being spent on things that school bonds historically have never been spent on.

But even on the best education blogs, there has been no attempt to connect the dots on why this abuse is happening. Instead, even the guy who’s arguably the Golden State’s best education reporter is simply out to sea. On the EdSource website, John Fensterwald had a long and well-reported piece on the relatively new phenomenon of 30-year bonds being used to buy laptops and iPads that will last at most a few years. It’s full of lots of interesting new details, such as the fact that the textbooks that laptops and IPads usually replace are specifically banned from being paid for with 30-year bond funds.

But then there is this:

Is it legal to buy personal computers for students using school construction bonds? And if it’s legal, is it wise to pay interest long-term on devices with a short shelf life?

Last month, the Bond Oversight Committee for  Los Angeles Unified balked at endorsing Superintendent John Deasy’s plan to buy tablet computers with bonds intended primarily for building and renovating schools. In doing so, the Committee raised questions that other school districts also should be asking.

There’s no unqualified answer to the questions that the Bond Oversight Committee asked, and school districts like San Diego Unified and Riverside Unified have come to opposite conclusions. What all agree on, however, is that the state needs to provide legal clarity and, most importantly, dollars.

It is absolutely not true, not in a million years, that all school districts want “legal clarity” on this. It’s much easier to balance budgets when you shift operating costs to capital budgets. School boards don’t want to be told it’s not an option.

Which brings us to the motive question: Why would school board members be eager to do such dubious things with borrowed funds? Because the most powerful force in most school districts is the local teachers union — which wants above all else to preserve the “step” and “column” pay practices that give automatic raises for years on the job and unearned raises for meaningless graduate coursework. The result is that compensation now routinely eats up 90 percent or more of many school districts’ operating budgets, which means school boards are always desperate to free up operating funds lest their schools become Potemkin villages.

This is not a whiny, minor, pedantic point. When journalists cover financial scandals in the private sector, they hunt for motives. So why on Earth when they cover financial scandals in the public sector would they act as if there were no impure motives? As if the scandals were created by the white-collar bureaucratic version of the Immaculate Conception?

I don’t know. I really don’t.

I won’t even get into the other little flaw in the EdSource analysis. Namely, that the use of 30-year bonds to pay for routine maintenance is probably even more of a financial cancer than buying iPads with such borrowing.