Photo: Carol Davis/Flickr
California public school and community college district voters used their Proposition 39 funding powers to approve $20 billion in construction loans in 2022, with more loans approved in 2023. The Association of California Bond Oversight Committees (CABOC) estimates that these types of construction loans currently total $197.8 billion.
Proposition 39 made it easier to pass a bond measure, but it also placed a new emphasis on stronger taxpayer oversight of construction spending. In fact, when Proposition 39 was presented to voters, the Legislature reduced the bond approval level from two-thirds to 55%, creating a trade-off scenario that required extensive taxpayer oversight and public visibility.
This oversight includes performance audits, which “…shall be conducted in accordance with Government Auditing Standards issued by the Comptroller General of the United States for Financial and Performance Audits.” Education Code Section 15286
But without performance audits that comply with standards, laws are broken, crimes are committed, and voters conclude that tax dollars are not being spent wisely. You can search the Internet for indictments, charges, and conviction deals in search engines related to school districts and construction. This is in addition to the traditional occurrences of excessive change orders, cost overruns and delivery delays.
For example, the state's Financial Crisis and Management Assistance Team (FCMAT) found evidence of fraud, misappropriation or other illegal activity in 65% of “special audits” it conducted between 2018 and 2023. Although not all construction related, these cases have been referred. To law enforcement agencies.
In Santa Barbara County, a deputy superintendent of schools and three construction company executives were indicted on 74 counts, including misappropriation of public funds, embezzlement of public funds, misappropriation of construction funds and grand larceny. In San Francisco, a former school district facilities manager who oversaw local construction accounts pleaded guilty to fraud and tax evasion charges in a scheme to misappropriate $500,000 from a construction escrow account.
But the bigger mystery may be when there are no oversight performance audits and when misconduct is not investigated.
A statewide compliance survey released in October 2022 found that performance audits conducted by most school districts showed insufficient compliance with required standards based on common sense and reasonable assessments. Missing or non-compliant performance audits deprive the public and those who oversee construction bond programs of valuable information that could be used to meaningfully evaluate the expenditure of hundreds of millions of dollars of public funds.
Many performance audits are just over two pages long and include a single compliance audit objective. They typically do not audit or provide information about program efficiency and results, internal controls, or prospective analyzes of the construction program, which is typically the largest construction program undertaken by the district.
The Comptroller General's Government Auditing Standards Manual explains how government officials, such as school districts, should use performance audits to ensure that the public's funds are being used well. These standards describe categories of audit objectives: program effectiveness and results. internal controls; compliance; and prospective analysis. It also lists 32 examples of audit objectives that illustrate each of the four categories. This information provides objective analysis, findings, and conclusions to improve program performance and operations, reduce costs, and increase public accountability.
School and community college districts that engage companies to prepare Proposition 39 performance audits must include audit objectives in a variety of audit categories to ensure the public truly understands the spending of billions of dollars of taxpayer funds.
And taxpayers should carefully review school and community college districts' Proposition 39 construction bond program documents, including performance audits, which are required by law to be posted on district websites.
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Brian Scott He serves on two Citizens Bond Oversight Committees in Brentwood, and in 2023, he was named Member of the Year by the California Association of Bond Oversight Committees. He is the creator of “Becoming an Effective Monitor: An Essential Primer for California School Construction Bond Oversight.”
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