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Clariece Tally: PUSD Trustees Betray Parents, Students

The community deserves answers from the board members regarding the $1 billion cost of a school bond.

If Will Carless, investigative reporter for Voice of San Diego, had detonated a nuclear device at the , he would not have created more collateral damage than he did in his well-researched and powerful article, Where Borrowing $105 Million Will Cost $1 Billion: Poway Schools.

Without Carless exposing the details of the 2011 bond financing by the Board of Education, Poway voters and property owners may never have known how deeply they had been deceived—well, not for at least another 20 years. 

To simplify the events: In 2008, the PUSD needed money to finish numerous facility upgrades that were supposed to have been paid for by Proposition U, which passed in 2002.  Why those Prop U upgrades went over budget by tens of million of dollars is a completely different discussion and pales in comparison to this discussion.

In 2007, the school board (President Jeff Mangum and Trustees Linda Vanderveen, Andy Patapow, Todd Gutschow and Penny Ranftle) decided to ask voters for money to finish school repairs and upgrades and to essentially extend the pay-off date for the Proposition U bond. However, by 2007, people were tired of being taxed to death with little to show for it and the country was in the initial stages of an economic free-fall.

So the school board promised that passing the bond would allow them to finish the projects with no tax increase. The length of the taxation would be extended but the tax itself would remain the same. It didn’t seem like such a bad deal at first blush. 

However, instead of disclosing to voters the trustees’ intent to use a highly risky financial instrument known as a capital appreciation bond, they simply said on the ballot the funds would be raised with “general obligation bonds.” They certainly knew including the words “capital appreciation bonds” would have been a red flag that the district planned to mortgage our future to the hilt. Capital appreciation bonds are the equivalent of what sub-prime loans were to low-income borrowers and collateralized mortgage bonds were to lenders during the housing bubble of the last decade.

And look where that got us.

So between hiding critical information and repeating the predictable mantra “it’s for the children,” we were intentionally deceived to the tune of a billion dollars. Right, billion with a “B.”

Predictably, Poway has become the laughingstock of the financial world. CNBC intoned this is “the worst loan ever!” The Financial Times said, “At best, this is a case of kicking the can down the road; at worst, a case of the government dancing with loan sharks.”  Now, bad financial planning by school districts can be referred to as “pulling a Poway.” 

We are a city that has prided itself on our community spirit; our ability to come together in the midst of disaster, to comfort each other in the face of tragedy; and our quality of life rises above the rest of the county. Now we are city that is leveraged to the hilt and will find future bonds out of the question (think infrastructure and storm drains). 

Not surprisingly, PUSD officials have gone into spin mode. Todd Gutschow, still a trustee, said, “We could have authorized more taxes, it would just have been breaking the promises we made to the community.” Jeff Mangum, president of the board at the time and now running for Poway City Council, posted on Facebook: “Short answer is I don’t know anything about it yet. It was passed in 2011 when I was no longer on the Board.” (No, Mr. Mangum, it was passed by the board in 2007 and the voters in 2008.)

I would welcome a statement from the PUSD superintendent and trustees who put this on the ballot in Feb. 2008—with an explanation as to why they have impoverished our children and grandchildren without our fully informed consent. I would also like a real discussion about concrete solutions on how we correct this financial disaster and how we can prevent this from happening to anyone else.

Unfortunately we have already learned the loan cannot be pre-paid or refinanced, so we need to start planning for the future payments now. And the very tax increase that the board said they wanted to avoid will undoubtedly come to fruition, either by a voter referendum with the money earmarked for future payments or by the far more drastic step of the County Tax Assessor forcing a tax on property owners to ensure repayment.

Either way, we need to begin a process of earmarking dollars now. As a result of their actions Mangum, Vanderveen, Patapow, Ranftle and Gutschow have virtually guaranteed us a triple-digit tax increase to cover their mess.   

We deserve answers. There needs to be full disclosure of the details on how this happened. It is abundantly clear we cannot trust the district to provide anything other than intentionally vague information and references to “we did it for the children.” Fortunately the law provides an investigative mechanism, and as an individual citizen or as a group we have the power to request a grand jury investigation against the Poway Unified School District, then-president Mangum and Trustees Vanderveen, Patapow, Ranftle and Gutschow. Because we can no longer trust the individuals or the district to give us honest answers, we will have to rely on sworn testimony and the power of the subpoena.

Sadly, what bothers me most about this situation is not the future increase in taxes or the fact that yet another politician has mortgaged our future—I’ve come to expect that from Sacramento and Washington. No. The real travesty is that this fraud was perpetrated on our community by a few of its own. People we believed to be trustworthy and above reproach—Mangum, Vanderveen, Patapow, Ranftle and Gutschow

Never again should any of you hold office in this community. We cannot afford to have our trust violated again. Shame on you.  

AdamJ August 22, 2012 at 04:40 PM
Gary, thank you for validating my theory that those who are trying to make this look like Mangum's fault are the ones who have something to gain by attempting to make Mangum look bad. How did Mangum "orchestrate this debacle"? He wasn't even on the school board when they voted on this 2011 bond. Prop C states: "The interest rate on any bond, which is established at the time of bond issuance, cannot exceed 12% per annum. The final maturity date of any bond can be no later than 25 years after the date of bonds issued pursuant to the Education Code or not later than 40 years after the date of bonds issued pursuant to the Government Code. Principal and interest on the bonds would be paid by revenue derived from an annual tax levied on taxable property within the District in an amount sufficient to pay the interest as it becomes due and to provide a fund for payment of the principal at maturity." How is that not clear? Even the controversial 2011 bond (of which Mangum was NOT a part of) falls within these guidelines laid out in prop C. Or are you saying that Mangum should have been psychic enough to know what was going to happen to the economy and that the school board was going to pass this controversial bond when he was no longer on the board? Again, those who are attempting to place blame on Mangum are the ones who have something to gain by trying (however dishonestly) to make him look bad.
Chris Cruse August 22, 2012 at 06:07 PM
Adam, the CAB bonds started in 2006. Way before the recession started and before Prop C was even on the ballot, and when Magnum was still on the board. PUSD issued a $3 million Prop U bond that was not subject to redemption before the maturity date in 2013. The interest was almost $16 million for a total payment of $19 million. That is a 6-to-1 payback.
Clariece Tally August 22, 2012 at 06:32 PM
AdamJ - Jeff Mangum did vote for this. He made the motion to authorize $105M at the October 2010 Board meeting. It was seconded by Linda Vandervene. Bonds do not happen in a vacuum. There is research and opinions that must be delivered to the Board well in advance of the actual date of issuance. But you're right in that it is the voters fault for being suckered into believing this is all for the children. The buildings are for the children but the FINANCING is for the investors and we got snookered good.
Cynthia Hedrick August 23, 2012 at 11:19 PM
For everyone concerned about this issue, First of all the person whose name i will not speak DID NOT RESEARCH THIS STORy, the research was done by a reporter out of the midwest. He just copied and used someone elses work. Also ask him where his wife works and ask him if she ever got a pink slip from her district. Also his is complaining about the cost of the bond but ask him where his child goes to school because he wants her to have the best education she can. Oh and by the way she does not live in the district where she is going to school.
Fran October 09, 2012 at 08:43 PM
I just now saw this comment. Will Carless used the midwest as a base for his article and then did further research. Where his wife works or where he lives is irrelevant. Complaining about the depth of research that has continued on the bond mess including the ILLEGAL premiums paid out in 2009 and 2011 are what's important. Should we point out that the PUSD superintendent's house was in foreclosure during this mess? No. Because it's not relevant. Cynthia - attempting to use a spouse as a smear tactic is childish and reflects a lack of understanding of the deeper issues which is how our school board screwed us over.

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