PROPOSITION 39 BONDS

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PROPOSITION 39 BONDSLEGAL, AUDIT and CBOC

REQUIREMENTS


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Proposition 39 Requirements• History

November 7, 2000• Voters Approved Proposition 39• “Smaller Classes, Safer Schools and Financial

Accountability Act”• Amended portions of the California Constitution

(Article 13A)• Added Education Code Sections 15264 – 15288 –

“Strict Accountability in Local School Construction Bonds Act of 2000”



Proposition 39 Requirements California Constitution – Article 13A

Bond proceeds can only be used for Construction Reconstruction Rehabilitation Replacement of facilities Acquisition or lease of real property for facilities




Bond proceeds cannot be used for: Teacher salaries Administrator salaries School operating expenses




School Board must formulate a projects list School Board must certify that they have:

Evaluated safety needs Evaluated class-size reduction needs Evaluated information technology needs




School Board must conduct an annual, independent performance audit to ensure that the funds have been expended only on the specific projects listed




School Board must conduct an annual, independent financial audit of the proceeds from the sale of the bonds until all of those proceeds have been expended for the school facilities projects



Proposition 39 Requirements California Education Code Section 15272

Requires establishment of a Citizens’ Oversight Committee

Requires annual independent audits “to assure that funds are spent only on school and classroom improvements and for no other purposes”




Establishes purpose of the Citizens’ Oversight Committee, which shall: Inform the public concerning the expenditure of bond

revenues Actively review and report on the proper expenditure of

funds for school construction Advise the public about compliance with Article 13A of

the State Constitution




Establishes purpose of the Citizens’ Oversight Committee, which shall (continued): Provide oversight for:

Ensuring that bond revenues are expended only for the purposes described in paragraph (3) of subdivision (b) of Section 1 of Article 13A; and

Ensuring that no funds are used for teacher or administrative salaries or other school operating expenses




Citizens’ Oversight Committee may do the following: Receive and review copies of the annual independent financial and

performance audits Inspect school facilities to ensure bond funds are spent in

accordance with Article 13A Receive and review copies of deferred maintenance proposals or

plans Review efforts by the District to maximize bond revenues by

implementing cost-saving measures: Reduce costs of professional fees Reduce costs of site preparation Joint use of core facilities Incorporating efficiencies in schoolsite design Cost-effective and reusable facility plans




Citizens’ Oversight Committee may do the following: Receive and review copies of the annual independent financial and

performance audits Education Code Section 15286 has been added to require the

annual financial and performance audits be submitted to the Citizens’ Oversight Committee by March 31 of each year




School District Governing Board shall provide to the citizen’s oversight committee (without expending bond funds): Necessary technical assistance Administrative assistance

Citizen’s Oversight Committee: Meetings open to the public; properly noticed Report to the Governing Board at least once per year Minutes of meetings are public records Minutes of meetings shall be available on an Internet website

maintained by the District




Describes the composition of the Citizens’ Oversight Committee

Minimum of seven members, of which five must be:1. Active Business member2. Active Senior Citizens’ Organization3. Active Bona Fide Taxpayers’ Organization4. Parent or Guardian of a child enrolled in the District5. Parent or Guardian of a child enrolled in the District, active in

Parent-Teacher Organization District Employees, Officials, Vendors, Contractors and

Consultants are prohibited from serving on the Committee



SCUSD CBOC Bylaws (1/16/2007) Establishes purpose of the Citizens’ Oversight

Committee, which shall (Section 3): Inform the public concerning the District’s expenditure of

bond proceeds (3.1) Review expenditure reports produced by the District to

ensure (3.2): Bond proceeds are expended only for the purposed set

forth in the ballot measure No bond proceeds are used for any teacher or

administrative salaries or other operating expenses



SCUSD CBOC Bylaws (1/16/2007) Establishes purpose of the Citizens’ Oversight

Committee, which shall (Section 3)(continued): Present to the Board, in public session an annual written

report which shall contain the following (3.3): A statement whether the District is in compliance with

the requirements of Article XIIIA, Section 1(b)(3) of the California Constitution; and

A summary of the Committee’s proceedings and activities for the preceding year



SCUSD CBOC Bylaws (1/16/2007) Citizens’ Oversight Committee may do the following

(Section 4.1): Receive and review copies of the annual independent

financial and performance audits Inspect some of the facilities and grounds for which bond

proceeds have been or will be expended Receive and review copies of deferred maintenance

proposals or plans developed by the District Provide input and advise to District staff and the Board

regarding the selection of an independent auditor for performance audit of bond funds

Make requests for copies or inspection of District records in writing to the Chief Financial Officer



SCUSD CBOC Bylaws (1/16/2007) Citizens’ Oversight Committee is not empowered to

do any of the following (Section 3.4): Approval of construction contracts Approval of construction change orders Appropriation of construction funds Handling of legal matters Approval of construction plans and schedules Approval of Deferred Maintenance Plans Approval for sale of bonds



SCUSD CBOC Bylaws (1/16/2007) Citizens’ Oversight Committee is not responsible for any of

the following (Section 3.5): Projects financed through the State of California, developer fees,

COPs, lease/revenue bonds or sale of surplus property (all sources not involving Proposition 39 bond proceeds)

Establishment of priorities and order of construction for bond projects Selection of architects, engineers, soils engineers, construction

managers, project managers, CEQA consultants and other professional service firms required to complete the bond projects

Approval of design for bond projects Selection of independent audit firm, performance audit consultants

and other consultants necessary to support the activity of the committee

Approval of an annual budget for the Committee necessary for the committee to carry out its activities



Performance Audit Standards Performance Audit Standards

Described in Generally Accepted Government Auditing Standards (GAGAS), issued by the Comptroller General of the United States (the “Yellow Book”)

Did not exist in GAGAS in 2000 when Proposition 39 was passed

Added to GAGAS in 2003; further enhanced in 2007



Performance Audit Standards Recent Developments:

SB 1473 (EC 15286) Introduced 2/19/10 Amended 3/25/10 and 4/12/10 First hearing 4/14/10 Passed Assembly 8/16/10; Passed Senate 8/26/10 Signed by Governor 9/22/10 Became effective January 1, 2011 EC 15286 clarifies Education Code to state that the Performance

Audit required under Proposition 39 must be done in accordance with Generally Accepted Governmental Auditing Standards



Performance Audit Standards GAGAS General Standards

Independence Professional Judgment Competence Continuing Professional Education Quality Control



Performance Audit Standards GAGAS Fieldwork Standards

Reasonable Assurance Significance Audit Risk Planning Supervision and Review Sufficient, Appropriate Evidence Audit Documentation



Performance Audit Standards GAGAS Reporting Standards

Reporting Report Contents



Performance Audits What will the Auditor look for?

Internal Controls Documentation of the control environment Verification that the controls work Compliance with laws and regulations Compliance with District controls




Bond Expenditures Expenditure details agree with District’s financial

statements / General Ledger Sample of expenditures

District procedures are followed Compliance with Bond provisions Compliance with project list School / classroom improvements; not teacher or

administrator salaries



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Oversight Committee Relationship to the Governing Board Compliance with oversight responsibilities

Reports to the Board Committee meeting minutes Accessibility of website information

Documents

PROPOSITION 39 BONDS