The Poway Unified School District has hired a forensic accountant to review its controversial 2011 bond issue, district Superintendent John Collins announced at a Monday night school board meeting.
“We want to be open, transparent and forthright in our responsibility to the district,” Collins said. “We realize that it’s 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.”
The district’s 2011 bond deal became headline news across the nation after Voice of San Diego ran a story detailing the repayment terms for the bonds. Taxpayers will pay almost $1 billion on an initial loan of $105 million.
In order to keep its promise to taxpayers not to raise taxes, Poway borrowed the $105 million last year with a loan called a capital appreciation bond. The district won’t start to pay off the bonds for the next 20 years and won’t finish paying them off until 2051. In total, residents will pay more than $877 million in interest on the bonds.
At last month’s board meeting, angry residents decried the deal and sought answers as to why the board chose to issue this type of bonds with such high repayment rates. One resident called on the county grand jury to investigate.
Collins said the review requested by the district will address some of those questions, including:
• 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?
Collins didn’t release many details about the review. He didn’t say how much it would cost or when it would be complete.
He said it will be carried out by an independent forensic accountant and former FBI official who works for a company called ESI International.
Voice of San Diego has filed a request under the California Public Records Act for the contract for the review.
Will Carless is an investigative reporter at Voice of San Diego currently focused on local education. You can reach him at will.carless@voiceofsandiego.org or 619.550.5670.
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