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School District Unresponsive to Questions on Tax Bond Measure

School district officials are not responding to questions about plans for this year's tax bond ballot measure.(File Photo)

School district officials are not responding to questions about plans for this year’s tax bond ballot measure.(File Photo)

Alameda Unified School District (AUSD) officials have been unwilling to respond to questions about strategy for this year’s tax bond, as it may relate to district machinations in 2002 through 2004, to get the previous tax bond measure, Meaure C, passed in 2004.

A series of public records act requests sent to the school district has revealed amounts paid to financial advisors and bond underwriters, who contributed to the pro-bond measure campaign, pursuant to the 2004 election.

School district responses to those requests also turned up a December 3, 2002 memo from California Financial Services to Charles Heath of Tramutola Advisors, a political consulting firm based in Oakland, asking for the firm’s review of the Tax Rate Statement that accompanied the March 2, 2004 ballot measure.

At that election, voters approved a $63 million school facilities bond issue, and the accompanying property tax. However, the $63 million ballooned into $176 million because the bond deal included so-called Capital Appreciation Bonds, which have come under fire in recent years for deferring principal repayment, and leaving taxpayers stuck with burden much larger than they may have originally anticipated.

California legislators tightened restrictions last year on the use of capital appreciation bonds.

The bond deals also came under scrutiny for practices apparently similar to what took place in Alameda prior to the Measure C vote. Last year, California State Treasurer Bill Lockyear said that the structure of the underwriting and financial advisor relationships may be illegal, because they are set up to skirt California laws that prohibit school districts from spending money to promote their ballot measures.

According to the Orange County Register, Lockyear was concerned about “agreements where school districts give banks exclusive contracts to sell bonds approved by voters in return for the firms providing pre-election campaign services.”

Documents uncovered so far by Action Alameda News show that California Financial Services was paid $680,000 for its services related to Measure C in 2004; it appears also that the firm contracted with Tramutola for political advice as well, which may have had the effect of laundering AUSD payments for political consulting, which would otherwise be illegal.

AUSD Superintendent Kirsten Vital declined to respond to the specific question of whether or how AUSD would change practices this year, as it approaches another tax bond ballot measure in November.

She did, however, punt the question of Who paid Tramutola? to Susan Davis, senior manager, community affairs for the school district, who told Action Alameda News, “we are currently putting together a timeline of when Tramutola was paid (and for what) in late 2003. Unfortunately, it looks like some of our documents relating to this may still be in historic Alameda High School. Once we locate those, we will also send you a statement about how Measure C was structured and the district’s relationship with various consultants.”

School board trustee Margie Sherratt, a pro-Measure C campaign contributor in 2004, has twice now declined to provide comment on the question of how AUSD might proceed this year, given the documents uncovered and the legislative changes. She responded only to our first inquiry, prior to the release of the Tramutola document, below, saying only that she would study the material we sent her.

California Financial Services letter to Tramutola

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