Schools
CUSD is not in a financial position to service a $1 billion dollar bond
the amount is to large for it's balance sheet to meet OCTax Payers Association Criteria
OCTax neither supports nor opposes school bond ballot initiatives. Instead, we recommend that voters insist that at a minimum, every school bond initiative includes the following criteria :
- There is a clear need to build or modernize facilities, documented by a list of specific problems to be corrected and specific projects to be completed.
- The bond initiative tells voters specifically how the bond funds will be spent.
- The projects to be funded are capital facilities. The bonds will pay for land, construction, safety improvements, and modernization, but not maintenance, operations, or salaries.
- The facilities will have useful lives at least as long as the terms of the bonds, so that future property taxpayers will realize benefit from their taxes. Bonds will not pay for computers, vehicles, audio-visual aids, or other equipment that will wear out or become obsolete while the bond debt is outstanding.
- Bonds will be issued incrementally, in response to the school district' s needs and prevailing interest rates, not necessarily all at once.
- The bonds' interest rates will be no higher than current market rates for municipal debt.
- A "sinking fund," equivalent to 2%-4% of the value of the bonds issued, will be set aside (from the district's general fund, not from bond money) in an interest-earning account for future construction and repair.
- The district will budget 2%-3% of its operating funds (not bond money) for maintenance of facilities.
- The district will maintain a reserve of 2%-3% of general funds (not bond money) for economic uncertainties.
- There will be an annual outside audit of bond proceeds and expenditures.
- The district will appoint a citizens' oversight committee of property taxpayers to verify that bond funds are spent as approved by voters. No member of the committee may be an employee of, or do business with, the district.
- Projects to be funded will be eligible for State of California matching funds, if available.
- The bond initiative states clearly that the district does not plan to build and maintain its bond-financed facilities under a project Labor Agreement (PLA).
See:
http://capousdca.schoolloop.com/file/1218998819331/1455438848279/6795361639437705343.pdf
See Exhibit #6
At the August 2, 2016 City of Laguna Niguel City Council meeting, Clark Hampton stated that the Bond resolution has been amended to comply with the OCTax Payer Association's Bond Criteria.
Listen to Meeting Audio below at 2:17:00
At the time Mr. Hampton made that representation, it did not appear that Carolyn Cavecche, President and CEO of OCTax Payers Association agreed with that presumption. At the last CUSD Board Meeting July 20, 2016 Agenda Item #26 Exhibit 26 page 849. Board Audio at 1:10:18 https://sites.google.com/a/capousd.org/board-audio-archive/
at: 1:10:18 Carolyn Cavecche, President and CEO of the Orange County Tax Payers Association asked to have OCTax Payer Association removed from the resolution if a specific list of projects cannot be done in the resolution. "It sounds like CUSD just wants to pass the bond and then decide how to spend the money."
The meeting concluded with the agreement that the resolution needed to be amended to reflect specific projects that were to be paid for with the bond funds and that CUSD needed to demonstrate that it had a financial system that could track how the funds were spent.
I just looked at the new resolution which has been posted on the August 10, 2016 BOT meeting Agenda Item #26 at page 4 of 18 see:
http://capousd-ca.schoolloop.com/file/1218998819331/1455438848279/6795361639437705343.pdf
The meeting concluded with the agreement that the resolution needed to be amended to reflect specific projects that were to be paid for with the bond funds and that CUSD needed to demonstrate that it had a financial system that could track how the funds were spent.
I just looked at the new resolution which has been posted on the August 10, 2016 BOT meeting Agenda Item #26 at page 4 of 18 see:
http://capousd-ca.schoolloop.com/file/1218998819331/1455438848279/6795361639437705343.pdf
I see one additional problem for CUSD in meeting the OCTay Payers Bond Criteria.
SINKING FUNDS:
The OCTax criteria requires:
- A "sinking fund," equivalent to 2%-4% of the value of the bonds issued, will be set aside (from the district's general fund, not from bond money) in an interest-earning account for future construction and repair.
This requires CUSD to set aside a minimum of 2% in GENERAL FUND money now. 2% of $889 million is $17.8 million dollars.
- The district will budget 2%-3% of its operating funds (not bond money) for maintenance of facilities.
This requires CUSD to set aside a minimum of 2% in OPERATING FUND money to maintain facilities. 2% of $889 million is another $17.8 million dollars.
- The district will maintain a reserve of 2%-3% of general funds (not bond money) for economic uncertainties.
This requires CUSD to maintain a minimum 2% in RESERVES for economic uncertainties- $17.8 million dollars.
The new resolution at page 4 of 18 (g) states: 
CUSD does not have sufficient funds at this time ($17.8 million) to set aside, and is in fact that it plans to pay the $17.8 million over a period of 10 years. That is NOT in compliance with OCTaxpayers Association bond criteria. The supporting documentation shows that CUSD only has $9,528,819.20.
The new resolution at page 4 of 18 (h) states: 
The new resolution at page 4 of 18 (i) states: 
From CUSD's Proposed 2016-17 Adopted Budget:
http://capousd.ca.schoolloop.com/file/1218998819331/1455438848279/2393257782469801746.pdf
The budget Documents Speak for themselves- CUSD is not in a financially stable position to take on and service an $889 million dollar bond.
