Frequently Asked Questions
Welcome to the CABOC Help Desk. This resource is designed to provide guidance related to Citizens’ Bond Oversight Committees formed for Proposition 39 school construction bonds.
Responses are intended to share CABOC opinions and expertise and are not intended as legal advice. If your matter calls for legal advice, you should consult legal counsel before acting on the resulting guidance.
The following section includes a list of frequently asked questions. Each question can be clicked on to view the corresponding answer.
1. What was the Origin of Citizen’s Bond Oversight?
Proposition 39, officially titled the “Smaller Classes, Safer Schools and Financial Accountability Act,” was approved by California voters in November 2000. It was difficult for most tax increase measures to receive the required two-thirds approval needed to issue general obligation bonds for school construction.
The effect of the proposition was to reduce the voter approval rate required for school districts to issue general obligation bonds from 66 2/3% to 55%. Proposition 39 limits the use of bond proceeds to school facilities projects listed or described in the language of the ballot measure approved by the voters.
Because of the lower voter approval requirement, Education Code Sections 15264-15282 contains provisions ensuring public oversight and accountability concerning the expenditure of facilities bond revenues. The district board is required to appoint a citizens’ oversight committee within 60 days the school Governing Board records the results of the election in its minutes. (Education Code Section 15278 (a).)
2. What is the legislative intent of School Bond Oversight?
The legislation that implemented Proposition 39 (Education Code Section 15264) had the following legislative intent (emphasis added):
- Vigorous efforts are undertaken to ensure that the expenditure of bond measures, including those authorized pursuant to paragraph (3) of subdivision (b) of Section 1 of Article XIII A of the California Constitution, are in strict conformity with the law
- Taxpayers directly participate in the oversight of bond revenues
- The members of the oversight committees promptly alert the public to any waste or improper expenditure of school construction bond money
- Unauthorized expenditures of school bond revenues are vigorously investigated, and the courts are to act swiftly to restrain any improper expenditures
Bond oversight is supposed to be an active probing process.
3. What is the purpose of a Bond Oversight Committee?
The purpose of this committee is to inform the public concerning the expenditure of bond revenues. To fulfill this responsibility, the oversight committee is expressly required “to actively review and report on the proper expenditure of taxpayers’ money for school construction” and to “verify that the funds are being spent only for authorized purposes.” The oversight committee must promptly alert the public to any waste or improper expenditure of bond revenue. (Education Code Section 15278 b)
4. What are the major Constitutional Requirements of a Bond Oversight Committee?
These requirements are as follows:
1. Determine whether a district is spending the bond monies for construction, reconstruction, rehabilitation, or replacement of school facilities, including the furnishing, and equipping of school facilities, or the acquisition or lease of real property for school facilities.
2. Advise the public as to whether a district is spending the bond monies for the purposes specified above and not for any other purpose, including teacher and administrator salaries and other school operating expenses
3. Determine whether a district is spending the bond monies for the specific school facilities projects listed in the bond measure information given to the public prior to the vote.
4. Receive and review copies of an annual, independent performance audit to ensure that the funds have been expended only on the specific projects listed.
5. Receive and review copies of an annual, independent financial audit of the proceeds from the sale of the bonds until all those proceeds have been expended for the school facilities projects (listed in the bond measure)
In short, the Education Code requires the CBOC to review and report out to public whether the projects identified to be funded by the bond money is being spent as promised and efficiently and not for efforts which were not approved by the voters or for operating expenses.
6 .What does a Citizen’s Bond Oversight Committee do?
The committee is the eyes and ears of the community to hold the school district accountable for the spending of bond funds authorized by the voters. It is an independent committee that sets its own agenda within the rules and regulations provided in its by-laws.
It reviews reports and information provided by the district. For the committee to be most effective, it must ask questions and receive complete and transparent responses from the school district. The committee reports to the public its findings including both positive observations about the efficiency and effectiveness of the district as well as areas for improvement.
7. What is expected of a Committee member?
The committee member should be prepared to read a moderate amount of written material, attend all meetings (subject to the normal exceptions such as illness or unavoidable conflicts), be attentive at the meetings, and not be shy in asking questions or inquiry about specific data and reports. While it is preferable for several members expertise in construction, municipal finance, public agency budgeting, project management or related field, it is not an absolute requirement for every member. Different perspectives such as senior representatives and taxpayer groups are on the committee. Common sense, an inquisitive mind, and commitment to ask questions are basic qualities of a good oversight member.
8. What can you expect at Bond Oversight Meetings?
There will be good deal of reports from staff on the progress of projects and information related to master planning, design, and construction. Issues of community concerns about school projects could also be discussed, so meetings are an opportunity to have the community directly participate in school governance.
9. What if I don’t have a background in construction, municipal finance, public agency budgeting, project management or related field?
This is not absolute requirement for every member. A variety of views and any concerns need to be heard. Critical thinking and question asking are particularly important factors to make your volunteer experience valuable to the District and enjoyable as a volunteer.
10. What can be funded with bond proceeds and what is not permitted?
California Constitution, Article XIIIA, Section 1 (b) (3), states the funding must be for “the construction, reconstruction, rehabilitation, or replacement of school facilities, including the furnishing and equipping of school facilities, or the acquisition or lease of real property for school facilities.” Bond Funds cannot be used for operating expenses such as teacher or general administrative salaries but can be used for the administration of the school construction process, including planning, design, engineering, and project management and control.
11. What can a Bond Oversight Committee member do when the District spends money on projects not authorized or are questionable in nature?
The Constitution requires that the bond measure contain a “specific list of projects to be funded”. The arguable intent of this language is the voter has a specific idea of how the money is be spent and not be expended on undefined or “pet projects” of elected officials.
The dilemma facing those who oversee bond measures is that a ballot measure will often contain a list of projects (sometimes more than what can be funded with the amount of bonds) as well as a generic paragraph(s) that contain statements such as “repair, renovation upgrading, lighting and electrical systems, HVAC systems……repair, renovation, modernization, and construction of new classrooms” without specific guidance on the location or dollar amount of expenditures.
These generic descriptions are often used to justify most any expenditure. For instance, the ballot language could state a school was to construct a “multipurpose room” and yet the actual project ended up being a “Performing Arts Center”. The problem is the law does not provide much teeth or force to prohibit such expenditures other than filing an injunction/restraining order pursuant to the Waste Fraud and Prevention Action. (Education Code Section 15284)
Under the Waste Fraud and Prevention Act an injunction can be filed by any taxpayer who pays taxes with the school bond area. There are three main reasons for such an action:
- Expenditures that are not authorized by the Constitution such as payment of teacher or administrative salaries
- Expenditure on projects that were not authorized in the bond language presented to the voters
- Willfully failing to appoint a bond oversight committee that meets all the statutory requirements, such as not having a business, senior citizen, student, parent, or taxpayer representative.
The action seeks a restraining order to prevent expenditure of funds.
12. Can a School District dictate the Bylaws of a Bond Oversight Committee?
Bylaws are rules adopted for the regulation of a Citizens’ Bond Oversight Committee’s own actions.
There is nothing in current law to prohibit a School District from attempting to dictate how an Oversight Committee can operate. There is no known case law that has challenged the enactment of onerous and restrictive bylaws that run counter to the legislative intent of bond oversight.
However, the District must operate within the context of Education Code Sections 15264 to 15288.
There are five (5) basic requirements – The citizens’ oversight committee shall advise the public as to whether a school district or community college district follows the requirements of the Education Code. This in simple terms is as follows:
- Did the District spend on authorized purposes i.e., capital expenditures and not on teacher and administrator salaries and other operating expenses
- Were expenditures made on projects specifically authorized by the voters?
- Was there an Annual Financial Audit?
- Was there an Annual Performance Audit?
- Annual Report Required and Regular Reports Encouraged. “The citizens’ oversight committee shall issue regular reports on the results of its activities. A report shall be issued at least once a year.”
In addition to these requirements of the Bond Oversight Committee, there are the following requirements of the School District:
Provide technical Assistance. “The governing board of the district shall, without expending bond funds, provide the citizens’ oversight committee with any necessary technical assistance and shall provide administrative assistance in furtherance of its purpose and sufficient resources to publicize the conclusions of the citizens’ oversight committee.”
Access to Audits. “The governing board of the district shall provide the citizens’ oversight committee with responses to all findings, recommendations, and concerns addressed in the annual, independent financial and performance audits
required by subparagraphs (C) and (D) of paragraph (3) of subdivision (b) of Section 1 of Article XIII A of the California Constitution within three months of receiving the audits.”
Maintenance of Public Records and Public Access. “All citizens’ oversight committee proceedings shall be open to the public and notice to the public shall be provided in the same manner as the proceedings of the governing board of the district.”
District Reporting Requirements. Minutes of the proceedings of the citizens’ oversight committee and all documents received and reports issued shall be a matter of public record and be made available on an Internet Website maintained by the governing board of the district.
13. Should the Bond Oversight Committee only get involved in the review of expenditures after they are made?
The short answer is “yes.”
Every approved Proposition 39 school bond measure (California Constitution November 2020 amendments to paragraph (3) of subdivision (b) of Article XIIIA and subdivision (b) of Section 18 of Article XVI) requires the governing board to establish and appoint members to an independent Citizens’ oversight committee. pursuant to Education Code Section 15282 within 60 days of the date that the governing enters the election results on its minutes.
Education Code Section 15278 (b) provides, “The purpose of the citizens’ oversight committee shall be to inform the public concerning the expenditures of bond revenue. The citizens’ oversight committee shall actively review and report on the proper expenditure of taxpayers’ money for school construction.”
Education Code Section 15278 (b) also provides that the citizens’ oversight committee shall convene to provide oversight for:
- Ensuring that bond revenues are expended only for the purposes described in the California Constitution.
- Ensuring that no funds are used for any teacher or administrative salaries or other school operating expenses.
Education Code Section 15278 (b) contains an often-overlooked phase “But not limited to”. This phase offers the possibility that a CBOC should look at accountability more broadly.
14. Can any operating costs be funded with bond proceeds?
The short answer is “no.”
The Proposition 39 school bond amendments to the California Constitution specifically provide that bonded indebtedness incurred may be used for specific school facilities projects approved in the bond measure for “construction, reconstruction, rehabilitation, or replacement of school facilities, including the furnishing and equipping of school facilities, or the acquisition or lease of real property for school facilities … on or after the effective date of the bond measure… .”
On November 9, 2004, the California Attorney General issued Opinion No. 04-110 that answered this question:
“May a school district use Proposition 39 school bond proceeds to pay the salaries of district employees who perform administrative oversight work on construction projects authorized by voter approved bond measure?”
The answer: “A school district may use Proposition 39 school bond proceeds to pay the salaries of district employees to the extent they perform administrative oversight work on construction projects authorized by a voter approved bond measure.”
While it is permissible for bond funds to pay for some overhead costs of the school construction bond program, such as employer pension contributions and office space and costs for the construction staff, the CBOC should monitor such costs to be sure that the construction program is not overcharged.
15. What is a Proposition 39 performance audit?
Proposition 39 requires “… an annual independent performance audit to ensure that the funds have been expended only on the specific projects listed.” (California Constitution Article XIIIA, Section 1(b)(3)(C).)
Appendix A to the California guide for annual audits (Guide for Annual Audits of K-12 Local Education Agencies and State Compliance Reporting, published by the Education Audit Appeals Panel) prescribes the specific scope for this audit:
1. “Select a representative sample of expenditures charged to the facilities project(s) and review supporting documentation to ensure that such funds were properly expended on specific projects listed in the text of the applicable ballot measure.
2. “Verify that the funds were generally expended for the construction, renovation, furnishing, and equipping of school facilities constituting authorized bond projects.
3. “Verify that the funds used to pay the salaries of district employees were allowable per Opinion 04-110 issued on November 9, 2004 by the State of California Attorney General.
4. “If the school district did not properly account for the expenditures, if such expenditures were made for unauthorized bond projects, of if salary transactions were used for general administration or operations, include a finding in the audit report.”
The audit required by the Guide is known as a “compliance” audit, performed to help the report recipients decide if the organization has met the applicable requirements. In addition, to the annual required compliance audit, the best practice is to do an annual ‘Effectiveness and Results’ performance audit. This audit could determine, for example if bond projects were delivered on-time, within budget and tax dollars spent effectively.
A review of efficiency and effectiveness could include factors and issues such as:
- The development of project scopes and cost estimates.
- Adequacy, completeness of justification of change orders in projects.
- Procedures for avoiding claims in projects.
- Whether project costs are in line with industry standards.
- Procurement processes for project consultants such as architects and engineers.
- Processes and procedures for utilizing best value procurement (e.g., design build)
- Master planning and cost estimations
- Procurement management and controls
- Contract Administration and controls
- Auditing post project completion construction contracts
- Warranty compliance and ongoing maintenance of assets
- District and Professional Services staffing plan
- Design and construction schedules cash flow analysis
- Cost schedule, budgetary management, and reporting controls
- Review of material specifications for competitiveness and completeness
- Contractor billing compliance controls
- Project close out controls
In short, the expanded performance audit is a vehicle for the oversight committee to “report on the proper expenditure of taxpayer dollars” and is also a process improvement document for a district’s bond program.
The Little Hoover Commission is an independent California oversight agency that recommended all school Proposition 39 bond programs have annual ‘Effectiveness and Results’ performance audits be performed in accordance with Government Auditing Standards published United States Government Accountability Office.
16. What are the basic key elements that should be included in a school district facility master plan?
The key elements of a school district facility master plan are as follows:
Strategic Priorities. This is a description from a policy perspective of the priorities for spending on capital projects. Factors such as health life safety needs, improvement in classroom environments, future capital cost avoidance or long-range operational cost savings are among the type of policy considerations. These priorities guide the timing of spending given a limited availability of funds with higher priority projects receiving more immediate funding.
Educational Plan/Specifications. This includes an examination of the delivery standards for education such as the size of classrooms, support space needs, and the infrastructure requirements such as lighting. These specifications are often included as design standards. The master plan process requires an examination of how the education service is best delivered by a particular physical environment.
Facility Needs/Condition Assessment. This involves a review of the physical condition of buildings and infrastructure and determination of such factors as remaining useful life; improvements need to extend and improve their physical life and which assets should be replaced. The Assessment includes an estimate of costs.
Enrollment Projections. This phase involves the forecasting of student population by service areas and the overall need for educational spaces.
Site Development Plans/Master Plans. For each educational facility, the overall space, and functional needs, be identified and dovetail with the facility conditions assessment to identify which facilities should be maintained and improved along with new construction or refurbishment requirements. Cost estimates would be for each site as well as the inclusion of overall systemwide infrastructure needs.
Implementation Plan. This final phase of the master plan takes estimated funding availability, project costs and district priorities and then identifies the phased development of school facilities.
17. What are some examples of questions that should be asked by bond oversight members?
The overarching goal of bond oversight is for the members of a Committee to report to the public on whether the expenditures from bond funds were “proper” and consistent with what was promised to the voters
Here are some sample questions:
- Why were outside consultant services used for Project Management when they have an hourly rate of X when in house half-staff has an hourly rate of Y?
- .Why was sole source or no solicitation of proposals approach used for selection of an architect for this project?
- How did your district expenditure plan for this fiscal year relate to district priorities for capital projects?
- What processes does your district have to reduce the amount of change orders in projects?
- What was the districts process for evaluating the environmental and site-specific conditions of a project that now has problems with soil contamination and settling that has resulted in substantial increase in costs?
- How was the district policy on Consulting selection followed for this project’s architect?
- Why were outside consultant services used for Project Management when they have an hourly rate of X when in house half-staff has an hourly rate of Y?
While knowledge of construction and related services is helpful in providing bond oversight, it is not an absolute requirement. Common sense and intuition given the circumstances of the bond program are just as important factors in determining questions.
18. Is Your CBOC Independent?
“On November 7, 2000, California voters reduced the voter approval threshold for school and community college district general obligation bonds from two-thirds (2/3) voter approval to 55% voter approval. Proposition 39 amends Article XVI, Section 18 of the California Constitution…to pay debt service on bonds issues for school construction with the approval of 55% of the votes cast.” 1 The California Legislature, as part of the Proposition 39 implementation legislation, enacted Education Code Section 15278 which establishes Citizens’ Oversight Committees.
Education Code Section 15278 Citizens’ Oversight Committee
Education Code Section 15278, Article 2 Citizens’ Oversight Committee, provides that if a bond measure authorized pursuant to Proposition 39 is approved, “… the governing board of the school district or community college district shall establish and appoint members to an independent citizens’ oversight committee, pursuant to Section 15282 2, within 60 days of the date that the governing board enters the election results on its minutes pursuant to Section 15274.” 3 (emphasis added)
Definition of “Independent”
Dictionary.com is helpful in the context of Education Code Section 15278 an “independent citizens’ oversight committee”. In this context Dictionary.com defines “independent” as follows:
Is Your CBOC Independent?
An independent CBOC needs to answer each of these twelve (12) questions with a “yes.”
- Can you prepare your own agenda?
- Can you meet whenever you want?
- Can you approve your own bylaws?
- Can you establish subcommittees?
- Do you have your own budget?
- Do you have ability to post documents to the CBOC website?
- Does the District provide you with all documents requested?
- Do you have independent legal counsel who works for the CBOC?
- Do you receive and accept the annual financial and performance audit reports?
- Does the CBOC prepare and issue its annual report including compliance opinion?
- Can CBOC members talk with contractors, architects, consultants, and auditors without restriction?
- Can CBOC members visit construction site?
1. Proposition 39 Best Practices Handbook, California Coalition for Adequate School Housing, 2000, page 1. Note that the reference to California Constitution Section XVIIIA was incorrect. It should be Article XVI, Section 18. This reference has been corrected in the passage quoted above.
2. Education Code Section 15282 prescribes the CBOC membership requirements.
3. Education Code Section 15278 (a).
19. What information should a new CBOC member get during the first three months of service?
A new CBOC member needs some basic information during the first three months of service to be an effective member. This is the basic information a new CBOC member should get during the first three months of service (not listed in any priority order):
- Requirement for an independent CBOC and review to ensure no conflicts of interest
- Ballot language including project list
- Facilities master plan including projects, costs, schedules, and objectives
- Dates of community meetings for the next year so they can be added to your calendar
- The CBOC and CABOC website links
- The last CBOC Annual Report
- The last financial audit report
- The last performance audit report
- Names, bio’s, emails, and telephone numbers of CBOC members and key district staff and policy on non-sharing of such information
- How to place an item on a future CBOC agenda
- Monthly check registers of bond measure expenditures, e.g., check #, date of check, vendor, amount, payroll in total, and purpose from which sample invoices could be selected for review at each committee meeting
- Monthly budget v. actual expenditures and commitments
- District policies for prioritization of projects
- Brown Act (open meeting act) and compliance requirements, most specifically, what not to do
- Who to contact for questions
- Subcommittee assignment
- California Association of Bond Oversight Committee Help Desk at website www.bondonversight.org
20. Should a CBOC take legal advice from the school district’s lawyer?
First, we recommend that every CBOC have its own legal counsel that is responsible to the CBOC and that the district’s legal counsel, internal or external, cannot be the CBOC’s legal counsel because that would be a conflict of interest. Also, for the same reason, the CBOC’s legal counsel cannot do any work for the district.
There will be occasions when it is totally appropriate for the district’s legal counsel to provide information about legal matters to the CBOC. For example, if the CBOC has legal questions about the district’s human resources or procurement processes, it will likely be far more efficient for the district’s legal counsel that works in these areas to provide the explanation to the CBOC. In such cases, it may be appropriate for the CBOC’s legal counsel to review the district’s legal counsel statements.
Occasionally, a CBOC may need technical advice. The district is required to provide technical advice to the CBOC when requested ”without expending bond funds.” See Education Code Section 15280 (a). Legal advice is one type of technical advice. Typically, the district employs a lawyer to give the district advice about issues related to the bond programs.
The district’s lawyer has an “attorney/client” relationship with the district in which the lawyer has a duty to give advice that is in the best interest of the district. The district’s lawyer has no duty to the CBOC, even if the legal advice is good advice. The district’s legal counsel also has a legal privilege responsibility to the district. This means that it is prohibited from sharing certain information, such as those for a claim or legal action, individual personnel action, and information regarding procurements that have not been completed, with any outside parties including the CBOC. Similarly, the CBOC’s legal counsel has the same responsibilities to the CBOC. It is possible that the CBOC’s legal counsel may be able to give general information about a situation that is in process that the district’s legal counsel is prohibited from discussing with the CBOC.
The potential problem with the CBOC receiving legal advice from the district is that the advice is “in the best interest of the district.” The CBOC should have advice that is in the best interest of the CBOC as the representative of the taxpayers, residents, and other stakeholders.
For example, the bylaws of a CBOC may include a provision “only the district may amend these bylaws.” An independent CBOC’s lawyer might explain that the board’s bylaws encroach on the independence of the CBOC.
An independent CBOC must draft its own bylaws.
Best practice is for the CBOC to have an independent legal counsel, paid by the District, and for CBOC legal counsel to be experienced in the types of matters that are likely to come before the CBOC. Fortunately, there are law firms that have attorneys that specialize in governmental and even K-12 and Community College organizations that can be well-qualified and experienced in the legal issues of such entities.