CALIFORNIA AUDIT FINDS MAJOR LAPSES IN OVERSIGHT FOR SCHOOL BOND FUNDS

Randall Jensen , Bond Buyer | http://bit.ly/n92DcA

July 29, 2011 - CALIFORNIA: California school district bonds are back in the spotlight after an audit found poor oversight of school construction bond money awarded by the state. The audit focused on $7 billion of bond money handed out through the state administrator of school construction bond funds. It found that billions of dollars of bond proceeds spent on projects considered to have a high risk of misuse of funds went unchecked, according to the report by the state Department of Finance.

Earlier this year, local government officials and state Attorney General Kamala Harris raised concerns about the misuse of bond funds and certain debt financing structures employed by some school districts. The Finance Department conducted the audit from April 2010 through January 2011 on Proposition 1D bond funds overseen by the Office of Public School Construction through the state facilities program.

The facilities program provides funds for building and upgrading K-12 schools. The State Allocation Board hands out the bond money through the the school construction program. “Although OPSC has established accountability processes and controls for Proposition 1D bond funds, a number of these controls are either not implemented or not working as intended,” the audit report said. “These issues, if left unresolved, will continue to adversely affect bond accountability.”