Metropolitan News-Enterprise


Friday, November 12, 2004


Page 3


A.G.: School Administrators Overseeing Construction Can Be Paid From Proposition 39 Bond Funds


By DAVID WATSON, Staff Writer


Funds from school construction bonds issued under the authority of Proposition 39, approved by voters in 2000, can be used to pay the salaries of school district administrators overseeing the construction work, Attorney General Bill Lockyer has said.

In a formal opinion issued Tuesday, Lockyer said that a provision of Proposition 39 barring the use of the bond money for “teacher and administrator salaries and other school operating expenses” does not mean it cannot be used to pay administrators who supervise the building projects.

“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,” Lockyer wrote.

The opinion was prepared by Deputy Attorney General Daniel G. Stone and came in response to a request from Assemblyman Manny Diaz, D-San Jose.

Proposition 39 amended the state Constitution to permit school districts, community college districts, and county boards of education to issue bonds “for the construction, reconstruction, rehabilitation, or replacement of school facilities” with the approval of 55 percent of the voters.

Article XIIIA, Sec. 1(b)(3)(A), added by the proposition, makes expenditures under the proposition subject to:

“A requirement that the proceeds from the sale of the bonds be used only for the purposes specified in Article XIIIA, Section 1(b)(3), and not for any other purpose, including teacher and administrator salaries and other school operating expenses.”

Lockyer declared:

“We believe that the phrase ‘the construction, reconstruction, rehabilitation, or replacement of school facilities’ embraces project administrative costs, such as monitoring contracts and project funding, overseeing construction progress, and performing overall project management and accounting that facilitates timely completion of the construction project. A construction project generates not only the costs of materials and equipment, architectural and engineering design work, and construction worker salaries, but also costs of project administration — work that the school district would not be required to undertake or to fund but for the existence of the construction project. This administrative work is performed, whether by private consultants under contract with the school district or by school district employees with expertise in project management, to ensure that all aspects of the construction project are properly coordinated; that each step satisfies the specifications; that invoices are reviewed, revised where appropriate, and paid in a timely manner; that costs do not exceed the project’s budget; and that the project is completed on schedule.”

He noted that some administrative tasks, such as annual audits, “are expressly required by Proposition 39 itself, as a condition of qualifying for the 55 percent voter approval requirement.”

The attorney general reasoned:

“Such project management costs may therefore be funded by Proposition 39 school bond proceeds unless the expenditures are specifically prohibited under the phrase ‘teacher and administrator salaries and other school operating expenses.’ The ‘teacher and administrator salaries’ in question are limited to those that qualify as ‘school operating expenses’ because of the word ‘other’ contained in the phrase. We believe that ‘school operating expenses’ are those regular, ongoing, day-to-day costs associated with maintaining and operating a school.”

He added:

“We distinguish between routine, everyday school operating expenses and the narrow category of costs and salaries of concern here — costs that arise only in connection with, and are incurred only for the duration of, construction projects authorized by a voter approved school bond measure….Accordingly, we believe that Proposition 39’s prohibition against the use of school bond proceeds for ‘school operating expenses’ does not bar use of the proceeds for the payment of salaries of school district employees performing oversight work on construction projects authorized by a voter approved bond measure.”

Lockyer said his interpretation would permit school districts to reduce construction costs by having project management work performed by their own employees. He noted that such cost reduction was among the objectives the Legislature sought to promote in enacting statutory provisions to implement the proposition.

His view of the measure was also consistent with “other legislative schemes dealing with similar types of costs,” the attorney general asserted.

Taking the view that such expenditures are barred by the language of the proposition would also lead to a result not envisioned by the voters who approved it, Lockyer contended.

“[W]e note that a contrary conclusion would permit the use of the school bond proceeds for administrative oversight work if performed by private consultants under contract with a school district while forbidding the use of such proceeds for the same work performed, presumably at lower cost, by district employees,” he wrote. “Nothing in the November 8, 2000 ballot pamphlet remotely suggests that California voters intended such a result when they adopted Proposition 39.”

The opinion is No. 04-110.


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