State

What happened to Modesto's $65M school bond?

Where did the $65 million from Modesto's 2001 school bond go?

Voters originally were promised that half would be spent to build a high school in northeast Modesto's Village I neighborhood (Enochs High), and the other half would go toward building a Salida high school (Gregori).

Modesto City Schools' administrators insist that is where the bond money ultimately ended up, but they acknowledge it took a detour along the way.

Gregori High's construction was delayed so long -- because of Salida land-planning disputes -- that the district said it had to spend all the bond money before Gregori's construction could begin.

If proceeds from those tax-free school bonds were not spent by 2007, there would have been financial penalties imposed by the federal government. To avoid that, the school district shifted money around.

Instead of splitting the bond funds equally between the Enochs and Gregori construction projects, all the 2001 bond money was spent to build Enochs High, which opened in 2006 at a cost of $101.4 million.

Then, to compensate Gregori High for its share of the bond, the district transferred an equal amount of Mello-Roos property taxes (collected from Riverbank and Village I homeowners specifically for Enochs High) to a fund for Gregori's eventual construction.

"Gregori got a late start, and we had to spend the bond proceeds in order to avoid penalties," school district administrators explained to The Bee in a written statement. "Physically, the cash was used on Enochs, but then the district had Mello-Roos reimburse for that portion, and that money was set aside for Gregori. The voters intended for the money to be spent equally on the two high schools, and ultimately that happened."

Once the district spent all the bond money on Enochs, however, it decided to dissolve the Citizens' Oversight Committee that legally was required to monitor how the 2001 bond money was used.

Back in 2001 when voter support for the bond was garnered, bond promoters repeatedly assured there would be "accountability for taxpayers" on how the $65 million was spent.

State law, in fact, required a bond oversight committee be formed.

"The Citizens' Oversight Committee will make sure the funds are spent efficiently and only on projects approved by the voters. There will be annual financial and performance audits," bond promoters promised in the 2001 election's official voter pamphlet, which detailed how bond money would be spent.

But since the oversight committee was disbanded in spring 2007 -- before Gregori's construction contract went out to bid -- no independent monitoring or reports about Gregori's $140.7 million construction project have been produced.

Modesto City Schools Superintendent Arturo Flores told The Bee he does not see anything wrong with saying bond funds were spent properly at Gregori High, despite there being no Citizens' Oversight Committee.

"Funds were spent efficiently and dissolving the committee (in 2007) was appropriate," Flores wrote in an e-mail to The Bee. "Annual 'performance audits' were conducted as required by law."

Bee staff writer J.N. Sbranti can be reached at jnsbranti@modbee.com or 578-2196.

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