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California’s Lockyer Seeks Examination of School Bonds

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March 19 (Bloomberg) -- California Treasurer Bill Lockyer asked state Attorney General Kamala Harris to determine whether agreements between some school district officials and bond underwriters used public funds in violation of the law.

Some California school districts are awarding exclusive contracts to the companies for bond sales approved by voters in an election, in return for getting campaign services from the underwriter, Lockyer wrote in a letter yesterday to Harris. He asked for a formal legal opinion on the practice.

“These arrangements raise substantive questions about whether school-district officials have violated state law by using public funds for campaign services related to advocating the passage of bond measures,” Lockyer wrote.

Underwriters typically help school districts conduct community forums and other public meetings on bond issues, and sometimes conduct voter surveys or help prepare ballot arguments, Lockyer said.

In some cases, schools agree that fees for the sales will reimburse the underwriters for pre-election services, according to the letter.

Lynda Gledhill, a spokeswoman for Harris, said the office received the letter, will review it and didn’t have a comment.

Lockyer asked Harris for an opinion on whether a school district violates state law by using public funds to advocate the passage of a bond measure when it reimburses the underwriter for the cost of offering campaign services, such as providing campaign consultants.

He also asked whether an underwriter providing campaign services in exchange for consideration for an exclusive agreement to sell bonds should be required to report the cost of the services as a contribution to the bond-measure campaign.

To contact the reporter on this story: Alison Vekshin in San Francisco at avekshin@bloomberg.net.

To contact the editor responsible for this story: Stephen Merelman in New York at smerelman@bloomberg.net.

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