On Friday, Hank Sims over at the Lost Coast Outpost broke the story about the McKinleyville Union School District’s bond financing. According to Hank, the MUSD will ultimately pay about $56 million to borrow $4 million for school improvements. It’s pretty shocking.
Since we only learned about this from Hank’s reporting on Friday, we don’t have time to get anything in-depth into the coming edition. That’s what happens when you get scooped. So we’re working on an article for an upcoming edition, hopefully Dec. 12. We’ll look into several different angles.
Meanwhile, here are some articles from our archives and a blog post about Measure C.
Below is an article that appeared in the Aug. 19, 2008. This is when we learned about the financing behind the campaign to pass Measure C.
Aug. 19 2008
By Elaine Weinreb
Press Staff Writer
A McKinleyville couple has accused the McKinleyville Union School District Board of Trustees of corruption and has asked them to invalidate Measure C, the recently passed school bond.
David Elsebusch stated at the Wednesday, Aug. 13, meeting of the MUSD Board of Trustees, that “the political process involved in Measure C has been corrupted by illegal campaign contributions that provided 90 percent of the campaign funds, without which the bond measure would surely have failed.”
Elsebuschs’ allegations were based on the fact that the school district had hired several consulting firms which contributed money toward the passage of Measure C, and which also benefited, or will benefit financially from the bond’s passage.
One of the firms in question is Kelling, Northcross and Nobriga (KNN), an Oakland financing firm. MUSD approved a contract with KNN at its Jan. 9 meeting. KNN performs the bond sales, and will be making about $80,000, which will be paid from the bond’s proceeds. If the bond had not passed, KNN would not receive any money. KNN contributed $7,000 on April 16, and an additional $1,500 on May 23 to Citizens in Favor of Measure C, the group which ran the political campaign.
Another firm in question is Jones Hall, a San Francisco financial consultant, which serves as the district’s bond counsel, advising them on legal issues, which will be getting about $45,000 from MUSD. Jones Hall contributed $5,000 to the campaign on April 16, and an additional $1,500 on May 23.
A third firm, Godbe Research, a consultant from Half Moon Bay, hired by the district in 2007, evaluated the community to see if the bond would be acceptable. Superintendent Dena McCullough said that this company has already been paid a fee of approximately $14,000. Godbe contributed $250 to the campaign on April 8.
A fourth firm, Siskiyou Design from Yreka, has been hired as MUSD’s architect. According to Dena McCullough, they will get between 11% and 14% of the project cost. Siskiyou Design contributed $1,500 on April 18.
The contributions of these four firms totaled $16,750, about 90% of the $18,600 raised by Citizens in Favor of Measure C. Most of the remaining contributions were made by top MUSD administrators, or their family members.
Details about the financial contributions were obtained from forms filed with the County Elections Office.
During an earlier MUSD board meeting held on Jan. 8, McCullough had pointed out that because the schools are not allowed to use public funds for campaigning, the money would have to be raised by a committee of volunteers. “Various groups would donate to this campaign, such as KNN, and other corporations that want to see the bonds passed,” she commented at that time.
At the Wednesday, Aug. 13, meeting, fiery exchanges erupted between David Elsebusch and Terrie Smith, the president of the Board of Trustees. Elsebusch asked who was personally involved with requests for campaign contributions from these firms, and asked, under the public records law, to inspect all documents related to communications with them.
He also told the board that he had requested the District Attorney to enforce the county’s ordinance, Measure T, which prohibits out-of-county corporations from contributing to local political campaigns, and to collect 10 times the amount of the contributions for the county’s coffers.
“I deplore that these people were solicited to provide a lot of money, because they knew that they were going to make a lot of money out of it. That is totally corrupt,” he told the board.
“Every person that made calls, that set signs out, that walked precincts, was a person who lived here. There was no outside influence as far as anybody else running the campaign.” replied Terrie Smith.
“Your board should recognize the fact that the process was totally freaking corrupt,” said Elsebusch. “If 90% of the funds received were illegal, that is corruption per se.”
Trustee Brian Mitchell asked if the penalties for violating Measure T included the invalidation of the election. Terrie Smith said that it did not.
“I don’t know how you can even think… ‘let’s go for the funds because we technically and legally can do it,’ when you know darn well that without that infusion of all that money… that you would not have gotten that 55.44%,” Elsebusch said.
Measure C needed a 55% majority to pass, and 55.44% of those who voted approved it.
“Every single person that campaigned are local community members, that were in it for all the right reasons,” countered Terrie Smith. “To better our community and to help our students have better facilities.
“Measure T – no one caught that,” she added. “None of the attorneys caught that. It was something that just slipped through. No, I don’t feel good about that. But do I feel we should backtrack all the hard work that we’ve done, and undo things? I don’t think so… I don’t feel that any member of that campaign committee did anything knowingly illegal, corrupt, wrong in any sense.”
The board unanimously voted to adopt a resolution certifying the election results to the Board of Supervisors.
Elsebusch and his wife Penny also took issue with the board over the formation of a facilities advisory committee, which Superintendent Dena McCullough said would not have to conform to California’s Brown Act. which requires public agencies to hold open meetings.
“This is not going to be an official appointment from the board,” said Superintendent Dena McCullough. “We’re going to establish an additional committee to review upcoming projects, prioritize those projects with the architect, as well as set up the phases for the project. This committee will be made up of Terrie, board members, as well as maintenance, transportation, operations, a business person, and myself.”
“Your architect has a serious conflict of interest,” said Penny Elsebusch, “because of his donations for the campaign contributions. The architect is going to make quite a bit of money. So it was in his best interest to contribute to push this through. Just like your bonding attorney, your financier … they all have conflicts of interest now.”
“That may come under a RICO law,” she added.
“That’s racketeering?” asked Brian Mitchell.
“That’s correct,” said Penny. “You ask for money. You get it. That’s corruption and that’s RICO. That’s racketeering.”
“There’s no board member here that asked for any money,” Smith said.
“They just did it out of the goodness of their little hearts because they’re all going to make big mega-bucks, and they’re used to throwing the money at campaigns,” said Penny Elesuch.
“You said ‘no board member,’” said David Elsebusch. “You didn’t say ‘staff’ or ‘superintendent.’”
“I have another question about the Facility Advisory Committee,” he added. “Who selects them? How are they selected? On what basis? And will that be a standing committee that is subject to the Brown Act?”
“This is not a mandatory facility committee. This is an additional committee that we are putting place,” said Terrie Smith. “They’re not subject to the Brown Act. ”
The Brown Act, which requires that most governmental meetings be open to the public, does include advisory committees in its definition of governmental bodies, and only grants exemptions for advisory committees that are composed solely of members of the legislative body, provided that the numbers of the members is too small to constitute a quorum. Based on the description of the committee’s membership given by Dena McCullough, the Brown Act would seem to apply to the group.
Here is an article from the Sept. 14, 2008 edition in which the MUSD defends itself against Elsebusch’s accusations.
By Elaine Weinreb
Press Staff Writer
McKinleyville Union School District trustees insist that they have done nothing wrong related to the passage of Measure C, McKinleyville’s school bond measure.
“David Elsebusch has made allegations of racketeering and corruption, but he has presented no evidence that any of these allegations are true,” said trustee Brian Mitchell in an interview with the McKinleyville Press. “There are no laws that prevent a company from donating money to a political campaign operated by private citizens. The crime would be if the district asked for – and received – money that they could use for campaigning. But the district has not spent one red cent on campaigning.”
“Anyway,” Mitchell added, “there is no legal way for us to invalidate an election.”
McKinleyville resident David Elsebusch has criticized the district for allegedly accepting campaign contributions from companies which will benefit financially from the bond’s passage. In a letter dated Aug. 12, he asked Superintendent Dena McCullough to place an item on the school board agenda that would “allow the Board to consider invalidating the Measure C vote.”
McCullough did place the item on the agenda of the MUSD Board of Trustees’ Wednesday, Sept. 10, meeting. At that meeting, Elsebusch told the board that “without the large illegal campaign contributions, Measure C would not have been approved, and the election process has been corrupted by companies whose sole motivation to contribute to the propaganda campaign was the prospect of immediate and direct financial payback…”
Elsebusch asked the board to voluntarily stop seeking bond funding, and to cancel contracts made with campaign contributors. “Continuing to engage them would be proof their contributions to the campaign involved bribery, extortion, collusion, coercion and corruption,” he stated.
In earlier letters to McCullough, Elsebusch had asked, under the Freedom of Information Act to inspect documents related to MUSD’s correspondence with KNN, Jones Hall, Siskiyou Design, Godbe Corp. and North Valley Bank. Each of these companies contributed to the Measure C Bond campaign, and each of them was or expects to be financially involved with MUSD.
McCullough replied in a Sept. 5 letter to Elsebusch that the Freedom of Information Act refers only to the federal government. She said that she had attempted to cooperate with Elsebusch’s request, but that he had not shown up for an appointment made to review the documents.
McCullough has referred all questions regarding campaign contributions to Citizens in Favor of Measure C, the election campaign committee, which is not legally connected with MUSD.
At the meeting, trustee Dan Saveliff discussed Measure T, the county law that prohibits outside corporations from contributing money to local campaigns. The validity of Measure T is currently being decided in the courts.
Saveliff noted that the community had supported a new fire station, new parks, a new sheriff’s station, and a new library, and he did not find it unreasonable that the public would also support improvements to the schools.
No one on the board wanted to initiate any action that would rescind Measure C, and they soon went on to other business.
New student conduct policies
“Cyber-bullying” is now forbidden in McKinleyville schools. This term refers to using computers to demean another person by posting harassing messages, placing “harmful” images on the internet, or “breaking into another person’s account and assuming that person’s identity in order to damage that person’s reputation or friendships.”
Students may not use cellphones to cheat on tests, or use digital cameras or cell phone cameras to invade another person’s privacy, or for any personal use. Cellphones must be turned completely off during school hours and stored in the student’s backpack. Students who wish to bring their cellphones to school must register with the school office.