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Eighty percent of the construction companies that donated $5,000 or more to pro-bond campaign groups in the last seven years received contracts with the San Diego Unified School District, a new Voice of San Diego investigation finds. District officials acknowledge companies donate for the chance to later win contracts but say a strong system of checks and balances keeps the process clean.
Maybe you’ve seen recent ads urging you to vote yes on Measure YY – a $3.5 billion school construction bond – for “repair and safety for our schools.”
What you possibly haven’t seen is a list of the major donors who pay for these ads and the hundreds of millions of dollars in contracts many of them receive when the bonds pass.
Construction and architecture firms acknowledge that school districts actively solicit contributions to their pro-bond campaign groups. A San Diego Unified School District board member acknowledged construction companies donate out of monetary self interest – or, in other words, the opportunity to make money when a construction bond passes. Construction companies want a chance to win the hundreds of millions in dollars in public works contracts that will become available if a school bond passes.
Few other elections offer companies the chance to create work they can bid on.
Overall, 80 percent of the construction companies that donated $5,000 or more to pro-bond campaign groups in the last seven years received contracts with the San Diego Unified School District, according to a Voice of San Diego investigation into campaign finance records and construction contracts. San Diego Unified awarded lucrative design and management contracts totaling more than $320 million to various donors to its pro-bond campaigns, according to Voice’s investigation.
San Diego Unified successfully passed a $2.1 billion bond in 2008 and a $2.8 billion bond in 2012, making Measure YY the third bond to come before San Diego voters in 10 years.
The findings reveal a strong correlation between giving money and winning contracts, but San Diego Unified officials adamantly insist it is nothing more than that. They say they have processes in place to make sure decisions are blind to who made the construction programs possible through the campaigns.
Here’s what we know about the process: When districts want to build or renovate a school, they usually put out a request for sealed bids. The bids are then opened in a room with each of the builders present, and the bid is awarded to the lowest bidder. None of the major donors to San Diego Unified bond campaigns were selected, or even competed, for these types of projects.
When the district wants to hire a service provider like an architectural, engineering or construction management firm, the process is different and more subjective. In that case, a panel of district administrators reviews applications from multiple companies. They each score the applications and then, through a consensus-building process, select multiple firms to carry out the work. The district might receive as many as 50 applications and select as many as 20 firms.
The clear majority of contracts awarded to major donors came in the form of service contracts – as opposed to through the sealed bidding process – awarded to architectural, engineering and construction management firms.
“The process for awarding contracts is a very strict process under state law,” Scott Barnett, a paid spokesman for the bond campaign and former school board member, recently told the Union-Tribune. “It’s always been the lowest bid.”
“Scott can say that all he wants to, but it’s just not the case,” Bill Ponder, a former member of San Diego Unified’s bond oversight committee, told me. “The issue for me is transparency. Show the public who’s donating and how much work they’re getting. Let the taxpayer decide.”
The district has a public-facing website that lists all of the major construction projects since 2010 that went out to companies through the sealed bidding process. But no such page exists for the hundreds of millions of dollars in service contracts that have gone out over the years. For a month, we had to pore through past meeting agendas and minutes to find the contracts awarded to service providers.
Of the 15 building service providers, like architects and construction management companies, that donated more than $5,000 to pro-bond campaigns, 12 received lucrative contracts. The smallest single contract was for $76,000. The largest was for $21.5 million. Many service providers have received multiple contracts over the years.
All 10 companies that gave more than $10,000 in the past seven years have also received contracts to provide building services to San Diego Unified. The money to pay them came directly out of the bond funds that were approved with their support.
Donating to the campaign isn’t a requirement to get contracts. Many service providers that won contracts with San Diego Unified have also never donated to its bond campaigns. But most who did donate got contracts.
A similar Voice investigation in 2013, which did not look into San Diego Unified’s bond donors, found that among several San Diego County school districts, roughly 70 percent of donors who gave $5,000 or more received contracts.
The second largest company donor of the last seven years is PJHM Architects, which has given $32,000 in the last seven years and also donated to the current pro-bond campaign for Measure YY. PJHM has received $9.5 million in contracts.
Charlene Yarnall, a partner at PJHM, told me that her company donates to several school districts, but doesn’t actually receive work in all of them. “It’s the integrity that we put into our work that wins us more work. It’s not because we donate. If our designs were failures, I guarantee these school districts wouldn’t give us more work,” she said.
“Ninety-nine point nine percent of our business is designing schools,” said Yarnall. “It’s part of our business that school districts ask us to donate [to their bond campaigns].”
At the state level, there have been some efforts to limit donations from companies that profit from bonds. Aside from construction companies, financial firms that underwrite a school district’s bonds also stand to make a lot of money. In 2016, the state treasurer’s office decided to no longer do business with any financial firms that also donate to a state bond campaign. The treasurer’s office issued roughly $10 billion in bonds for the state last year, and the new policy seems to have completely stopped financial underwriters from donating to statewide bond campaigns.
And in the past, some local school districts have limited how much any one company or person could donate to a school bond to eliminate any possible appearance of pay-to-play contracts. Cajon Valley Union School District placed a $2,000 limit on donations to its bond measure in 2012 to send a message that donations had nothing to do with contracts, according to Voice’s 2013 investigation.
Of 11 San Diego County school districts with bonds on the ballot this November, none has put in place campaign donations limits, according to the county Registrar of Voters.
San Diego Unified Trustee Richard Barrera told me it would be a mistake to consider limiting bond campaign donations in San Diego Unified. Because San Diego Unified is such a big district, “it costs money to get a message out,” Barrera said. He noted that powerful interests will sometimes spend big money to defeat a bond campaign.
But this year, even though the San Diego County Taxpayers Association came out against Measure YY, no campaign group is raising money for an anti-YY campaign, according to campaign finance records. Meanwhile, campaigns in support of YY have raised several hundred thousand dollars from construction companies, building unions and the California Charter Schools Association Advocates, the charter school group’s political arm.
Barrera openly acknowledged that construction firms donate to bond campaigns because they want the chance to win lucrative contracts once the bond money is available. But in his 10 years on the board, he said, a construction company has never been awarded a contract because it donated.
Lee Dulgeroff, who runs San Diego Unified facilities and construction department, also highlighted San Diego Unified’s vetting process. “There are checks and balances in place to prevent collusion and favoritism,” he told me, referencing the multiple departments that a contract must pass through before it can be approved. “It’s not like one small group of people making decisions.”
In some cases, companies that have donated to past bond campaigns were later not awarded work, which Dulgeroff pointed to as evidence that the process works as it should. Vanir Construction had won several multimillion-dollar contracts with the district. It submitted an application to provide construction management services in 2017 along with three other companies – Gafcon, Harris & Associates and Aecom.
All four companies have donated to previous bond campaigns, but only Gafcon, Aecom and Harris & Associates were chosen to receive contracts. Each received a $21.5 million contract to “support the completion of all scheduled bond projects” from San Diego Unified’s most recent two bonds.
The people who work in the district’s procurement and construction departments generally don’t even know who the donors are, Dulgeroff said.
That may well be true, Jessica Levinson, a law professor at Loyola Law School who previously served on the Los Angeles City Ethics Commission, told me. But, she added, “The donors don’t donate to throw money away … These donors definitely think their donation is buying them something.”
The current framework around school ballot measures makes it easier for school districts to go for construction bonds than a more general tax that could pay for teachers and other resources. Proposition 39 in 2000, brought the threshold to pass a school bond down from 66.7 percent to 55 percent. But to pass a general “parcel tax” measure, a district still must convince 66.7 percent of voters.
Proposition 39 also created Independent Bond Oversight Committees to audit local school bonds. Legislation, co-sponsored by the state Treasurer’s Office, would have given county offices of education more power to look into the dealings of local school districts and construction firms. The bill was ultimately defeated, but, according to Treasurer’s Office officials, they may offer a new bill in the future that would expand the oversight committees’ authority. Such a bill could include powers to limit campaign donations in the future, they said.
Kayla Jimenez contributed to this report.
Clarification: This post has been updated to reflect the fact that the the California Charter Schools Association’s political arm, the California Charter Schools Association Advocates, donated to the Measure YY campaign.