Contractors Questioning School Bond Fundraising

Staff Reporter

The Los Angeles Unified School District, campaigning for passage of a bond measure next week that would provide billions of dollars to shore up and build new facilities, has been inviting contractors to fundraising events in support of the measures.

The invitations, given the scrutiny being paid to relationships between the administration of Mayor James Hahn and its commissioners and city contractors, have made some potential bidders for school construction uncomfortable.

"What this tells me is if you want work from L.A. Unified, show your face at this fundraiser," said one contractor, who requested anonymity. "It's a difficult environment over there. People who do regular business with L.A. Unified call it a snake pit."

Voters will decide Measure R, which would authorize the LAUSD to sell $3.87 billion in bonds to fund physical plant improvements, on the March 2 ballot.

The most recent fundraiser, hosted by an entity created to raise money in support of Measure R called the Committee for Quality Neighborhood Schools, was held Feb. 17 at the Regency Club, said Kevin Reed, LAUSD's acting general counsel.

Another fundraiser, planned for Feb. 19 at The Palm restaurant, was canceled when it was decided that it was more effective to hold the two events together, he said. The latter event was to feature Assembly Speaker Fabian Nunez and cost $1,000 per person to attend.

Armando Gonzalez, a principal at Gonzalez Goodale Architects in Pasadena, said he has contributed at fundraisers because the money flowing to the schools would mean more work.

"If these bonds pass, and we continue to do good work for the district, hopefully we'll be selected for more work," he said, adding that such selections should be "on the basis of favorable work, not because we attended the function."

Limited resources

David Tokofsky, a school board member whose tenure has been marked by his criticism of the LAUSD, defended the district but called for reform of the process.

"Is there a pay-to-play problem?" he said. "I can't say there is an impropriety. But I have a suspicion of potential future impropriety. There still is not enough transparency to the public about how the contracting process occurs."

Edith Castillo, a spokeswoman for School Board President Jose Huizar, said he would not be available for comment.

Ellen Morgan, a spokeswoman for the school district, said Superintendent Roy Romer would not be available for comment either and referred questions about fundraising events to Darry Sragow, managing director of Public Strategies Inc., the Austin, Texas-based public affairs and communications firm managing the LAUSD's campaign in favor of the measures.

Sragow said people who want to be involved in the building of schools have an implied interest to make sure the bond passes. Bond measures for schools are difficult to pass in L.A., where a large percentage of the voters do not have children and do not want to pay more property taxes, he said.

He said it makes sense to turn to those with deep pockets who can help raise the $1.5 million to $2 million needed to promote the bond. Sragow said the bond campaign has so far raised about $1 million.

"It would be wonderful if everybody in L.A. chipped in $10 for the bond campaign," he said. "But that doesn't happen. The people who chip in have a specific interest in the result of the campaign."

Contracting practices were questioned in LAUSD Inspector General Don Mullinax's fifth annual report on challenges facing LAUSD management.

In language strikingly similar to that in a recent audit on L.A. contracting practices by City Controller Laura Chick, Mullinax said contracting procedures at the district need to be more transparent to avoid the "appearance of impropriety," according to a Jan. 20 letter he sent to the school board.

He also questioned the district's financial operations, noting an organizational culture exists that, if left unchanged, may "breed an environment susceptible to waste, fraud and abuse." Mullinax could not be reache.

Reed said he has not reviewed the report but noted that he has heard no concerns of a play-to-play environment. He also said he has met with department heads for discussions on how to prevent such abuses.

"I've said, as counsel of the district, contact people, ask for their support and never give them any impression that their decision to support would impact their ability to do work with the district," Reed said. "It would be strange, indeed, if the district were not to turn to contractors, architects and others doing work on existing construction programs."

Chick said rumors of a pay-to-play environment played a role in her audit of Los Angeles World Airports, the department that runs Los Angeles International Airport. Chick's audit, released in December, criticized LAWA for contracting procedures that create an "environment ripe for potential abuse."

Chick turned over her findings to the District Attorney's office, which, along with the U.S. Attorney's office, issued subpoenas to several city officials and contractors in two separate investigations.

Unlike city departments, however, LAUSD is overseen by a popularly elected board and does not answer to commissioners appointed by the mayor. It is also responsible for the fundraising efforts that support bond measures.

A selection panel that is made up of district staff members review contracts and make recommendations, but the board makes final approvals.

Reed, the LAUSD counsel, said the Committee for Quality Neighborhood Schools was established specifically to raise funds for the upcoming bond measure.

The Jan. 27 invitation to the fundraiser scheduled for Feb. 19, signed by Romer and Huizar, was sent on the committee's letterhead. It shares the same address and phone as Rix Bradford, an L.A. consulting firm whose principal partners, Brian Rix and Pat Bradford, were fundraisers for former L.A. County Sheriff Sherman Block in his 1998 re-election campaign. Calls to the offices were not returned.

Appearances questioned

Since 2001, the DA's office has investigated 38 complaints of public corruption involving LAUSD employees, said District Attorney spokeswoman Jane Robison. Five of the investigations resulted in criminal filings and convictions against assistant-level staff on charges including embezzlement and theft. All but one of the investigations has since been closed, she said.

In March, the District Attorney's office closed its long-running investigation of the Belmont Learning Center, the $175 million school that was abandoned in 1999 after critics charged the environmental problems of building a school on an abandoned oil field were more serious than first believed. The DA's office, which re-opened the investigation under District Attorney Steve Cooley, had been looking at whether developers tried to conceal knowledge of deadly gases at the site and whether contractors had over-billed for the project.

A key player in the Belmont investigation was Art Gastelum, a lobbyist and fundraiser who secured several minority business contracts from cities and school districts. Gastelum has denied any improprieties, but the District Attorney's office re-opened its investigation of Gastelum last fall.

Roger Carrick, an environmental attorney who represented Mullinax in his 1999 internal investigation of Belmont, said allegations of pay-to-play likely didn't stop there. "Most of the money is in the school district," he said. "They're spending hundreds of millions of dollars an environment where this kind of pay-to-play world can mushroom."

Steve Soboroff, who chaired the 1999 oversight committee for the Proposition BB bond measure, said he made up to 60 recommendations to improve the awarding of contracts. But none involved inappropriate activities, he said.

"Every once in a while we would get a rumor like someone saying, 'This guy knows one of the contractors he's hiring, and they go on vacation together,'" said Soboroff, now president of Playa Vista. "When we looked at them, there was nothing substantiated. But that doesn't mean that with thousands of contractors and thousands of bureaucrats that something wasn't amiss."

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