The Public Eye

3 Folsom Cordova school officials fined for failure to report gifts

Three Folsom Cordova Unified School District leaders were fined last week for not reporting free meals from a bond firm the school district has used since 1997, part of an ongoing state Fair Political Practices Commission investigation that ensnared officials statewide.

Folsom Cordova Board of Education President Zak Ford, Vice President Teresa Stanley and former Superintendent Patrick Godwin were among 93 California school district administrators or trustees fined by the commission Tuesday for not reporting gifts from Stone & Youngberg LLC over the last four years. An additional 167 officials received warning letters, according to FPPC enforcement chief Gary Winuk.

Ford was fined $200 for not reporting a meal gift in 2011 worth about the same amount as the fine. Stanley was fined $400 for not reporting two meals totaling $331, one in 2011 and another in 2012. Godwin was fined $200 for not disclosing two meals totaling $292 in 2010. The state Political Reform Act requires that public officials report meals or other gifts worth more than $50.

Statewide, the FPPC issued fines totaling more than $16,000, Winuk said. The number of warnings and fines is likely to go up, as the FPPC is still investigating some officials.

Winuk said the investigation and resulting fines send a message to public officials: “We’re watching.”

Public school leaders place bonds on the ballot worth tens or hundreds of millions of dollars, and the advisers they hire stand to receive hefty commissions for arranging the financing.

Stone & Youngberg LLC has served as Folsom Cordova’s bond underwriter since the district passed Measure V in 1997. The district has since used Stone & Youngberg on all five of its subsequent bonds, as well as for refinancing transactions.

The district paid Stone & Youngberg $2.7million over that period to handle $347million in bond transactions, according to the state Treasurer’s Office.

Ford, Stanley and Godwin said they have never been influenced by the free meals.

“Absolutely not,” Godwin said, calling Stone & Youngberg a high-performing organization.

The three Folsom Cordova leaders said they have tried to be conscientious about reporting gifts they received. Ford and Stanley said they didn’t learn the meals were over the $50 limit until June, at which point they immediately sent in amended disclosure forms.

“I’ve always been extremely cautious about accepting gifts,” Ford said. “Typically when you go to a conference, they indicate when a gift is over a certain amount. I generally avoid those gifts.”

Stanley said she and Ford attended a dinner for Folsom Cordova trustees at a California School Boards Association conference in 2011 that is generally hosted by the school district. Stanley said she didn’t know that an outside group had hosted the meal.

Godwin said he ate dinner at a conference and “plain and simply forgot to record it.”

Sacramento Taxpayers Association President Ken Payne said the fact that Stone & Youngberg paid for “extravagant dinners” is not surprising. But he said it is a cause for concern that the firm continually received contracts after paying for dinners and contributing to bond campaigns.

Folsom Cordova has placed a $195million bond, Measure G, on the Nov. 4 ballot to pay for updates and renovations at campuses in Folsom.

The district used a “request for qualifications” process to select bond underwriters and advisers in past bond transactions, said spokesman Daniel Thigpen. But the Board of Education approved stronger rules last month that require the district to use a competitive process for future bond contracts and ignore whether an individual or organization has contributed to a bond campaign. The district can select a firm that does not submit the lowest bid but cannot base pay on a percentage of a project cost unless a maximum fee is set.

Stifel Financial Corp., which acquired Stone & Youngberg in 2011, did not return a request for comment.

The FPPC investigation began last year after the U-T San Diego newspaper detailed gifts received by board members in the San Diego area. The FPPC subsequently fined 93 state officials – mostly school district leaders – in November after reviewing the records of bond adviser E.J. de La Rosa & Co. and real estate developer Shea Properties. The fines totaled $22,000.

Last year, five local school board members – Diana Rodriguez of Sacramento City Unified, Lisa Kaplan of Natomas Unified, Brian Rivas of the Sacramento County Board of Education, Rene Aguilera, a former Roseville City School District board member, and Roy Grimes, a former Sacramento City Unified board member – were fined for not reporting gifts from bond advisers.

Of the 282 Stone & Youngberg gifts reviewed by the FPPC, only 22 public officials disclosed their gifts, according to a memo from Winuk to the commission. Only 16 of 221 public officials investigated last fall had properly reported gifts.

“Investigations last year and this year show that there are a lot of gifts given and not reported,” Winuk said. “The public has the right to know if someone doing business with an agency is giving them gifts.”

Call The Bee’s Diana Lambert, (916)321-1090. Follow her on Twitter @dianalambert.

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