The nation’s most populous state was an epicenter of the national housing bust. From June 2006 through last month, it lost 43% of its construction jobs, or 401,900 positions. That far outpaced a 28% decline in total U.S. building employment during the same period.

————————————————————-

WHO REALLY BENEFITS FROM EDUCATION DOLLARS?
(Hint: It’s Not the Students)

Issues

•
Are the school Boards of Trustees in Santa Clara County good stewards of our
education dollars?
•
Is the money allocated to education directly benefiting the children in the
classroom, or Superintendents/Chancellors, Boards of Trustees and Attorneys?
•
Does our county really need 34 elementary and secondary school and four (4)
community college districts to provide our students with a quality education?
•
Are the cumulative compensation and benefits provided to Boards of Trustees
and Superintendents/Chancellors overly generous?
Summary

Investigations by the 2008-2009 Civil Grand Jury brought to light instances of excessive
school district spending. There are citizens’ complaints, reports of significant budget
problems, and unusual contract buyouts. These and other issues pertaining to district
finances compelled the Grand Jury to conduct this investigation. This effort involved the
review of publicly available information (contracts, expense reports, financial
statements, audits, etc.) and interviews with district personnel.

All schools are facing unprecedented financial crises, creating the prospect of severe
budget cutbacks. For example, prior to the May 19, 2009 special election, Governor
Schwarznegger had already proposed deep cuts…..”Billions of dollars would be cut
from K-12 schools, potentially shortening the school year by a week, while financial aid
for college students would be reduced.” {Sacramento (AP) May 26, 2009} These cuts
will likely result in major staff reductions (teachers, counselors, librarians and other
support staff), increased class size, elimination of numerous programs (sports, arts and
music) and other extracurricular activities.

Despite the draconian budget cuts facing the schools in the coming months, there
appears to be little inclination on the part of the Districts to reduce or even limit the
amounts paid to Superintendents/Chancellors, Assistant Superintendents, Presidents,
and Boards of Trustees. It is difficult to understand or support continuing these
generous administrative expenses, while at the same time teachers, staff and programs
are being cut.

1

Methodology

The Grand Jury requested the following information from each school district in the
County, including the Santa Clara County Office of Education and the four Community
College Districts:

•
Superintendent/Chancellor contracts and gross salary, plus the cost of benefits
•
Superintendent/Chancellor monthly expenses
•
Stipend and cost of benefits for each member of the Board of Trustees
•
Legal fees per month and all contracts with law firms
•
All contracts with Superintendent search/consulting firms
•
Annual budget and 2007/2008 financial reports
• Number of students in the district.
All districts responded with copies of the documents requested. However, the
information provided was not consistently complete. For example, only 14 of the 38
districts provided data on health benefits.

Background

Santa Clara County Schools are divided into 34 districts and four Community College
Districts, each of which is governed by a Board of Trustees (Board) and managed by a
Superintendent or Chancellor. The number of Trustees for each school district varies
from five to seven. The school and community college districts hire their own legal
representation.

Boards of Trustees

School Board trustees are locally elected individuals who govern the community’s public
schools on a part time basis. They generally meet once or twice a month to conduct
district business and receive a modest stipend for attending Board meetings. Board of
Trustees stipends are determined by California Education Code Section 35120. Other
Board of Trustees benefits such as health benefits are discretionary and not required by
the Education Code. It is the Board’s responsibility to set a clear direction for the district.

The cumulative stipends and full health benefits (vision, medical, dental) for most
trustees and their dependents in all 34 districts and four Community College Boards
equaled approximately $1.615 million for the 2008-2009 Fiscal Year. Not all trustees
avail themselves of these health benefits. (See Appendix 1 for a table of Board of
Trustees compensation and benefits in 2008/2009).

2

District Superintendents / Chancellors

The superintendent is hired by the Board of Trustees to manage the day-to-day
operations of the K-8/K-12 districts as its chief executive. The superintendent should
ensure that all students in their district receive appropriate academic programs and
services. Chancellors are hired by the Community College District Boards of Trustees to
perform many of the same functions.

Their general roles and responsibilities are to:

•
Provide a safe and healthy learning environment.
•
Direct and manage school district staff.
• Implement and manage the district’s long range plans.
•
Liaise with members of the district and community.
The following table sets forth a partial list of salary and benefits received by
superintendents and chancellors.

3

Table
1
K-12 Superintendent Partial Compensation FY2008/2009

K-12 School District (includes
only K-12 students)
# Students# SchoolsSalaryBonusHealth Insurance(medical, dental,
vision)
Car AllowanceTechnology(personal IT)
AnnuityHousing AllowanceTotal CompensationTotal Cost per Student
Alum Rock Union 13,562 28 190,126 $ –
18,406
$ 7,800 $ –
–
–
$
216,332 $ 15.95
Berryessa Union 8,265 14 132,825 $ –
data
not provided 8,100 $ –
–
–
$
140,925 $ 17.05
Cambrian 3,053 6 170,000 $ –
10,386
$ 6,000 $ –
–
–
$
186,386 $ 61.05
Campbell Union 7,333 13 260,934 $ –
data
not provided –
–
–
–
$
260,934 $ 35.58
Campbell Union High School 7,779 8 227,646 $ –
15,205
$ 6,000 $ –
–
–
$
248,851 $ 31.99
Cupertino Union 16,971 25 230,000 $ 15,000 $ data not provided 7,800 $ –
$
15,000 –
$
267,800 $ 15.78
East Side Union 26,008 25 225,000 $ –
14,056
$ –
–
–
–
$
239,056 $ 9.19
Evergreen 13,333 18 200,679 $ –
14,832
$ –
–
$
10,835 –
$
226,346 $ 16.98
Franklin McKinley 9,781 17 200,000 $ –
data
not provided 7,200 $ –
–
–
$
207,200 $ 21.18
Fremont Union 10,228 7 271,975 $ –
data
not provided 7,200 $ –
$
12,000 –
$
291,175 $ 28.47
Gilroy Unified 10,116 17 187,500 $ –
13,591
$ 7,200 $ –
5,625$
–
$
213,916 $ 21.15
Lakeside Joint School District 89 1 115,254 $ –
–
–
–
–
–
$
115,254 $ 1,294.99
Loma Prieta Union 450 2 163,890 $ –
data
not provided 15,124 $ –
$
10,750 –
$
189,764 $ 421.70
Los Altos 4,161 9 206,595 $ –
22,872
$ 3,000 $ –
–
–
$
232,467 $ 55.87
Los Gatos-Saratoga Joint Union 3,155 3 185,869 $ –
13,470
$ 7,200 $ –
–
–
$
206,539 $ 65.46
Los Gatos Union 2,587 5 185,400 $ –
data
not provided 5,232 $ –
–
–
$
190,632 $ 73.69
Luther Burbank 524 1 150,000 $ –
data
not provided 6,600 $ –
–
–
$
156,600 $ 298.85
Metro Ed 12,478 4 179,562 $ –
10,646
$ 7,200 $ –
–
–
$
197,408 $ 15.82
Milpitas Unified 9,682 15 207,104 $ –
data
not provided 6,000 $ –
–
–
$
213,104 $ 22.01
Montebello Elementary 9 1 46,444 $ –data
not provided –
–
–
–
$
46,444 $ 5,160.44
Moreland Elelmentary 3,873 6 196,033 $ –
6,800
$ 7,800 $ –
–
–
$
210,633 $ 54.38
Morgan Hill Unified 9,402 16 200,077 $ –
6,000
$ 7,800 $ –
–
–
$
213,877 $ 22.75
Mountain View - Los Altos Union 3,617 4 210,330 $ –
data
not provided 6,000 $ –
–
–
$
216,330 $ 59.81
Mountain View - Whisman 4,298 8 183,854 $ –
data
not provided 6,000 $ –
–
–
$
189,854 $ 44.17
Mt Pleasant Elementary 2,970 5 165,724 $ –
data
not provided 6,000 $ –
–
–
$
171,724 $ 57.82
Oak Grove Elementary 11,899 20 239,367 $ 8,000 $ data not provided 8,400 $ 2,400 $ –
–
$
258,167 $ 21.70
Orchard Elementary 802 1 139,682 $ –
17,253
$ –
–
–
–
$
156,935 $ 195.68
Palo Alto Unified 10,931 20 248,063 $ –
data
not provided 9,000 $ –
–
–
$
257,063 $ 23.52
San Jose Unified 30,912 53 225,000 $ –
data
not provided 6,000 $ –
–
–
$
231,000 $ 7.47
Santa Clara COE 3,854 -285,000 $ –
11,516
$ 12,000 $ –
$
20,000 –
$
328,516 $ 85.24
Santa Clara Unified 14,151 25 185,562 $ –
data
not provided 7,200 $ –
–
–
$
192,762 $ 13.62
Saratoga Union 2,348 4 135,000 $ –
data
not provided 7,200 $ –
–
$
48,000 $ 190,200 $ 81.01
Sunnyvale 6,003 11 220,000 $ –
data
not provided 4,800 $ –
–
–
$
224,800 $ 37.45
Union 4,421 8 170,000 $ –
data
not provided 4,800 $ –
4,800$
–
$
179,600 $ 40.62
Total 269,045 –
6,540,495
$ 23,000 $ 175,033 $ 200,656 $ 2,400 $ $ 79,010 $ 48,000 $ 7,068,594 –
30,912 –
285,000
$ 15,000 $ 22,872 $ 15,124 $ 2,400 $ $ 20,000 $ 48,000 $ 328,516 $ 5,160.44
Average 7,913 –
192,368
$ 11,500 $ 13,464 $ 7,166 $ 2,400 $ $ 11,287 $ 48,000 $ 207,900 $ 26.27
Minimum 9 –
46,444
$ $0 $0 $0 $0 $0 $0 $ 46,444 $ 7.47

4

Table 2
Community College Chancellor Partial Compensation FY2008/2009

Community College
# Students# Schoolsv(Sites)
SalaryCar AllowanceHousing AllowanceTotal
Total Cost per Student
Foothill-DeAnza CCD 44,510 2 230,438 $ 6,324 $ –236,762
$ $ 5.32
Gavalin Joint CCD 9,717 1 238,500 $ 12,000 $ –250,500
$ $ 25.78
San Jose-Evergreen CCD 19,318 2 278,575 $ —-
278,575
$ $ 14.42
West Valley-Mission CCD 22,000 2 240,000 $ 12,000 $ 24,000 $ 276,000 $ $ 12.55
Total 95,545 7 987,513 $ 30,324 $ 24,000 $ $ 1,041,837 –Maximum
44,510 –278,575
$ 12,000 $ 24,000 $ 278,575 $ $ 25.78
Average 23,886 –246,878
$ 10,108 $ NA 260,459 $ $ 10.90
Minimum 9,717 –230,438
$ $0 $0 236,762 $ $ 5.32

Assistant superintendents and community college presidents are awarded contracts
with benefits similar to their respective superintendents and chancellors. For example,
the presidents of West Valley and Mission Colleges each receive $18,000 for housing
allowances and $6,000 for car allowances.

Legal Representation and Expenses

School districts utilize the services of various legal firms to:

•
Prepare, review and advise on contracts
•
Assist with negotiations (union, staff, construction, compensation, mediation and
defense)
•
Provide legal counsel on issues such as public relations, special education, and
State and Federal statutes
•
Provide representation in litigation
•
Train Board of Trustees and staff
A small number of law firms represent a majority of districts. Some districts have legal
firms on retainer contracts in addition to their standard hourly charges. As an example,
one district has over $882,341 in retainer contracts (to date) for 2008/2009.

Legal expenses incurred by school districts include, but are not limited to, retainer fees,
hourly fees, settlement costs, judgments, and associated costs and expenses. Legal
fees were in excess of $7,000,000 for 2007/2008. (See Appendices 2 through 4 for
tables of legal fees).

The Santa Clara County Counsel has attorneys who specialize in education law and
several school districts are currently availing themselves of these services. These
school districts employ the County Counsel at substantially lower rates than those
charged by private law firms.

5

Discussion

Despite the prospect of impending budget cuts, it appears that school districts are
paying stipends, large salaries and extraordinary benefit packages to
Superintendents/Chancellors, Assistant Superintendents, Presidents, and Boards of
Trustees. Generous salary increases, which appear unrelated to performance, are
routinely provided to Superintendents (while many private sector companies are
reducing compensation).

Based on the partial data provided by the school districts, the average 2008/2009
annual compensation (including benefits) for K-12 superintendents is at least $203,887.
The total 2008/2009 compensation for superintendents is at least $67,006,577, and
potentially hundreds of thousands of dollars more if all benefit data were provided. The
highest paid superintendent is at the Santa Clara County Office of Education
($337,000). Fifty-five percent (55%) of superintendents have a total compensation
exceeding $200,000 and 91% have total compensation exceeding $150,000. Only four
superintendents have total compensation less than $150,000.

The average 2008/2009 compensation (salary, car and housing allowances) for
chancellors is at least $260,459. The 2008/2009 compensation for chancellors is at
least $1,041,837. All chancellors are paid in excess of $236,000 per year.

Many Board Members and Superintendents receive housing allowances, loans with
zero or low-interest rates, full family health care, and other insurance benefits. Some of
these benefits continue after the person leaves the district or retires.

Districts pay significant fees to a small number of private law firms who handle their
legal affairs under separate agreements. Many legal issues are common across
districts, indicating that it would be beneficial to consolidate efforts to realize cost
savings.

Trustees

There are approximately 200 trustees, most of whom receive a stipend which is
determined by California Education Code Sections 35120-35124. However, health
benefits, travel compensation (meals, lodging, mileage and airfare), and reimbursement
for conference costs are controlled by each Board. Health benefits in most cases also
cover the trustees and their families. In many districts, the full costs of these health
benefits are absorbed by the district. In contrast, teachers and other classified
employees are required to pay significant portions of the cost of their health benefits.

The trustees vote upon their own benefits and set their own travel agendas. Public
awareness and oversight of Board spending is minimal.

6

Superintendents/Chancellors

All superintendents/chancellors in Santa Clara County work under complex contracts
approved by the Boards. Superintendent/Chancellor salaries vary widely and do not
appear to be commensurate with the size of the districts, the number of students, or the
number of schools they manage.

Although many superintendents’ base salaries are already high, additional incremental
benefits significantly inflate their base salaries. In some instances, superintendents can
choose to take cash in lieu of certain benefits, which is added to their salaries and
inflates their pension benefits. These extra benefits are usually not visible to the public.
They include:

1.
Interest-free loans up to one million dollars
2.
Housing allowances
3.
Contract buyouts
4.
Merit increases
5.
Performance bonuses
6.
Guaranteed longevity increases
7.
Guaranteed annual step increases (predetermined)
8.
Auto allowances – insurance, maintenance, gas, tires
9.
Mileage allowances
10.
Per diem payments when out of the district
11.
Technology allowances for personal computers and cell phones
12.
Professional memberships and subscription allowances
13.
Reimbursements to attend meetings/conferences (hotel, meals, transportation,
entertainment)
14.
Salary increases automatically triggered by increases in teachers’ salaries
which are in addition to other guaranteed salary increases.
15.
Pension allowances (in addition to regular STRS/PERS contributions)
16.
Advanced degree stipends
17.
Lifetime medical insurance benefits
18.
Annual physicals
(Note: This is not a complete listing of perquisites (perks) that appear in the contracts)

7

Generous as these terms are, there were some notable perquisites that went far beyond
what typically appear in most superintendent contracts, which are listed below:

•
Loans totaling one million dollars each to superintendents at zero interest or
below market interest rates. (Palo Alto and County Office of Education)
•
The Saratoga Union School District Superintendent receives an annual
housing allowance of $48,000.
•
Annual housing allowance of $24,000 is paid to the West Valley-Mission
Community College Chancellor. The Presidents of West Valley and Mission
(who report to the Chancellors) receive an annual housing allowance of
$18,000 each.
•
The San Jose-Evergreen Community College District Chancellor receives a
one-time $147,000 bonus upon completion of the four-year contract.
•
Six-figure dismissal buyouts for the following districts: Luther Burbank, Alum
Rock, Fremont Union High School District.
•
The Superintendent at Franklin McKinley receives fully paid (premiums paid
by the school district) life insurance coverage totaling $500,000.
•
Superintendents frequently conduct working lunches and dinners at the most
expensive restaurants in the county at taxpayer expense.
As an example, the Cupertino Union School District Superintendent’s contract of July
2006 through June 2010 provides:

•
Base Salary – $230,000 with a one-time signing bonus of $15,000
•
Merit increase for satisfactory performance equivalent to the increase granted to
certificated personnel for the prior school year
•
$15,000 paid annually for a tax shelter annuity that increases by 2% of the base
salary each year
•
Fully paid health benefits equal to certificated management personnel
•
Payment up to $3,000 a year for life insurance and disability insurance
•
Fully paid annual physicals
•
25 days annually of paid vacation; unused vacation can accumulate up to 25
days
•
Annual expense limit of $5,000
•
Car Allowance of $7,800 annually plus out of County mileage.
•
Termination without cause will result in payment of 18 month’s salary at his
current base salary.
Note: Assistant Superintendents/Presidents/Directors often earn similar compensation
packages as Superintendents/Chancellors.

8

Another expense is the use of search firms to fill Superintendent and Chancellor
vacancies. There are 38 school districts, most of which have one or more assistant
superintendents, yet the Boards of Trustees routinely continue to hire search firms at an
average cost of $30,000 each to locate qualified successors for retiring or dismissed
superintendents.

Legal

The cost of legal services provided by 21 of the districts was in excess of $7,000,000 in
the 2007/2008 school year. Legal expenses for the 2008/2009 year which ends June
30, 2009 are already in excess of $6,200,000. In addition, many utilize the same five to
six law firms, all under separate contracts. One firm used by six districts has already
billed in excess of $1,400,000 for the 2008/2009 school year (see Appendix 2). A
concern is that 38 County of Santa Clara districts are not leveraging their buying power
to negotiate lower fees.

Since Santa Clara County Counsel fees on average are lower than private firms used
by Santa Clara County school districts in 2008/2009, there are opportunities for Districts
to utilize them for legal services. For example, Santa Clara Unified, East Side Union,
and San Jose-Evergreen Community College currently use County Counsel as legal
counsel. Note: Hourly rates have not been published for private legal firms due to their
proprietary nature.

Conclusion

Based on the rising concern of California’s budget cuts, politicians, unions, and
members of the community must seek ways to retain teachers, maintain current
operations, and reduce cuts to the classroom. Potential funding cuts could have a
significant impact on the quality of education that our students receive.

It appears that there is very little scrutiny of Board expenses, Superintendent/
Chancellor compensation packages, and legal services costs. The governing boards
have not properly focused on reining in the salaries and benefits paid to
Superintendents/Chancellors. In this current economic climate it is difficult to rationalize
the escalating salaries and benefits, million dollar housing allowances, and annuity
payments as vital to attract and retain qualified Superintendents and Chancellors.

Boards of Trustees hire costly search firms to recruit successors for retiring or
dismissed superintendents, before doing a preliminary search within the local area.
There are numerous assistant superintendents in Santa Clara County and neighboring
counties, who may be qualified for a superintendent position and should be given
consideration.

9

Boards of Trustees should conduct an in-depth review of all costs to determine where
reductions can be made without negatively impacting the education of our children.
Approximately 85%-90% of a school district’s budget is spent on staff, including
teachers, administrators and support employees. Teachers, classified and support staff
are typically targeted when discussions of budget cuts are raised. The
Superintendent/Chancellor compensation should be an area of particular scrutiny, given
their generous salary and benefit packages. Further, legal fees and Board of Trustees
stipends and benefits are additional areas where districts should look to reduce costs.

District consolidation could reduce Superintendent/Chancellor and Boards of Trustees
expenses. The resulting savings could be used to retain teachers, programs, and
maintain smaller class sizes. Other large counties operate with far fewer districts than
Santa Clara County (e.g. San Diego, San Francisco). For example, San Francisco
County encompasses 55,000 K-12 students, 102 schools, 34 preschools, 9 charter
schools, and 8 county schools. There are only seven school board members and one
superintendent.

Findings and Recommendations

Finding 1

Boards of Trustees approve overly generous benefits to themselves which include the
following:

•
Fully paid health benefits for trustees and their families (often exceeding those of
teachers and/or with no payment ceiling)
•
Excessive travel and conference costs
•
Pension contribution
Recommendation 1

Boards of Trustees should carefully review the benefits listed in Finding 1 and:

•
Eliminate health benefits for Board Members
•
Minimize travel and conference costs
•
Eliminate pension contributions
10

Finding 2

Boards of Trustees are approving overly generous benefits to Superintendents and
Chancellors, including the following:

•
Auto allowances (auto leases/purchases, insurance, maintenance, etc.) to
superintendents
•
Housing allowances
•
Million dollar housing loans at zero or below market interest rates
•
Guaranteed annual step and/or longevity increases
•
Signing bonuses
•
Contract buyouts
•
Excessive performance bonuses
•
Per diem payments when out of the district
•
Personal technology allowances
•
Professional memberships and subscription allowances
•
Excessive travel and entertainment expenses
•
Salary increases automatically triggered by increases in teacher’s salaries which
are in addition to other guaranteed salary increases
•
Pension allowances (in addition to regular STRS/PERS contributions)
•
Advanced degree stipends
•
Lifetime medical insurance benefits
•
Annual physicals
Recommendation 2

Boards of Trustees should carefully review and renegotiate the
Superintendent/Chancellor benefits listed in Finding 2 for possible reduction and/or
elimination.

Finding 3

Superintendent salaries and increases appear to bear no relationship to the number of
schools, students, and employees they oversee, nor their district’s academic
improvement.

11

Recommendation 3

The Board of Trustees should ensure that Superintendent/Chancellor salaries and
increases take into account the number of schools, teachers, and students they
oversee, and are tied to the district’s students’ progress and quantifiable metrics.

Finding 4

Boards of Trustees hire costly search firms to recruit successors for retiring or
dismissed Superintendents/Chancellors.

Recommendation 4

Boards of Trustees should conduct a preliminary search within the local area prior to
hiring search firms.

Finding 5

Boards of Trustees approve the hiring of multiple private attorneys, in some cases at a
tremendous expense.

Recommendation 5

All Boards of Trustees should engage County Counsel whenever possible and leverage
their buying power to negotiate lower fees with private law firms.

Finding 6

The operation of 34 K–12 school districts and four (4) community college districts
creates excessively high management and administrative costs. Five K-12 school
districts have excessively high Superintendent costs per student which is reflective of
the district’s having only one or two schools.

Recommendation 6

A consolidation of districts should be considered to reduce the numbers and costs of
Superintendents/Chancellors, Boards of Trustees, administrative staff and overhead.

12

Appendix 1
Board of Trustees 2008/2009 Compensation

District #
Total
Stipend
Medical
Benefits
457
Contribution
Total
Compensation
Alum Rock 5 $24,000 $82,675 $106,675
Berryessa 5 $14,400 $11,332 $25,732
Cambrian 5 $0 $41,546 $4,800 $46,346
Campbell Union 5 $14,400 $46,456 $60,856
Campbell Union HS 5 $14,400 $43,314 $57,714
Cupertino 5 $12,000 $0 $12,000
Cupertino Union 5 $23,800 $28,581 $52,381
East Side Union 5 $45,000 $51,056 $96,056
Evergreen 5 Not provided
Foothill CC 5 $45,000 $64,559 $109,559
Franklin McKinley 5 $15,510 $28,673 $44,183
Fremont Union 5 $24,000 $97,180 $121,180
Gavilan CC 7 $21,168 $0 $21,168
Gilroy 7 $20,160 $94,706 $114,866
Lakeside 5 Not provided
Loma Prieta 5 $0 $0 $0
Los Altos 5 $24,000 $0 $24,000
Los Gatos-Saratoga 5 $14,400 $28,504 $42,904
Luther Burbank 5 Not provided
Metro Education 6 Not provided
Milpitas Union 5 $17,640 $54,740 $72,380
Montebello 3 Not provided
Moreland 5 $14,400 $58,740 $73,140
Morgan Hill Unified 7 $20,160 $0 $20,160
Mt Pleasant 5 $17,280 $63,646 $80,926
Mtn.View - Los Altos 5 $16,560 $38,528 $55,088
Mtn.View - Whisman 5 $15,120 $0 $15,120
Oak Grove 5 $24,000 $10,709 $34,709
Orchard School 5 $7,200 $8,893 $16,093
Palo Alto 5 $24,000 $0 $24,000
San Jose Unified 5 $14,400 $58,482 $72,882
Santa Clara Unified 5 $26,460 $52,014 $78,474
Saratoga Union 5 $12,000 $32,842 $44,842
SCCOE 7 $45,161 $71,536 $116,697
Sunnyvale 5 $14,400 $0 $0 $14,400

Total $581,019 $1,068,702 $4,800 $1,654,531

13

Appendix 2

K-12 and Community College Legal Firms with Highest
Billing for FY 07/08 & 08/09 (partial expenses)

# Schools Legal Fees
Miller Brown Dannis 6 1,881,132 $
Ruiz & Sperow 3 788,449 $
Garcia, Calderon Ruiz 2 776,888 $
Burke Williams Sorenson 3 693,014 $
Lozano Smith 4 621,877 $
Atkinson, Addison, Loya 5 365,493 $
Fagen, Friedman & Fulfrost 2 323,651 $
Hopkins & Carley 5 246,852 $
County Counsel 2 89,281 $
Littler Mendelson 3 74,855 $
Herrero & Pizarro 2 59,487 $
McArthur Levin 2 45,985 $

14

Appendix 3
Community College (CCD) Partial Legal Expenses FY 07/08 & 08/09

Contract Hourly Rate ($’s)
Expense Sr Attorney Attorney Paralegal
Foothill-De Anza CCD
Curiale Hirschfield Kranek
Not provided
General Counsel Ass.
GRM
Marilyn Kaplan
T Klein Ass.
McCarthy & Berlin
Law Off Wm Rappaport
Shope & Finkelstein
Jaret & Jaret
Total $2,355,334
Gavilan Joint CC
Atkinson, Addison, Loya
Not provided
$6,062
Fagen, Friedman & Fulfrost $14,109
Bingham
Total $20,171
San Jose-Evergreen CCD
County Counsel 198 78
Not provided
Fagen, Friedman & Fulfrost 210-220 190-200 100-150
Littler Mendelson 285-290 185-240
Miller, Dannis & Brown 210-265 185-215 110-125
Total $142,462
West Valley-Mission CCD
Atkinson, Addison, Loya 195 185 135 $266,334
Public Agency Law Group 185-210 80-95 $53,814
Shope & Finkelstein 200 $1,169
Total $321,317
Total CCD Legal Expenses $2,839,284

Note: Hourly rates have not been published for private legal firms due to their
proprietary nature.

15

Appendix 4
K-12 Legal Expenses FY 07/08 & 08/09

Expense
Alum Rock Union
Lozano Smith $302,473
Miller Brown Dannis $193,777
Garcia, Calderon Ruiz $126,351
Ruiz & Sperow $385,974
Burke Williams Sorenson $58,654
Total $1,067,229
Berryessa Union
Cambrian
Kronick Moskovitz $64,878
McArthur Levin $28,175
Total $93,053
Campbell Union
Total $1,571,079.0
Campbell Union High School
Atkinson, Addison, Loya $28,097.0
Littler Mendelson $36,356.0
Lozano Smith $25,407.0
McArthur Levin $17,810.0
Total $107,670.0
Cupertino Union
Miller, Dannis & Brown
Not provided
McArthur Levin
Littler Mendelson
Kronick Moskovitz
East Side Union
Garcia, Calderon Ruiz $650,537
Miller, Dannis & Brown $3,243
County Counsel $2,686
Total $656,466
Franklin McKinley
Lozano Smith
Not provided
Miller Brown Dannis
Liebert, Cassidy, Whitmore
Total $249,287
Fremont Union
Fagen, Friedman & Fulfrost
Not provided
Littler Mendelson
Lozano Smith
Miller Brown Dannis
Zampi & Associates
Total $407,670

16

Appendix 4
K-12 Legal Expenses FY 07/08 & 08/09

Expense
Gilroy Unified
Atkinson, Addison, Loya
Not provided Garcia Calderon Ruiz
Total $299,044
Lakeside Joint
Fagen, Friedman & Fulfrost
Not provided Zampi & Associates
Loma Prieta Joint Union
Littler Mendelson $40,448
Total $40,448
Los Altos
Hopkins & Carley $5,684
Miller Brown Dannis $44,813
Fagen, Friedman & Fulfrost $30,318
Total $80,815
Los Gatos - Saratoga
Public Const– Law
Not provided
Lozano Smith
Fagen, Friedman & Fulfrost
Miller Brown Dannis
Herrero & Pizarro $26,702
Hopkins & Carley $22,067
Total $48,769
Los Gatos Union
Lozano Smith
Not provided Miller Brown Dannis
Fagen, Friedman & Fulfrost $293,333
Atkinson, Addison, Loya $15,000
Total $308,333
Luther Burbank
Herrero & Pizarro $32,785
Hopkins & Carley $34,712
Total $67,497
Metropolitan Education
Manat, Phillips & Phillips
Not provided Lozano Smith
Burke Williams Sorenson $2,636
Littler Mendelson $4,052
Total $6,688
Milpitas Union
Moreland
Morgan Hill
Miller Brown Dannis $526,900
Total $526,900

17

Appendix 4
K-12 Legal Expenses FY 07/08 & 08/09

Expense
Mountain View-Los Altos Union
Mountain View Whisman
Hopkins & Carley $35,964
Total $35,964
Mt Pleasant Elementary
Miller Brown Dannis
Not provided
Lozano Smith
Fagen, Friedman & Fulfrost
Total $58,850
Oak Grove Elementary
Orchard Elementary
Palo Unified
San Jose Unified
Law Office of Nive Gau $25,000
Lozano Smith $137,750
Miller Brown Dannis $423,500
Orbach Suraez $21,091
Ruiz & Sperow $207,000
Samuelson Wilson & Roe $19,000
Atkinson, Addison, Loya $50,000
Total $883,341
Santa Clara COE 276,647.00 $
Santa Clara Unified
County Counsel $86,595
Hopkins & Carley $148,425
Miller Brown Dannis $10,377
Scholl/college Legal $1,314
D Hunter $6,671
Sue Bardet See Notice of Errata $5,000
Total $258,382
Santa Clara Unified Not Provided
Saratoga Union Not Provided

18

Appendix 4
K-12 Legal Expenses FY 07/08 & 08/09

Expense
Sunnyvale
Miller, Brown & Dannis $395,496
Total $395,496
Union Not Provided
Total K-12 Legal Expenses $7,439,628

Note: Hourly rates have not been published for private legal firms due to their
proprietary nature.

19

This report was PASSED and ADOPTED with a concurrence of at least 12 grand jurors
on this 15th day of June, 2009.

Don Kawashima
Foreperson

Mary Nassau
Secretary

20

educationdollars

At a time when California school board members were agonizing over laying off employees, slashing programs and imposing furloughs, the man who was the boards’ public face earned $1.61 million over four years.

CSBA, a nonprofit organization with a $16 million annual budget, including $5.9 million in member dues paid by nearly 1,000 school boards, initially refused to release financial information.

San Mateo County saw 463 sales of single-family resale homes, the lowest for a July in 20 years. In Santa Clara County, the 1,159 single-family resale homes that closed escrow represented a drop of 24.3 percent from the 1,531 sold a year earlier, making this the second-slowest July since 1990, according to figures released Thursday by the real estate information service MDA DataQuick.

Mortgage fraud takes many forms, but a well-organized scam frequently involves a limited liability company (LLC) or a “straw buyer.” In this scheme, fraudsters use a fake identity or that of someone else who allows them to use their credit status in return for a fee. The seller pockets the money the buyer borrows from a lender to pay for the home. The buyer never makes a mortgage payment and the property goes into foreclosure.

e property appraisal — compiled by an appraiser who Scott believes never visited the area — showed four nearby comparable properties of around the same age (100 plus years) sold recently for around $360,000. The trick to this kind of scheme is engineering the sale of the first few fraudulently overvalued properties to get “comps” — comparable values — to fool appraisers and underwriters alike.

“Miraculously, all of these properties were all within a very narrow price range,” Scott said with weary sarcasm. “This is a perfect appraisal for an underwriter. If you are an underwriter sitting in Kansas or California it all looks fairly straightforward so you can just hit the button and approve it.”

Several thousand are employed in HP’s Cupertino campus, these jobs will be relocated to Palo Alto.

Both facilities are only half occupied as the local tech sector stalls.

10081 PENINSULA Ave Cupertino, CA 95014
Beds: 3
Baths: 2.5
Sq. Ft.: 1,525
$/Sq. Ft.: $616
Lot Size: 8,504 Sq. Ft.
Property Type: Detached Single Family
Style: Mediterranean
Stories: 2
Year Built: 1997
On Redfin: 84 days

A big push by banks in recent months to modify such loans—by stretching out maturities or allowing below-market interest rates—has slowed a spike in defaults. It also has helped preserve banks’ capital, by keeping some dicey loans classified as “performing” and thus minimizing the amount of cash banks must set aside in reserves for future losses.

Restructurings of nonresidential loans stood at $23.9 billion at the end of the first quarter, more than three times the level a year earlier and seven times the level two years earlier. While not all were for commercial real estate, the total makes clear that large numbers of commercial-property borrowers got some leeway.

PACE lets homeowners use special property-tax assessments to pay off, over 15 to 20 years, the cost of new improvements. Local governments sell municipal bonds to fund it.

In May, Fannie and Freddie said the liens violated the terms of their contracts to purchase loans from lenders and said they would require borrowers to pay off the liens before refinancing or selling their properties. The announcements, which raised concerns that borrowers would have to pay off their mortgages early, led most municipalities to suspend their PACE programs.

On May 28, 2010, Symmes pleaded guilty to mail fraud conspiracy and money
laundering in connection with a large-scale builder-buyout mortgage fraud scheme. For many
years, Symmes was the largest homebuilder in Chico. In 2006, as the market cooled, Symmes
had a significant amount of unsold new homes in inventory. Symmes established relationships
with several unlicensed mortgage brokers to “sell” his homes to straw buyers at inflated prices.
The entire reported purchase price was 100% financed on each home with various subprime
lenders. Typically, the day after escrow closed, Symmes then rebated $40,000 to $60,000 of the
reported purchase price per home to shell companies controlled by the buyers’ agents. The
rebates were not disclosed to the lenders. Altogether, from 2006 through 2008, Symmes sold 62
homes with undisclosed sales rebates. The homes were financed in the aggregate amount of $21
million. To date, 38 of the homes have fallen into foreclosure and 10 more have been the subject
of short sales, causing losses to date of $5 million. Symmes has pleaded guilty, is presently
cooperating in an ongoing mortgage fraud investigation, and has already paid $4 million toward
restitution/forfeiture. He is currently scheduled to be sentenced on September 3, 2010.

United States vs. Garret Gililland, et al.

Cr. S 08-0376 EJG

This morning, a federal grand jury returned a second superseding indictment against
Garret Griffith Gililland and Nicole Magpusao who were originally charged in 2008 with mail
fraud and other charges relating to a multimillion dollar “builder bailout” mortgage fraud scheme
in Chico. The new charges add eight defendants with participation in that scheme or related to it.
Chico-area homebuilder William E. Baker; Nor Cal Innovative Investments Inc. president Shane
Burreson; Leonard Williams, a licensed real estate professional; Christopher M. Chiavola,
Brandon Resendez, Niche Fortune, and Kesha Haynie –all former employees of Gililland and
Burreson; and Remy Heng. According to the new indictment, Gililland, Burreson, Chiavola,
Resendez, and Williams recruited various individuals to purchase residential real properties.
Gililland and his associates acted as the mortgage broker and real estate agent in connection with
the transactions. Gililland, Burreson, and others assisted in obtaining residential loans for the
transactions causing materially false loan applications to be prepared on behalf of the purchasers.
Gililland, Burreson, Chiavola, and others arranged with the sellers of the properties to purchase
the properties at a price above the true market price. The defendants also arranged to credit a
percentage of the margin between the actual market price and the inflated purchase price of the
properties after the close of escrow to various bank accounts controlled by defendants. At the
same time, defendants caused the credits to be concealed from the lenders. As a result of the
scheme to defraud, lenders issued loans in an aggregate amount of approximately $21 million.
Bank accounts controlled by Gililland, Burreson, and others, received over $2 million in fraud
proceeds, and defendants Gililland, Burreson, and others, ultimately caused losses to lenders of
over $4 million.

The new indictment separately alleges that Chiavola, Resendez, Fortune, and Haynie,
after leaving the employment of Gililland and Burreson, replicated the scheme on their own.
Gililland, Burreson, and Chiavola are further charged with money laundering for bank
transactions involving the proceeds of the fraud. Finally, Remy Heng is charged with bulk cash
smuggling for attempting to ship $20,000 in cash in a Pringles potato chip can via Federal
Express to Gililland in Spain while Gililland was a fugitive.

United States vs. Hoda Samuel, et al.

Cr. S 10-0223 JAM

On June 10, 2010, a federal grand jury returned an indictment charging 10 individuals
with 48 counts, including charges of conspiracy to commit mortgage fraud, mail fraud, and
making false statements in mortgage applications. The indictment focuses on two Elk Grove
businesses owned by defendant Hoda Samuel - Liberty Real Estate and Investment Company
and Liberty Mortgage Company. From April of 2006 through February of 2007, Samuel and
other Liberty employees are alleged to have been involved in at least thirty separate residential
real estate transactions involving fraud. Specifically, the indictment alleges that loan
applications contained misrepresentations concerning loan applicants’ employment and income.
In addition, the indictment alleges that many of the transactions involved the payment of cash-
back to buyers, often disguised as payments to contractors for repair and remodelling work, and
usually not revealed to the lenders. As a result of these undisclosed payments, lenders were led
to believe that the houses being purchased were worth more than the buyers were actually paying
for them. Of the thirty transactions described in the indictment, at least twenty-eight have now
gone into foreclosure, causing a collective loss to the lenders of more than $5.5 million.

United States vs. William T. Bridge

Cr. S 08-275 WBS

William Bridge wilfully failed to report over $3.8 million dollars on his 2003 – 2006
federal tax returns that he had earned as a licensed real estate mortgage broker doing business as
The Loan Center in San Francisco. In completing his tax returns, Bridge reported only the
compensation he earned as part of the “yield spread premium” that was reported by the lending
institutions themselves to the IRS. He did not report his full commission, which involved
substantially more money. During the same time, Bridge was paying thousands of dollars in
kickbacks to an employee of Long Beach Mortgage (formerly a subsidiary of Washington
Mutual bank) to process what he knew were fraudulent loans application packages to be secured
by residential properties located in the Sacramento and Stockton areas. Bridge pleaded guilty to
multiple counts of filing false tax returns and paying kickbacks in connection with real estate
loan transactions in 2008. On April 9, 2010, Bridge was sentenced to 21 months in prison, to be
followed by one year of supervised release, $1,057,700.90 in restitution to the Internal Revenue
Service, and a $60,000 fine. A co-conspirator, former Long Beach Mortgage employee Joel
Blanford, is currently on trial in federal court in Sacramento.

United States vs. Eric Ray Hernandez, et al.

Cr. S 10-249 AWI

Eric Ray Hernandez, Monica Marie Hernandez, and Evelyn Brigget Sanchez, all of
Bakersfield, were charged with submitting loan applications to lenders containing false and
fraudulent information that caused lenders to fund mortgage loans based on such fraudulent
applications. The indictment alleges that the defendants caused false statements to be submitted
to lenders concerning buyers’ income, assets, and liabilities, buyers’ employment status, and
buyers’ intent to occupy the properties as their personal residences. Additionally, the defendants
are alleged to have submitted false supporting documentation in support of mortgage loan
applications, including false pay stubs, false letters purporting to be from the buyers’ tax
accountant, false customer letters purporting to support the buyers’ self-employment status, and
false verifications of the buyers’ bank funds on deposit. The indictment alleges that the
defendants defrauded lenders of in excess of $2.5 million through this scheme.
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