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SUHSD Alleged Corruption; San Diego Housing Prices Drop

We take on two hot news topics: the release of 40 pages of court documents detailing corruption in Sweetwater Union High School District, and San Diego housing prices take a dip.
GUESTSBob Stern, former president of the the Center for Government Studies Dan Seiver, SDSU Finance Professor

ST. JOHN: This is KPBS Midday Edition. I'm Alison St. John in for Maureen Cavanaugh. It's Wednesday, December the 28th. The District Attorney's Office has released 40 pages of court documents and they detailed thousands of dollars in campaign contributions and numerous cases of wining and dining of education officials involved in decisions about pig one instruction contracts. One contractor spent $10,000 on gifts and meals for the officials before winning construction contracts worth millions of dollars for his firm. We have on the line, bob stern, who is the former general counsel for the California fair practices commission. Plus he used to be the center for government studies in Los Angeles. Thanks for joining us. STERN: Nice to be with you, Alison. ST. JOHN: We've been sensitized a bit to corruption of city officials by the City of Bell. This is a bit different. The board members appear to have benefited from perks angled at them from contractors. How shocking is this case in terms of government corruption that we've seen around the state? STERN: I'm sorry surprised by this. I would think these School Board members would know better. They would know they shouldn't be receiving gifts from contractors who want to do business with the school district. They should know if they are receiving gifts, they were disclosed and also disqualify themselves. It's sorry surprising to me that people still feel that they can receive gifts from contractors. We don't know all the facts, and there have been no indictments yet. These are all allegations. And these people deserve a day in court. But just from the newspaper articles and from what I'm reading, it still surprises me that public officials think that they can receive benefits that the rest of us can't receive, not disclose them and think they can get away with it. ST. JOHN: Is it possible if they have reported all their gifts they wouldn't be in trouble? STERN: No, one is the reporting of first dollars or more, the second Sthere's a limit on the amount of gifts they can receive from one individual or entity of $420 a year. And it appeared from the newspaper articles that they exceeded that limit. And third he, if you receive gifts of $250 or more, you have to disqualify yourself if the person giving you the gift comes forward and wants a benefit, such as a contract. So there are three different legal requirements here that they may have violated. Even if they didn't violet the law, it looks terrible. You don't receive gifts from people who are trying to do business with you when you're a public official. Everybody upons that. And I just can't understand why these people had this problem. ST. JOHN: Well, do you think that the dearth of money for construction contracts these days makes public bond money especially choice winnings for contractors. And the increased competition for this is fertile territory for corruption? STERN: That's true. We're in a down economy. Any time there are contracts, people obviously want to get those contracts and that's understandable. But you don't give gifts. You don't lavishly wine and dine people. Everybody knows what the rules are. And it's very important for the District Attorney to pursue this to see if there are any laws that were violated, and if laws were violated to prosecute these people and set another example of public officials not complying with the rules. Now, most public officials do. We need to be well aware of that. Ninety-nine% of the public officials are complying with the laws, and fortunately it's big news when somebody doesn't. But that's the fortunate thing. In other countries, it's big news when somebody doesn't take bribes and isn't corrupt. So we have to at least appreciate the fact that we don't want get news when people officials are doing their job. But still it's very disappointing to me, particularly a school district because schools are really hurting these days. Funds are being cut, and taxpayers really want the biggest bang for their bucks. And they don't want to see this type of corruption ST. JOHN: Well, you watch government ethics around the state, and I was going to ask you whether School Boards are less likely to appear in the spotlight in this way than, say, City Councils STERN: That's a very good point. School Boards are less likely, and it may be that nobody is watching these School Boards. Everybody watches the City Councils, and everybody watches the legislature, and everybody watches Congress and the president. But school district, water districts, mosquito, abatement districts, nobody really watches them. Nobody is minding the store. And sometimes the officials think they can get away with it because nobody is paying any attention. We've seen example it is of water districts having some problems because nobody pays attention to what they're doing. And so autoimportant that all of us not just pay attention to what the president is doing or our City Council is doing but also watch what the school district is doing because they have such great authority, particularly in these bond measures. And it reduces the confidence of voters in approving new bond measures. So in the future, kids may suffer because of the problems that are coming out today. ST. JOHN: It didn't just come out of the blue, in case. The former superintendent, Jesus Gandara, was named in the documents that were unsealed yesterday as accepting some of the same perks Mr. Board members that the investigation did. Can you speculate on why his home wasn't searched? STERN: Oh, I just don't know. Obviously I don't know all the facts in this situation. But it is a problem when you have an atmosphere within a school district of saying, OKAY, here's what we can get away with. And clearly they thought that nobody was watching them, nobody was paying attention, and they could get away with it. And we'll see whether there are indictments being brought against them, but clearly from these allegations, at least it seems like a very serious case. ST. JOHN: It does seem like there was a culture in the Southbay, because it spread across the school district to the community college district. And we heard about the superintendent for several years there appeared to be engaged in this kind of you scratch my back, I'll scratch yours activity for some time before he was fired. What kind of thing can the community do to prevent this kind of culture from just growing? STERN: We have the laws on the books. I don't think we need necessarily any more laws. We need vigorous enforcement, we need to make examples of people who violate the law, and I'm very pleased that the District Attorney is pursuing. Although, again, of course, it den greats all public officials when one public official is accused of wrongdoing, people think everybody does it. But those who think they can get away with it really need to have enforcement actions brought against them. And the DA can bring enforcement actions, the fair political practices commission can bring enforcement actions, and citizens can actually bring enforcement actions as well if the government officials don't. But the DA can bring criminal actions. And the fair political practices commission can bring civil actions, and they do when people don't disclose gift accident and there's not a widespread problem such as this appears to be. ST. JOHN: And have you seen this kind of thing happening in affluent neighborhoods as well as sort of lower income neighborhoods? Does it happen across the spectrum, in other words? STERN: It happens when people think that nobody is paying any attention. And it happens particularly with water district, and the City of Bell, for example, where -- there was no newspaper covering it. Nobody was watching what they were doing. And people felt that nobody cared about them. But it happens throughout the state. Fortunately it's rare. So this is big news when it does happen. But we see it in Congress. You had a local Congressman who got into trouble a few years ago and wept to jail for several years ST. JOHN: Cunningham, yes. STERN: You've had a former mayor get in trouble. So it could be Congress, City Council, districts. But what I'm seeing lately is more of the special districts, school districts or water districts. ST. JOHN: I think listeners might be wondering how likely is it that this might be going on in my district? So it's perhaps reassuring to hear you say it's not that common. STERN: It's not that common. But we don't know what we don't know. And that's why it's very important for your listeners, for the media to be paying attention to what's going on in their local districts. Everybody says the best government is the government closest to them. And that's really true. But unfortunately, very few pay that much attention to the local government, and what they're doing. We get a lot of news about national, and some news about state, but not that much news about local. It's very important for all of us to make sure that the local governmental entities are doing their jobs and doing them efficiently, and getting the best bang for the buck. Every tax dollar is precious these days ST. JOHN: And one final question, what kind of penalties do officials in the Southbay face if they are found guilty? STERN: There could be a range of penalties, administrative fines, civil fines. And that's a monetary penalty, to going to jail or prison if it's very serious. Violations of the political reform act are misdemeanors, that's a local jail. But if you're involved in a conspiracy to violate the law, that that's a felon which means state prison. So people could go to jail over this if the allegations are really serious. If there's corruption involved. And where it would be really serious is if somebody said give me these gifts or give me money in exchange for my vote to give you the contract. That's the worst form of corruption. That's obviously bribery. And that's the type of violation where somebody would go to prison ST. JOHN: Good, well, thank you very much. That's bob stern, former general council for the California fair political practices commission. Thanks for beings with us, bob. STERN: Pleasure talking to you. ST. JOHN: Giving us insight into allegations and an investigation in a possible pay to play in the sweet water school district, and southwestern college. The latest report on house prices shows home prices in San Diego continue to fall. The Case-Shiller index says they fell 4.5% from last year in October. Dan Seiver is on the line with us, from SDSU. Thanks for being with us. SEIVER: You're welcome. ST. JOHN: This is the 4th straight month home prices have dropped in San Diego. Why haven't we reached bottom yet? SEIVER: Well, that's hard to say. I can give you several explanations. One is that, you know, if there are more and more foreclosed homes coming on the market, that tends to depress all prices, and it makes it harder to sell homes that aren't foreclosed. Second, I think -- it is much harder to get a mortgage than it used to be. So that keeps some buyers out of the market. I think that's a good thing because when we made it too easy to get mortgages, that's what created this problem in the first place ST. JOHN: Right, but the fact it's so difficult to get a loan does seem to be very frustrating. Have you seen more evidence that banks are willing to lend? SEIVER: Well, yes, but you have to come up with a hefty down payment, and you have to have a good credit report. And I think in the long run, that makes a lot of sense. Before the housing boom went crazy and we decided that anybody who could fog a mirror could get a home loan, that's why we're in such a mess. ST. JOHN: Were you surprised to see that four months in a row of drops again after we thought perhaps they would have levelled off? SEIVER: Well, I think as part of the long-run bottoming process, we're going to have some what they call in the stock market backing and filling, where we'll go up some and down some. And the third reason is that there are buyers in the wings who could qualify who don't want to get in until they think housing has definitely bottomed. And they're going to wait. Because if you think housing prices are going to be lower next month, why should I commit? They'll knock another thousand off the home if I wait. And I think there are a fair number of these buyers out there. Once it looked like the housing mark has actually turned, many of them will actually jump in and see a decent at least short term recovery. ST. JOHN: But what indications should these people look for? We saw a few months when it looked like it was going to turn up again in the summer, and it didn't. SEIVER: My feeling is that those buyers sooner or later should say, well, you know, housing is relatively cheap so we're going to buy now. We're not trying to buy it and flip it a year from now if we're buying it because we want to live in it for some time. It is really cheap. And if you look at affordability measures, San Diego has become quite affordable. And that's a dramatic change from five years ago. And on that basis, housing is already relatively cheap in San Diego. So you would think some of these buyers would say we're not going to catch the bottom, we don't want to get in the stampede after the bottom, so we're ready to buy. So I think some of these will trickle into the market. And if you look at the month to month, there wasn't much of a monthly decline ST. JOHN: True. SEIVER: There was a certain amount of noise in those figures ST. JOHN: Less than 1%, yeah. Will SEIVER: And if you look at the seasonal month to month, what was unchanged for San Diego. So I think we are scraping bottom. But give how huge the bubble was and how much bursting happened, it's the kind of thing that will take -- the housing market isn't going to heal itself really soon. But if we're not at the bottom, we're certainly close and we could actually see I think on balance in 2012 given I think the economy is probably going to grow some, we could actually see some modest beginnings of a recovery and the home prices in San Diego. ST. JOHN: Okay. Well, that sounds like a good place to leave it. Thank you very much for your perspective. SEIVER: Sure, you're welcome. ST. JOHN: That's Dan Seiver, finance professor of SDSU giving us a bit of a context on the latest report on home prices.

The District Attorney's office has released 40 pages of court documents, detailing thousands of dollars in campaign contributions alleging corruption in the Sweetwater Union High School District.

San Diego home prices drop, according to this week's release of the S&P/Case-Shiller Home Price Index.