CONCORD -- The Mt. Diablo school board on Monday approved a budget that depends on about $9 million in cuts by 2014-15 to eliminate deficit-spending, even if the November taxes pass.

But it also got some good news: The Internal Revenue Service will only bill the district $3,000 rather than the estimated $833,000 penalty for issues surrounding payroll taxes paid. The district had set aside the larger amount in a reserve fund until the IRS investigation was complete.

The board also discussed its practice of using bond premiums to pay costs for issuing $150 million in general obligation bonds, even though the state attorney general has warned another school district the practice is illegal. Superintendent Steven Lawrence said trustees received a "thorough analysis" of a letter sent March 1 by the Attorney General's Office to the Poway school district, which led him to believe the practice was legally sound.

"We are not doing anything that is outside the law or outside of common practice," he told trustees.

The Attorney General's letter to the San Diego County district said the use of a bond premium to pay for issuance costs was "not authorized by the law." Lawrence, however, said it is widely done throughout the state and the attorney general has not prosecuted any district for it.

Trustee Gary Eberhart agreed, saying the district had received "extremely definitive assessments" of their process.

"It is clearly within the law," he said. "And it is clearly used by other districts."

Trustees voted 4-1 to approve a cost-of-issuance report for bonds sold last week to upgrade facilities over the next three years. Trustee Cheryl Hansen opposed it, saying even though the district's bond counsel endorsed the practice, there are still questions from the public about it.

A district resident has filed a misuse of public funds complaint with the Contra Costa District Attorney's Office. In the complaint the resident said the Mt. Diablo district is shorting its taxpayers' debt service fund by $869,980 and diverting that amount to pay underwriters and legal advisers.

District General Counsel Greg Rolen refused to provide this newspaper with a copy of the analysis referenced by Lawrence and Eberhart, saying he thought it might be protected by attorney-client privilege.

The board also voted 4-1 to approved school site safety plans. Eberhart opposed the plans, saying there was too little consistency between schools.

In another split decision, the board voted 3-2 to authorize Lawrence to hire administrators without board approval over the summer. Eberhart and Hansen opposed this, saying they didn't want to relinquish their authority.

ONLINE
Details about the Mt. Diablo school board meeting are available by calling 925-682-8000, ext. 4000, or by going to http://esbpublic.mdusd.k12.ca.us. Click on "June 25."
For more, including links to video clips, read the On Assignment blog at IBAbuzz.com/onassignment.