Grand Jury finds SLO County school districts misused developer fees

June 6, 2019

A San Luis Obispo County Grand Jury investigation found local school districts have misused and improperly accounted for funds raised from developer fees. [Cal Coast Times]

Developers who build or enlarge residential, commercial or industrial buildings are assessed fees when it is anticipated the construction will have an enrollment impact on a school. Revenue generated from the fees must go toward the construction or reconstruction of school facilities needed to accommodate the increased enrollment that the new development could generate.

But, a grand jury report released this week said local schools districts have spent developer fees on a wide variety of expenditures, including office expansion, restroom modernization, kindergarten playground equipment, electrical work, an aerial survey, ceiling fans, an auto lift, painting classrooms, a water filter delivery system, upgrading a girls’ locker room and resurfacing a basketball court. State rules specify the developer fees cannot be used for general fund expenditures such as regular or deferred maintenance or routine repairs.

Likewise, local districts have failed to comply with multiple accounting rules. The grand jury found districts’ accounting of the developer fees to be inadequate and not reasonably accessible to the public. At least one district also failed to keep the fees in a separate account and not commingle them with other funds, as required by law.

Furthermore, local districts have failed to provide written notice required by law informing developers of their right to protest the fees. This may extend the period in which a developer can file a lawsuit challenging a fee and could expose school districts to potential liability, according to the grand jury report.

The grand jury is recommending local school districts abide by developer fee regulations in the future.


“Developer fees” are not paid by the developer but passed on to the home purchaser as part of the price of the house (and part of the tax basis of the house forever). The idea back in the 1980s, when this state law was passed, was that new homes bring new children into a school district, ergo money for new schools to accommodate them should come from this new growth and not existing property owners. That some of these new home purchasers might be childless was irrelevant. The fee went with the house, assessed on square footage. Instead of using the funds for new buildings, administrators and school boards have used them for other purposes not allowed by law. That is what the Grand Jury found. You may agree or disagree with what the funds went to, but the law and reasoning behind it are quite clear.

Could this possibly be why we are hit up for bond issues for schools? There is no shortage of money for schools, it’s just flagrantly mismanaged by well-intentioned but naïve school board members and grossly overpaid incompetent school administrators.


I don’t understand… it seems like everyone has gotten the “vote up” and “vote down” buttons mixed up for the comments on this story. What am I missing?


School fees have been twisted and misused for decades. The idea of school fees is; you’re a developer who builds a thousand houses necessitating the construction of ADDITIONAL, not renovated or rebuilt, school facilities. Who should pay? The existing ratepayer, subsidizing development impacts and maximizing developer profits? No. The developer to pay the TRUE costs for his/her project? Yes. But what if ADDITIONAL schools are not needed, nor being built due to demographics? Read the required justification for school fees each year, always the same. Kudos to the Grand Jury


Gee, modernizing restrooms, electrical work, painting, what a waste of wealthy developer money.

Are you kidding me? Sounds like perfectly legitimate ways to spend the money. Why is it that this nation won’t bat an eye when we give giant tax cuts to the boys on Wall Street and the wealthy dynastic families—see Trump or Mercer or Koch—but begrudge every penny used to educate our youth.

Nelson Mandela once said, “There can be no keener revelation of a society’s soul than the way in which it treats its children.”


From a majority rule country in Africa with abundant resources but without free and compulsory primary education. Seems like Nelson’s vision got lost. Or Winnie sold it.


Another reason why this monopoly system we call public schools should be scraped and parents be allowed to op-out for “school choice”. Over and over again school choice is cheaper for tax payers, better for families, and we end up with smarter kids.

(This is not an attack on school teachers, but school union and administrative Politburo).


Paying for kindergarten play equipment? Sounds OK to me. What about the money lent to an administrator? What about administrators bankrupting districts? Is this really the most appropriate use of Grand Jury time?


Must be some high payed Administration whom disagree with your viewpoint.


And yes, quarter million dollar salaries for B.A in administration is a joke, gpa/art/ag/science standards don’t get nearly as much funding as football or other dangerous competitive sports, or friends in “high” places. But there’s always the mega millions right?


Excuse me, Cal Coast NEWS (my emphasis), but your function is communication and NEWS.

The wholesale misappropriation and wastage of taxpayer funds by public employees and public officials is hardly “news”, it’s an old story. However, we should nevertheless thank CCN and the Grand Jury for researching and pointing out the obvious, the routine, the system-wide malfeasance.