Cali School District Borrows $100M – Owes $1B

Irrefutable evidence that liberals don’t have a clue, as to how money works! Worse than just this, the current structure of the federal education system which would require such stupidity from local districts is unconscionable. When it all comes down, we must do everything we can to wrest control from federal hands – and keep it that way!

More than 200 school districts across California are taking a second look at the high price of the debt they’ve taken on using risky financial arrangements. Collectively, the districts have borrowed billions in loans that defer payments for years — leaving many districts owing far more than they borrowed.

In 2010, officials at the West Contra Costa School District, just east of San Francisco, were in a bind. The district needed $2.5 million to help secure a federally subsidized $25 million loan to build a badly needed elementary school.

Charles Ramsey, president of the school board, says he needed that $2.5 million upfront, but the district didn’t have it.

“We’d be foolish not to take advantage of getting $25 million” when the district had to spend just $2.5 million to get it, Ramsey says. “The only way we could do it was with a [capital appreciation bond].”

Those bonds, known as CABs, are unlike typical bonds, where a school district is required to make immediate and regular payments. Instead, CABs allow districts to defer payments well into the future — by which time lots of interest has accrued.

In the West Contra Costa Schools’ case, that $2.5 million bond will cost the district a whopping $34 million to repay.

Ramsey says it was a good deal, because his district is getting a brand-new $25 million school. “You’d take that any day,” he says. “Why would you leave $25 million on the table? You would never leave $25 million on the table.”

Lockyer is poring through a database collected by the Los Angeles Times of school districts that have recently used capital appreciation bonds. In total, districts have borrowed about $3 billion to finance new school construction, maintenance and educational materials. But the actual payback on those loans will exceed $16 billion.

Some of the bonds can be refinanced, but most cannot, Lockyer says.

Perhaps the best example of the CAB issue is suburban San Diego’s Poway Unified School District, which borrowed a little more than $100 million. But “debt service will be almost $1 billion,” Lockyer says

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13 Responses to Cali School District Borrows $100M – Owes $1B

  1. notamobster says:

    We only had to spend $2.5M to get $25M.

    Nevermind that we have to pay back $34M. WTF? Is it any wonder that our country is in shambles and the State of California, in particular is circling the drain? How can people be so incredibly, mind-numbingly, irresponsible?

  2. I will turn your flesh to alabaster. Then you’ll find your servant is your master. ah schools, what a crock

    • notamobster says:

      Good call. The debt they allowed their government to shackle them to is now their master, and they don’t even see it.

      Master of puppets I’m pulling your strings
      Twisting your mind and smashing your dreams
      Blinded by me, you can’t see a thing
      Just call my name, ’cause I’ll hear you scream –
      Master, master, where’s the dreams that I’ve been after?
      Master, master, you promised only lies
      Laughter, laughter, all I hear or see is laughter
      Laughter, laughter, laughing at my cries

  3. Greg B says:

    Strains of Metallica, who’da thunk it.

  4. Greg B says:

    I imagine the reasons schools in CA are just so screwed up is the administrators are products of said schools.
    Schools here are utterly worthless. I pisses me off beyond reason my taxes go to these institutions. I don’t have kids, and yet I am totally disgusted at how pathetic is is here.
    Right now, the teachers union is running radio spots thanking voters for raising taxes on themselves. And I KNOW the vast majority of the money will only go for union perks. They don’t give a rats ass about their students.

  5. notamobster says:

    Seriously, can you imagine if the government told you that you could have a $250,000 housing grant, but you had to put up $25K – which you had to borrow from Luigi – at a cost of $3.4M? Who does that?!?!

    Who sees that deal and says “hell yeah!”?

    Folks who know they can kick the can down the road onto their great-grandchildren? Oh, government functionaries of the liberal persuasion, you say? I get it now.

    They must not have a fracking clue how money works.

    I need $100k for my new house. Anyone wanna loan it to me? My great grandchildren will pay you back a million. It makes me wanna puke.

  6. Greg B says:

    That’s exactly it. There is absolutely no thought about who gets saddled with this debt.
    These people are selling their own progeny down the river. And they are either to stupid to realize it, or they utterly don’t give a fuck as long as they get theirs right now.

  7. James says:

    “We’d be foolish not to take advantage of getting $25 million” when the district had to spend just $2.5 million to get it, Ramsey says.

    You’d be foolish to take it. Make use of the schools you have, dumbass.

  8. sortahwitte says:

    Are they bumping up the shopping lists in anticipation of a federal bail-out? Would a bail-out be a clean slate ponzi scheme?

  9. BaconNeggs says:

    >>Seriously, can you imagine if the government told you that you could have a $250,000 housing grant, but you had to put up $25K – which you had to borrow from Luigi – at a cost of $3.4M? Who does that?!?!<<

    If only Kalifornians would at least learn from Hollyweird ….

    Rocky – You wanna dance, you gotta pay the band, you understand? If you wanna borrow, you gotta pay the man. Hey, I ain't emotionally involved, Bob, ya understand? Gimmme some money. C'mon…. gimmme some money.

    Maybe if Luigi broke their legs like Gazzo says, Kalifornian School Boards would get a clue how this really works.

    What do these spineless shits care, right now its only their kids and grandkids who are going to get their legs broke.

  10. Roy Ryder says:

    Good grief! These people are products of the “special” education system of California.

  11. Steve says:

    Just another example of government’s (and much of our entire cultures) having the : “I want mine NOW” attitudes we’ve developed.