With 100% of precincts counted, Measure O fails.                                        Board of Directors just wasted half a million dollars of taxpayer money on this election.                                        Criminal complaints against the district will continue to be pursued.                                        Criminal and FPPC complaints against the Astro-Turfers will continue to be pursued.                                        Your property taxes based on indebtedness will now go down, as they should.                                        

Everything You Always Wanted To Know About School Bonds (or not)

Since November 2000, when Californians changed the constitution to allow voters to approve school bonds with less than a two-thirds majority, school construction bonds have exploded onto the scene. Over $120 billion (with B) in local school and community college bonds have been authorized since.

Not all the news is good. Since many consider bonds "free" money, and school districts seem to always require more money than they have, it's a recipe for a natural disaster sometime down the road.

I know more about school bonds now than I've ever known in my whole life. What you can learn here should make every voter cautious. With a two-thirds approval requirement, there was a built in protection that the bonds would be approved when they were really necessary -- to build needed school facilities. Now it's become a game of keeping up with the Joneses. Compton Unified put a bond measure on the ballot for this fall for $350 million. That'll be nearly $700 million paid by the taxpayers of that district if it passes. That doesn't sound prudent, especially in the 21st when virtual businesses, unheard of two decades ago, are now some of the largest companies in the world.

It won't be long before the best schools will be found in the clouds (technologically speaking).

Bonds, however, are a gift that keep on giving -- for the wealthy investors who can afford to tie up their money in long-term, tax-free, financial obligations -- and for the lobbyists and industries that have grown around the feeding frenzy.

Ticking Time Bomb

What do you think happened to the $50,000,000 in bonds you approved for the district in 2000? The bonds where there was no oversight, even if in name only.

As Gomer Pyle might say, "Surprise! Surprise!" The district turned $21,000,000 of those into what's called capital appreciation bonds [CABs]. You're homes are still securing those bonds, but you're not paying them off right now. You don't see them on your tax bill. But you will in about five more years. For the next 15 years after that you'll be paying handsomely for whatever that money bought more than 10 years ago. CABs are the bane of taxpayers all over the state. Just ask Poway homeowners how they like paying back 10 times (yes, TEN TIMES!) the amount that they authorized for their schools.

The Board used this trick on you with the 2000 bond measure as well as 2007's Measure Y. There's nothing stopping it from doing it again. After all, it isn't the Board's homes and money at risk. It's yours. Here's the proof at page 56 and following. Be forewarned. SURGEON GENERAL'S WARNING: Learning About Capital Appreciation Bonds Causes Brain Stress, Heart Palpitations, Strained Breathing, And May Complicate Retirement Plans.

In simple terms, the Board is putting off the repayment of already issued so that you won't see the effect of its machinations until much later. All of a sudden, you're tax bill go up without any obvious reason. This is major-league kicking the can down the road.

 

Food for Thought About Bonds
DateArticleComment
2015-08-03'For the kids' borrowing will saddle kids with debtFormer State Senate Leader Gloria Romero
2015-07-21Executive Summary: "For the Kids" Comprehensive Review of California School Bonds (1 of 9)This arrived on the same day as the news that WVUSD was putting $208 million in bonds on the ballot.
2015-07-21Tricks of the Trade: Questionable Behavior with Bonds (Section 6 of 9)The special interests have learned how to play the game. They play to win. You lose.
2014-07-23Moody's assigns Aa2 rating to Walnut Valley Unified School District's (CA) GO BondsMoody's wasn't encouraged by the current debt. New bonds will certainly result in a downgrade.
2013-02-23Swimming With the Sharks: Goldman Sachs, School Districts and Capital Appreciation BondsThe Poway school district issued $105 million in bonds. When the final payment comes due, the taxpayers will have paid almost $1 billion. Wall Street greed at its finest.
2012-03-08New 200-home project approved in Diamond Bar will benefit school districtRead how Board members gloat about what they're going to do with the money. District made $25 million on property sale and it's still in trouble financially.
2012-01-13Brokers' Gifts That Keep GivingWho wouldda thunk? The money men are behind most of the school bonds in the state. The public survey for Measure O was done for free by the money men.

 


Copyright © 2015, Richard Michael. All Rights Reserved.