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Blog

    California School District to Spend $1 Billion to borrow $105 Million

    08/13/2012

    California has lost 600,000 jobs in the last decade and has a $26 billion deficit. Their public schools aren’t performing well, with lower grades and graduation rates than students in other states. It makes sense that a community would want to invest in education, but one would expect reasonable return on investment. Yet, in Poway United School District, taxpayers voted to spend $1 billion to borrow $105 million.

    It is made even more irresponsible by the fact that payments, even interest-only payments, are deferred 20 years. The majority of payments are deferred 35 to 40 years. That’s right, California is settling the next generation with even more debt.  Two payments of over $300 million each are due in 2046 and 2051. It is not possible to pay off the debt early, so a sudden bout of responsibility is off the table. The bond, although being used in other districts around California, is so odd that it has been made illegal in Michigan.

    The deal was sold to taxpayers by promising that their property taxes would not be raised again. According to  NBC San Diego, Superintendent John Collins said “if we made (our kids) wait twenty years until the tax rate would have supported that, where would they be now?”  Where will they be in 40 years? At the rate people are leaving California, there won’t be anybody left to shoulder the burden.

    Is it any wonder California is going broke?