Somehow this reminds me of Greenwich Democrats’ advocating borrowing more now to repay later

California Dreaming at Greenwich Democrat headquarters

California Dreaming at Greenwich Democrat headquarters

California schools face billions in debt repayment.

From NPR:

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.

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.

I seem to recall Bob Horton and his Democrat friends on the BET advocating exactly this sort of financing – we’d be stupid to deprive ourselves now of things we want when interest rates are so low – and long term? Hell, in the long term, we’re all dead.

4 Comments

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4 responses to “Somehow this reminds me of Greenwich Democrats’ advocating borrowing more now to repay later

  1. D

    Idiot bureaucrats address these bonds like they’re free money. Even more so when they allow you to accrue with no payments for what, 10 years? Dangerous idiots… all of them.

  2. Daniel

    Here is the spreadsheet for the bonds. Very scary!

    http://spreadsheets.latimes.com/capital-appreciation-bonds/

  3. Georgie

    Ah, come on Chris. You are a party pooper—wait until our kiddo’s have their Musical Performance Hall and you see those shiny faces singing and dancing.

    Just don’t ask if they are qualified for college or have a practical skill for a career ready job.

  4. CatoRenasci

    Ain’t no free lunch.