Paso Robles, Cayucos school districts shoulder huge bond debts

December 4, 2012

Two San Luis Obispo County school districts have borrowed millions of dollars using a risky form of financing saddling them with huge debt.

Both Cayucos Elementary School District and Paso Robles Joint Unified School District turned to capital appreciation bonds (CABs) as a way to raise money during the economic downturn. These bonds, illegal in one state, allow school districts to postpone the start of repayments to decades after the bonds are secured while the balance balloons in size.

The Paso Robles district is faced with a massive CAB debt repayment. In 2010, it issued a $3,700,127 CAB. With principal and interest the debt has swelled 6.9 times to $25,830,814, which is currently under a maturity warning.

That brings the North County district’s total bond debt, which also includes a 2007 CAB issued at $889,871, to more than $30 million.

The Cayucos Elementary School District was issued a $2,633,543 CAB in 2007. Also currently under a maturity warning, the debt has more than tripled in size to $8,785,000.

California Treasurer Bill Lockyer is warning school districts to avoid the bonds. Lockyer compares CABs to the sort of creative Wall Street financing that contributed to the housing bubble, the subsequent debt crisis, and the nation’s lingering economic malaise. [LATimes]

In the long run, property owners — not the school system — are likely to be on the hook for bigger tax bills if the agency’s revenues can’t cover future bond payments, Lockyer told the LA Times.

In California, 200 school districts have borrowed more than $2.8 billion since 2007, using CABs with some maturities longer than 25 years. Ultimately, they will have to pay back about $16.3 billion in principal and interest.

 


44 Comments

  1. Ted Slanders says:

    Like Uncommonsensemama stated below, screw those damn F*&$%)g teacher UNIONS that the teacher thinks is necessary as a protection for teachers against the arbitrary exercise of power by heavy-handed school administrators! In our school systems, as in our city, state, and federal governments, the teachers think they need checks and balances, aka, UNIONS. Ha, what a joke!

    The teachers tell us that as the executive, legislative, and judicial branches of government all act as checks on each other, they think they need checks and balances in their school systems as well in the form of UNIONS! I say poppycock!

    They have boards to hire the superintendent and to hold open public discussions of administrative decisions, and the teachers think they need independent teacher UNIONS to assure that teachers’ rights are protected, or to sound the alarm against unwise policies, and to advocate on behalf of sound education policies, especially when administrators are non-educators! BALDERDASH! Let the teachers eat cake and remove their UNIONS!

    How much do baby-sitters make? That’s what they should be paid, because the parents of today that don’t discipline their children, send them off to school and think that the teacher is responsible for their behavior as well as teaching! Therefore, pay them baby-sitter rates!

    A normal salary for a teacher is $32,000 dollars a year. That’s way too much! Just because they work after school, bring work home with them, re-up their teaching credentials yearly, have parent teacher conferences, put up with unruly kids, yada, yada, yada, is not an excuse for such an exorbitant salary.

    Then, they have the audacity to have the summers off!!!! WHAT?! So what if they take part of their summer in getting ready for the next school year? If they worked yearly, they would probably be making an ungodly amount of $45,000 a year to be in classes that are 30 students or more! What the hell else do they want?

    Screw the teachers, they don’t deserve to be in UNIONS for protection, let alone their high pay rate where the fire fighters or police, that for the most part, sit on their assess and make more than the teacher.

    Let the teachers earn what a server does at Micky D’s, that’ll show em! Then we’ll see what kind of education we get without UNIONS and a lower pay scale, praise!

    Like or Dislike: Thumb up 21 Thumb down 8

    • thinkaboutit says:

      Ted said:
      “…screw those damn F*&$%)g teacher UNIONS” and “Screw the teachers, they don’t deserve to be in UNIONS for protection, let alone their high pay rate where the fire fighters or police, that for the most part, sit on their assess and make more than the teacher.”

      What happened to your “Christian” ways? So much for walking the talk.

      Like or Dislike: Thumb up 4 Thumb down 9

      • Ted Slanders says:

        thinkaboutit,

        Truly, I want you to really think about it!

        Look up the terms “sarcasm” and being “facetious”.

        Until the next time …..

        Like or Dislike: Thumb up 10 Thumb down 2

        • thinkaboutit says:

          Yeah, I’ll get right on that.

          Since you seem to be big on instruction, that period belongs on the inside of that quotation mark on “facetious.”

          Like or Dislike: Thumb up 2 Thumb down 9

          • Ted Slanders says:

            thinkaboutit,

            Okay, we can understand your embarrassment in not understanding or seeing the “sarcasm” and “facetiousness” in my post, but, this is all you have to try in vain to hide from this fact? A minute grammar mistake? That’s it? You’re just shedding more light upon your embarrassment!

            “Facetiously”, I will email CCN and let them know that you qualify for being their duly authorized “Grammar Nazi!”

            You should be so proud!

            Like or Dislike: Thumb up 8 Thumb down 2

  2. CommonSenseMama says:

    Our school’s administrators are being overpaid. They fill their days with meetings and agendas, so it looks like they are working. How many of these positions are really necessary?

    Also, a teacher’s success is based on State Test scores. So the focus now must be to prepare for these standardized tests, rather than meeting the individual needs of the student.

    And don’t get me started on Unions and their influence over the Public Education System! (if union dues were not mandatory, I would think differently. But as they are, teachers are forced to support causes that they would not otherwise)

    Like or Dislike: Thumb up 18 Thumb down 5

  3. Ted Slanders says:

    When in the hell our the factions that run these school districts going to actually follow the Godly inspired word of the Judeo-Christian bible? How can they call themselves Christians if they don’t? Huh?

    Cayucos Elementary School District, and Paso Robles Joint Unified School District’s problems are solved with this one godly inspired edict, to wit; “At the end of every seventh year you must cancel the debts of everyone who owes you money.” (Deuteronomy 15:1) Get it?

    The Hebrew/Christian God’s direct words state with specificity that all debt must be released and people must be freed from it every seven years, period! Does anyone want to argue with the “inspired word” of God? No? Good, I didn’t think so.

    It is clear that the bible sanctions debt release/forgiveness and it appears that it must be done on a regular seven-year basis. It is hard to argue that this verse could mean anything else but what it literally states.

    The the challenged pseudo-chrisitans that state that this edict is within the Old Testament, and therefore they’re not to follow it, I suggest that you remain silent upon your ill-perceived notions. Otherwise, Brother Ted will give you another patent pending “Jesus Slap Down” that will once again put you in your rightful place! Comprende? Good.

    Hot debate. What do you think? Thumb up 19 Thumb down 17

    • Paso_citizen says:

      Ted, Ted, Ted, whatever would we do without you and others of your ilk.

      When all else fails to make sense you either bring up the Almighty’s name or start spouting stuff that makes very little real sense. By the way, did you have your mortgage forgiven in 7 years – or were you lucky enough to pay cash for your house?

      I, personally, have some belief that there is a higher being; but I happen to feel that he (or she) has been laughing their head off for several years now having observed just what this world has come to and is now, and most likely will yet become. The human species is totally unique in its ability to take something nice and, in the name of advancement or ‘betterment’ to absolutely screw it up.

      But what does this have to do with the cold, hard fact that PRJUSD knowlingly and willingly made the decision to get money by use of CADs – and having to know the only way this would be paid for is by socking it to the citizen?. The never ending search for more and more and more money, at any cost,
      is the only way they, and many other politicians, know. The term ‘cost reduction’ was deleted from thier dictionary a long time ago.

      Like or Dislike: Thumb up 12 Thumb down 12

      • Ted Slanders says:

        Paso_citizen,

        I am sure that the bible God takes offense to your ungodly position that His inspired word doesn’t make any sense relating to debt being forgiven every seven years. I will pray for you tonight in the hopes that He will not strike you with lightening.

        Paid cash.

        Yes, the aforementioned school districts knew they would have to pay these CADS back. But, if they’re TRUE Christians, that actually read their bibles completely, then they know that they can pull this religious card of debt forgiveness every seven years.

        Just in case, I am showing them a way out on their loans 7th birthday. It’s in the bible, so it’s got to be true, get it?

        Like or Dislike: Thumb up 17 Thumb down 7

    • thinkaboutit says:

      Yawn.

      Is there an editor in the house?

      Like or Dislike: Thumb up 2 Thumb down 8

  4. Paso_citizen says:

    All of you who are rightly P—ed off about this should simply remember one thing. You will pay for this brilliant decision of the PRJUSD. And so will everyone else in this city. This is just one more example of the extra fine job the school admiinistrators have done and will continue to do – since they know no better.

    I do not happen to have children of school age, and I have voted against each and every school bond on every ballot, and will continue to do so for the rest of my life. But I know that the school system in Paso will be asking voters for just a little more money soon (probably by next election). And, as has been the case many times before, if the ballot fails, they will ask again, and again, until it finally passes. That is the unblemished raw truth – accept it.

    Now that you all have accepted the truth – go out and support your fine school administration. Tell them how fine a job they are doing, how so d–m lucky the citizens are to have them running (or ruining) our schools. Aren’t you just so happy to live in a city that has a school system run this good? Or maybe not? and that may be part of the reason many parents send their kids to Templeton for an education.

    It will never happen, but it would be interesting to know the names of the school board members that voted to do this CAB and just how they imagined it would be paid for?

    Like or Dislike: Thumb up 25 Thumb down 1

  5. obispan says:

    7x in two years? That’s 250% simple interest. There’s got to be the ubiquitous journalism math error in there.

    Like or Dislike: Thumb up 11 Thumb down 1

    • hotdog says:

      I sure hope you are right, the figures are staggering.

      Like or Dislike: Thumb up 12 Thumb down 0

    • Karen Velie says:

      No math required. The numbers are correct.

      Like or Dislike: Thumb up 17 Thumb down 0

      • obispan says:

        If that’s true they should be borrowing at better rates from some gentlemen of Italian ancestry who will break the legs of the board members if not repaid on time.

        Like or Dislike: Thumb up 5 Thumb down 0

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