Official seal of County of Contra Costa

Official seal of County of Contra Costa (Photo credit: Wikipedia)

This is what schools in California have been doing for years. The laws of seem to have passed California by entirely. If there’s an ounce of common sense there, I can’t seem to find it.

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.

“Why would you leave $25 million on the table? You would never leave $25 million on the table.”

“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].”

A CAB is a payday loan. Borrow $25 million with a $2.5 million initial deposit, and put off paying the rest for years and years – long after the children have graduated and who then have the privilege of paying back the money. This is the of compound interest, in reverse.

In this case, the school district will owe $34 million when the loan comes due. But Ramsey doesn’t care. He’ll be long gone, maybe even dead, before then.

There is one lonely single solitary voice of reason: the California State Treasurer, Bill Lockyer:

It’s the school district equivalent of a payday loan or a balloon payment that you…obligate yourself for. You don’t [have to make payments] for, maybe, 20 years…

Lockyer has discovered that West Contra Costa School District isn’t the only miscreant living in la la land:

In total, [California school] districts have borrowed about $3 billion to finance new school construction… But the actual payback on those will exceed $16 billion.

West Contra Costa isn’t the only one, or even the worst one. Try this:

“The best [sic!] 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. “So, over nine times amount of the borrowing. There are worse ones, but that’s pretty bad.”

Lockyer thinks he has the solution: fire the superintendent who thinks these are great deals. I don’t think so. You’d just wind up with someone else buying into the same mindset that you can borrow today and not have to pay it back while you’re still superintendent. In fact, if you work it right, you might even get a plaque on the wall with your name on it for being so far-sighted and responsible.

These people are certifiable.

Opt In Image
Soak Up More Light from the Right
with a free copy of Bob's most popular eBook!

Sign up to to receive Bob's explosive articles in your inbox every week, and as a thank you we'll send a copy of his most popular eBook - completely free of charge!

How can you help stop the Democrat's latest gun grab? How is the deceiving America today? What is the latest Obama administration coverup? Sign up for the Light from the Right email newsletter and help stop the progressives' takeover of America!