School District Owes $1 Billion On $100 Million Loan

Richard Gonzales • http://www.npr.org • December 7, 2012

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.

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.”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].”

In the West Contra Costa Schools’ case, that $2.5 million bond will cost the district a whopping $34 million to repay.

Read the entire article here.

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2 Responses

  1. ARCHITETTO GIANCARLO PORCINI-ITALIA- SALERNO

    leggo le vs. email da tempo,.. quello che sta accadendo negli Stati Uniti è anche accaduto- e sta tuttora accadendo anche in italia,…
    i CAB, tipici bonds, da noi sono stati chiamati DERIVATI ed hanno devastato le economie di molte gestioni comunali anche di grandi città,….
    l’economia deviata ha distrutto l’ìamministrazione della giustizia in molti Tribunali d’Italia,.. mentre pochi giorni fa l’ex governatore della Banca d’Italia Fazio è stato condannato con sentenza definitiva per gravi comportamenti intrasparenti nell’esercizio delle sue funzioni di governatore della Banca d’Italia!!

    NEI TRIBUNALI D’ITALIA LE LOBBY DI BANCHE E FINANZIARIE HANNO ASSUNTO IL CONTROLLO DELL’AMMINISTRAZIONE DELLA GIUSTIZIA NELLE PROCEDURE ESPROPRIATIVE E MINORANZE IMPEDITE A DIFENDERSI HANNO PERSO CASE E SONO STATE ISTIGATE AL SUICIDIO!!
    LA PENA DI MORTE VIENE OCCULTAMENTE APPLICATA A CITTADINI INDIFESI PER IMPEDIRE AD ESSI DI DENUNCIARE ALLA MAGISTRATURA QUESTI REATI, VERI CRIMINI CONTRO L’UMANITA!!

    QUESTI FATTI DEVONO ESSERE DENUNCIATI AL TRIBUNALE DI STRASBURGO E I RESPONSABILI GIUDICATI DAL TRIBUNALE PENALE DELL’AJA PER CRIMINI CONTRO L’UMANITA!1

    DIFFONDETE QUESTE NOTIZIA ALLA MAGISTRATURA DEGLI STATI UNITI,..IL MONDO INTERO APPARTIENE ANCHE ALLE MINORANZE E LE COSTITUZIONI DEGLI STATI DEMOCRATICI DEVONO ESSERE FEROCEMENTE PROTETTE DAI POTERI DEVIATI DI BANCHE E FINANZIARIE!!!

    ARCHITETTO GIANCARLO PORCINI- ITALY-SALERNO
    http://www.giancarloporcini.it

  2. ”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].”

    This is just like a politician…twist things around to suit HIS/HER agenda to bring the entire world into bondage.

    Either way the end result was that of a foolish administrator. $25 million cost $34 million to repay.. “we’d be foolish not to pay $34 million tomorrow for a hamburger today worth $25 million. Let me guess, payable on the second Tuesday of next week.

    Once again this goes to show the inability for those “elected” into office to effectively and efficiently do their jobs. This is called as fraud in some languages, and in other languages it is treason.

    Only in America can a politician redefine a word, and make it “legal”.

    Oh to be politically correct.

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