School bonds are candy land to the interest groups involved where investment banks, teachers and contractors organize to make sure they win the enormous money financed. Recently my local school board decided to pass a porkulus of a school bond. Chaffey Joint Union School District sadly put 848m over 40 years on the ballot. And the other problem is the district already took out a 128 million dollar bond for 30 years in 1998 and we are still paying off the first bond for the next 15 years. Because of all this money that basically sold the taxpayers a white elephant, we will be facing so much fiscal waste with this bond.
First, items that will be obsolete way before the bond is finished should NOT be eligible to be paid for with school bonds. Fiscally irresponsible people buy tablet computers and paving parking lots with school bond money. Stuff that has a shelf life of 5 or 10 years should be paid for with a line of credit. If we want tablet computers for our schools, we work with the community to buy them as a community instead. School bonds are for building new buildings, adding earthquake reinforcement, improving the air-conditioning and heating systems.
Second, I would limit people who have a direct interest in the school bond from donating more than the amount people can donate to state legislators in a calendar year. Donate more than the given amount especially if you are the investment bank handling the school bond, architect ready to design the new building and you would be legally banned from taking the spoils for a five year period. This reminds me of the abuses with redevelopment agencies.
Third, we need limits on school bonds. School bonds should have a fixed credit limit based on the needs of the community. We need to ask the critical questions with the local districts so we know their actual needs. Is there a high growth rate? Is there earthquake issues with the buildings, we get the needs appraised and fit the district with a fixed limit for the bond they want with an independent appraiser. The fixed limit would be 50%+1, if you go over the fixed limit the passage rate increases 5% for each successive school bond up to 65%. If a bond gets paid off, the district can lower their passage tier required. In a community such as mine, the real estate market collapsed real bad and I do not know what drugs the local school board ingested when they felt that the taxpayers in my area could absorb the bond payments.
There would be exemptions for districts to rebuild after fires and natural disasters, but only for those buildings needed.
Fourth, Capital Appreciation Bonds would be BANNED for any school district. It is a major rip off to taxpayers. Recently a school district in Poway borrowed 132m and will have to pay 800+m in 30 years which is utterly fiscally irresponsible. We may be helping the kids of today, but we are screwing our future generations in the long run. Also locally the Fontana Unified School district did this as well. I would like to see incentives for school districts to accelerate the payments so less interest would be owed. Deferring payments to 2029 is stupid. 2020 at the earliest would be appropriate.