• This is a political forum that is non-biased/non-partisan and treats every person's position on topics equally. This debate forum is not aligned to any political party. In today's politics, many ideas are split between and even within all the political parties. Often we find ourselves agreeing on one platform but some topics break our mold. We are here to discuss them in a civil political debate. If this is your first visit to our political forums, be sure to check out the RULES. Registering for debate politics is necessary before posting. Register today to participate - it's free!

California School District Owes $1B on $100M Loan...

tessaesque

Bring us a shrubbery!
DP Veteran
Joined
Apr 13, 2011
Messages
15,910
Reaction score
12,631
Location
Plano, Texas
Gender
Female
Political Leaning
Other
Wow, talk about poor financial planning..In one instance, in addition to the $25M loan to fund a new elementary school, the district also took out a loan that will cost them $35M to repay. This means the school will cost $59M, not including interest on the government loan. WTF? This is sound fiscal policy?

California School District Owes $1 Billion On $100 Million Loan : NPR




 

Oops! Typo in my original post. It should have said it'll cost 'em $34M to repay...d'oh!
 
tessaesque said:
Oops! Typo in my original post. It should have said it'll cost 'em $34M to repay...d'oh!
Click to expand...

Well look on the bright side it will end up as a deficit and according to Joaquin there is nothing better for the economy than a massive deficit!
 

i heard this story on NPR the other day. unreal. it's like payday lenders for schools, only worse.
 


What person in his right mind would agree to such a loan? Incredible. Hot tar and feathers for that sorry excuse for a school superintendent, I say.

I never had much use for Lockyer, but he's doing the Lord's work in this case.
 
LowDown said:
What person in his right mind would agree to such a loan? Incredible. Hot tar and feathers for that sorry excuse for a school superintendent, I say.

I never had much use for Lockyer, but he's doing the Lord's work in this case.
Click to expand...

I would think a liberal would be all for such a loan, after all the bigger the deficit the better the economy.
 
We need to demand better fiscal policy from all politicans
 
They are all for the loan because they know they will be retired when the decision actually effects their district adn someone needs to be held accountable.

You never leave 25 million on the table. Just spend baby spend!
 
They will simply declare bankruptcy like so many cities in CA and get the school for free.
Watch - its not like the bond holders are going to be "granted" a school as collateral. Stockton,
CA lost a city hall building (private office building) they tried to buy before going bankrupt
but they won't lose the sewer lines, water lines, storm drain system and many other infastructure
projects they borrowed money on - and will now default on. These local governments are
engaging in a ponzi scheme no better than Bernies; if you have ANY money in a muni
bond of ANY kind I'd bail - oh but don't worry most of those are held by the "pension"
plans who will be bailed out by the State.
 
A couple of months ago I was asked by a concerned educator to analyze how the $100 million dollar loan will cost $1B and why school board and voters would go for it. Here is the deal. The loan has a 40 year duration. The annual interest rate is about 5%. No payments for the first 20 years but interest accumulates and becomes part of the principle. Thus after 20 years the principle is about $350 million. Principle and interest payments are made through the second 20 years and like most mortgages the total payment is about 3 times the principle which turns the $350 million into $ 1 billion = 10X the original loan. The loan has a clause that prevents prepayment. Because there is no payment for 20 years there is no accountability for the present school board or most of the taxpayers in the area. It was sold to the voters as a loan without any tax increase! This gimmick has been used by some other Southern Cal districts where multipliers are X7 or X8 - but they were for smaller amounts so they didn't make the news that a sensational $1 B commitment does. Michigan passed a law forbidding this type of loan. All other states need to follow suit. But it probably isn't a disaster for the school district or the state. The stupid idiot is the lender. The payment each of the last 20 years is about $50 million per year. The district won't have it so they will surely declare default. Then the bankruptcy court will force more reasonable terms. This scenario will probably play out sooner because the district will likely declare bankruptcy sooner and the reorganization plan will surely cause rework of this loan.
 

The liberal loan. BWAAAA HAAA HAAAAA!
 
You must log in or register to reply here.
Menu
Log in
Register
Cookies are required to use this site. You must accept them to continue using the site. Learn more…