…To simplify the events: In 2008, the PUSD needed money to finish numerous facility upgrades that were supposed to have been paid for by Proposition U, which passed in 2002. Why those Prop U upgrades went over budget by tens of million of dollars is a completely different discussion and pales in comparison to this discussion.
In 2007, the school board (President Jeff Mangum and Trustees Linda Vanderveen, Andy Patapow, Todd Gutschow and Penny Ranftle) decided to ask voters for money to finish school repairs and upgrades and to essentially extend the pay-off date for the Proposition U bond. However, by 2007, people were tired of being taxed to death with little to show for it and the country was in the initial stages of an economic free-fall.
So the school board promised that passing the bond would allow them to finish the projects with no tax increase. The length of the taxation would be extended but the tax itself would remain the same. It didn’t seem like such a bad deal at first blush.
However, instead of disclosing to voters the trustees’ intent to use a highly risky financial instrument known as a capital appreciation bond, they simply said on the ballot the funds would be raised with “general obligation bonds.” They certainly knew including the words “capital appreciation bonds” would have been a red flag that the district planned to mortgage our future to the hilt. Capital appreciation bonds are the equivalent of what sub-prime loans were to low-income borrowers and collateralized mortgage bonds were to lenders during the housing bubble of the last decade.
And look where that got us.
So between hiding critical information and repeating the predictable mantra “it’s for the children,” we were intentionally deceived to the tune of a billion dollars. Right, billion with a “B.”
Predictably, Poway has become the laughingstock of the financial world. CNBC intoned this is “the worst loan ever!” The Financial Times said, “At best, this is a case of kicking the can down the road; at worst, a case of the government dancing with loan sharks.” Now, bad financial planning by school districts can be referred to as “pulling a Poway.”…
Sounds like “outraged” is the prevailing PUSD taxpayer sentiment.
I wonder why the school board couldn’t have just told its voters in 2007, “Due to rising labor and material costs, we don’t have enough income from the school construction bonds you passed in 2002 to rehab these schools (or your District HQ, lol) in the manner which you think your children should grow accustomed to. If you won’t vote in another school construction bond, we will not be able to make all the repairs and complete all the construction projects we set out to do.”
See? Was that so hard?
If the voters didn’t wish to vote for another bond measure, then they get what they pay for. That’s the way it’s done in ALL CA public school districts. Why should PUSD be the exception?
No more taxes? Then time to take delivery of trailers, modular units and stucco patch.
Now, no one trusts the board members who voted in this preposterous scheme or even the school board itself. Of course they are all gone now except for one, who is current running for mayor …
What did this “paternal role” of “deciding” for their taxpayers where the (Prop C) money would come from and HOW it would become available and then “duping” them into voting for it do for the District? The city??
Spiraling down a black hole into eventual BK is what it will do for them.
It would have been far better to face reality with the taxpayers’ full knowledge than to feed into their fantasies by mortgaging their future away under terms they would never be able to pay back whilst still being able to operate the District’s day-to-day activities.
People who think the PUSD will be able to begin amortizing this humungous sub-prime loan and eventually retire this debt due to increased assessed values are smoking fairy dust.
…Unfortunately we have already learned the loan cannot be pre-paid or refinanced, so we need to start planning for the future payments now. And the very tax increase that the board said they wanted to avoid will undoubtedly come to fruition, either by a voter referendum with the money earmarked for future payments or by the far more drastic step of the County Tax Assessor forcing a tax on property owners to ensure repayment
Either way, we need to begin a process of earmarking dollars now. As a result of their actions Mangum, Vanderveen, Patapow, Ranftle and Gutschow have virtually guaranteed us a triple-digit tax increase to cover their mess. …
