Trustees with the San Diego Unified School District wary of a controversial bond financing maneuver passed a resolution Tuesday night that would ban such financing.
The district's upcoming bond measure, Proposition Z, will not sell Capital Appreciation Bonds (CABs) to fund the $2.8 billion bond measure on the November ballot, the resolution stated.
The bond measure is designed to funnel money into campus renovations and technology upgrades.
The Poway Unified School District recently came under fire for financing their own CAB. The bond will be payed off starting in about 20 years after interest builds. Poway parents and residents were outraged when they learned of the financing plan. They criticized the long-term impacts the bond will have on future taxpayers.
"We're letting people know in a very specific way what it is exactly these bonds represent in terms of long-term debt and near-term debt," said SDUSD Board President John Lee Evans.
Evans said with the passage of the resolution, the disclosure will use conventional financing for the Prop. Z bond. The district trustees voted 4-1 on the resolution that would ban the use of the bonds, according to a district spokesperson.
"The new tax rate included in Proposition Z will allow the district to use regular current interest general obligation bonds," Evans said in a statement prior to the vote. "Therefore, under Prop. Z, there should be no need for the district to make use of Capital Appreciation Bond financing."
The La Mesa-Spring Valley School District also adopted policy changes calling for greater scrutiny and openness of the terms of school bonds Tuesday night.
"The La Mesa- Spring Valley School board passed a 10-point plan which requires extensive public dislcosure and outside review of any district bond sales," said board president Bill Baber, who voted against his district's 2005 CAB sales. "We want a transparent and open process for all district financial matters, including bond financing."
Both districts are leaving open the possibility of using Capital Appreciation Bonds in the future.
County tax collector Dan McAllister has been encouraging county schools to make reforms. He says the bonds are fine as long as Districts are able to refinance during the loan and the final amount paid is reasonable.
"If they're looking at a 4 to 1 or a 5 to 1 payback ratio, that's pretty reasonable," McAllister said, "as compared to an 8 or 9 or 10 to 1 payback ratio."