Townhall Column: “America’s Dreadful Debt Legacy”
In California local school districts have become some of the worst abusers of passing on debt to future generations. Since 2007 school districts in the state have used capital appreciation bonds to spend over $7 billion to fund various construction projects. In some cases interest payments alone on the debt total almost 10 times the amount borrowed.
Santa Ana Unified School District used capital appreciation bonds to borrow $35 million to build new classrooms. The tax obligation to repay the loan will not begin until the year 2026, when taxpayers will have to repay an accumulated balance of $340 million to repay the original $35 million.
Folsom Cordova Unified School District will have to repay $630 million on a $164 million bond, and an additional $514,000 bond will cost taxpayers in the district $9.1 million.
“Poway Unified School District borrowed $105 million to “modernize school buildings”. For borrowing $105 million in 2011, taxpayers will end up paying investors more than $981 million by 2051. That’s almost $1 billion to repay just over $100 million borrowed. Elected officials, who want to buy what they can’t afford, and the public, who don’t want their taxes raised, are complicit in passing on huge debt to generations that aren’t even born yet.