San Diego County Grand Jury • 2012-2013

School District Dilemma Bonds or Bondage?

Published: May 22, 2013 10 pages
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Findings 3 findings

F01
Bond initiatives and propositions typically do not provide information as to the cost of principal and interest payments. This amount can be exponentially larger than the original principal in bond measures that employ a CAB structure.
F02
When school districts divert premiums to unauthorized uses and by artificially inflating interest rates to generate the premium, they are not acting consistent with statutory law and are incurring debt beyond what voters authorized in violation of the California Constitution.
F03
AB 182, if enacted, will require governing boards of school and community college districts to provide greater transparency to voters concerning: • Whether CABs are proposed and the reasoning for them 20 http://www.pomeradonews.com/2013/01/25/school-bond-legislation-unveiled/ 21 http://www.co.san-diego.ca.us/ttc/docs/news130125.pdf 22 http://www.leginfo.ca.gov/pub/13-14/bill/asm/ab_0151-0200/ab_182_bill_20130124_introduced.pdf 6 • Cost comparisons between CIBs and CABs • Total debt service to principal ratios • Mandatory early redemption guarantees • Analysis of the overall bond cost • Underwriter disclosure. This mandatory reporting will provide greater bond referendum clarity for the taxpayers.

Recommendations 10