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(NPR)   Why we need a California tag: California schools districts taking loans that are "the equivalent of payday loans." One district now owes more than $1 billion on a loan of $100 million. Way to go, professional smart people   (npr.org) divider line 169
    More: Dumbass, Los Angeles Unified, National Intelligence Council, school districts, Bill Lockyer, loans, elementary schools, California State Treasurer  
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8723 clicks; posted to Main » on 11 Dec 2012 at 1:21 AM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2012-12-11 02:56:55 AM
Something is rotten in Denmark.
 
2012-12-11 03:00:54 AM
And people gave me shiat for voting against every bond issue in November.

Guess what? We have to pay that money back.
 
2012-12-11 03:01:06 AM

gweilo8888: You are not "getting" a brand-new $25 million school. You are "PAYING $34 million to get a $25 million school".


It's even better than that, at least if I'm reading the article correctly.

The district needed $2.5 million to help secure a federally subsidized $25 million loan to build a badly needed elementary school. [...] In the West Contra Costa Schools' case, that $2.5 million bond will cost the district a whopping $34 million to repay.

They'll have to pay back the rest of that $25M loan, as well as $34M for the initial bond.
 
2012-12-11 03:03:13 AM

gibbon1: feckingmorons: It seems like there should be another solution, but they probably legislated themselves into a corner by limiting class size, requiring so many square feet of football pitch per student, and other very nice, but not essential things.

The voters in 1978 passed Prop 13, which is pretty much the source of all this mess. Listening to my fellow Californians when this passed the consensus was if you limit the amount of money the government can raise then they'll spend the money they do have wisely. And if you've ever seen how poor people spend money, you'd be dissuaded of that notion pretty quick. Because poor people do exactly the sorts of things that the school districts in California do. Rob from the future to pay for the present.


That only works if you elect those who, you know, actually have discipline needed to stop pet projects. Prop 13 without fiscal discipline was prone to failure from the start. We Americans like nice things; we just don't want to pay for it
 
2012-12-11 03:06:48 AM

Ivo Shandor: gweilo8888: You are not "getting" a brand-new $25 million school. You are "PAYING $34 million to get a $25 million school".

It's even better than that, at least if I'm reading the article correctly.

The district needed $2.5 million to help secure a federally subsidized $25 million loan to build a badly needed elementary school. [...] In the West Contra Costa Schools' case, that $2.5 million bond will cost the district a whopping $34 million to repay.

They'll have to pay back the rest of that $25M loan, as well as $34M for the initial bond.


That's how I read it too. No to mention the federal subsidized loan I would imagine has some interest in it itself also. They'll probably be paying over $70 million for the $25 million school. But hey it's free money...
 
2012-12-11 03:12:33 AM

Ivo Shandor: gweilo8888: You are not "getting" a brand-new $25 million school. You are "PAYING $34 million to get a $25 million school".

It's even better than that, at least if I'm reading the article correctly.

The district needed $2.5 million to help secure a federally subsidized $25 million loan to build a badly needed elementary school. [...] In the West Contra Costa Schools' case, that $2.5 million bond will cost the district a whopping $34 million to repay.

They'll have to pay back the rest of that $25M loan, as well as $34M for the initial bond.


Hmm. I originally read it as $34 million total repayment, but your reading is probably right (assuming the journalist described it right, which is always questionable). It might still be a decent deal--financing can often be three times the purchase price, whereas this is more like 2.5--but it's not a really good deal. So never mind what I said above.
 
2012-12-11 03:14:11 AM
Oh get farked. Arizona's far ahead of us in the "candidates for 'the other Florida'" race.
 
2012-12-11 03:20:44 AM

cman: That only works if you elect those who, you know, actually have discipline needed to stop pet projects. Prop 13 without fiscal discipline was prone to failure from the start. We Americans like nice things; we just don't want to pay for it


Before Prop 13 if a school district needed more revenue, say to pay for a bond, or operating expenses they'd put a tax measure on the ballot and it required 50% of the voters to approve it. Maybe the voters would pass it, maybe they wouldn't. Either way the district has some control over revenue.

Then comes Prop 13. First off it gives the cranky pants brigade veto power over any tax measure. And froze assessed values to 1976 prices and limited any increase to well below inflation, except when the property changes hands. This applies to both residential housing and commercial property. The latter case it interesting, in California when people buy commercial property they usually buy the corporation that owns the property, thus the property never gets reassessed.

So due to inflation and prop 13 over time your effective tax bill declines due to inflation. $500 in 1978 is worth about $200 in 2012. $500 is the property tax bill my dad pays every six months. The neighbors with a bigger house next door pay $5000.

Oh and you inherit the tax break with the property. So if your parents bought a house in 1976, and they and you inherit it, then you keep the original 1976 era assessment. (I remember a comment about a mansion in SF worth $25 million, that has a tax assessment of $400k)
 
2012-12-11 03:21:14 AM

fiver5: It's California, they can just raise taxes to get that money back.


TBH that's really what needs to be done.
Apparently, due to the way property taxes are calculated, there is a huge amount of land in California that are paying next to no property taxes at all compared to what the property itself is worth.


Phoenix_M: Prop 13 has jack shiat to do with the problems of California schools it's just a convenient excuse by politicians and idiots who don't understand how prop 13 works.


How do you figure? Just because the school funding isn't tied exclusively to property taxes doesn't mean that the schools wouldn't benefit from additional property tax revenue. Suggesting that having overcrowded schools and well below average per-pupil spending has nothing to do with education quality is kind of ridiculous IMO.
 
2012-12-11 03:27:14 AM
Many of you who biatch about the stupidity of public schools seem to forget that the teachers are never in charge of education. It's always dumbasses YOU elect. I have never met a smart school board member. Ever.

If teachers were actually in charge, things might be a lot different.
 
2012-12-11 03:30:25 AM

ecmoRandomNumbers: Many of you who biatch about the stupidity of public schools seem to forget that the teachers are never in charge of education. It's always dumbasses YOU elect. I have never met a smart school board member. Ever.

If teachers were actually in charge, things might be a lot different.


In theory, an interesting proposal. But thanks to NCLB, teachers are limited to teaching to the test.
 
2012-12-11 03:33:52 AM
Imma be, imma be, imma imma imma be ...

files.dipdive.com
 
2012-12-11 03:45:13 AM

simplicimus: ecmoRandomNumbers: Many of you who biatch about the stupidity of public schools seem to forget that the teachers are never in charge of education. It's always dumbasses YOU elect. I have never met a smart school board member. Ever.

If teachers were actually in charge, things might be a lot different.

In theory, an interesting proposal. But thanks to NCLB, teachers are limited to teaching to the test.


I know. It's why I work at Verizon instead of teaching now. Did that for 10 years. Education is screwed without a major overhaul. We will be developing nation status within a generation.
 
2012-12-11 03:53:08 AM

ecmoRandomNumbers: simplicimus: ecmoRandomNumbers: Many of you who biatch about the stupidity of public schools seem to forget that the teachers are never in charge of education. It's always dumbasses YOU elect. I have never met a smart school board member. Ever.

If teachers were actually in charge, things might be a lot different.

In theory, an interesting proposal. But thanks to NCLB, teachers are limited to teaching to the test.

I know. It's why I work at Verizon instead of teaching now. Did that for 10 years. Education is screwed without a major overhaul. We will be developing nation status within a generation.


I didn't make it though my second semester of teachers ed. Classroom observation. In the 80's in NYC. Realized I didn't have the stomach for this. So, I bow to you for lasting 10 years.
 
2012-12-11 03:53:24 AM

gibbon1: feckingmorons: It seems like there should be another solution, but they probably legislated themselves into a corner by limiting class size, requiring so many square feet of football pitch per student, and other very nice, but not essential things.

The voters in 1978 passed Prop 13, which is pretty much the source of all this mess. Listening to my fellow Californians when this passed the consensus was if you limit the amount of money the government can raise then they'll spend the money they do have wisely. And if you've ever seen how poor people spend money, you'd be dissuaded of that notion pretty quick. Because poor people do exactly the sorts of things that the school districts in California do. Rob from the future to pay for the present.


Prop 13 protects middle class/retired/poorer home owners or people who inherit property If not for prop 13 property taxes here would be in six digits.
 
2012-12-11 04:01:37 AM
If you live in the affected area, become an involved citizen - smartvoter dot org provides contact information for your local school board representatives, including the ones quoted in the article.
 
2012-12-11 04:07:00 AM

worlddan: DrPainMD: Don't you people understand? When the government spends money it stimulates the economy. Just ask Krugman.

That's actually true. The problem here is that the government isn't actually spending money. It is taxing the poor and giving it to the rich (the bond holders). Only 100 million is actual spending. The other 900 million is simply a reverse wealth transfer.


Actually, it's not true. That's the joke. Much of the money that the government spends has a negative effect on the economy. For example: that portion of law enforcement, courts and prisons that goes to keep young, able-bodied people in prison for drugs and other victimless crimes.
 
2012-12-11 04:09:06 AM

vygramul: simplicimus: In the West Contra Costa Schools' case, that $2.5 million bond will cost the district a whopping $34 million to repay.
Who are they borrowing from? Loan Sharks?

[charlesmobley.files.wordpress.com image 800x486]


Yeah, but their spokes-lady is quite hawt
 
2012-12-11 04:14:25 AM

Ivo Shandor: gweilo8888: You are not "getting" a brand-new $25 million school. You are "PAYING $34 million to get a $25 million school".

It's even better than that, at least if I'm reading the article correctly.

The district needed $2.5 million to help secure a federally subsidized $25 million loan to build a badly needed elementary school. [...] In the West Contra Costa Schools' case, that $2.5 million bond will cost the district a whopping $34 million to repay.

They'll have to pay back the rest of that $25M loan, as well as $34M for the initial bond.


Good point, I wasn't even paying attention to that.
 
2012-12-11 04:20:13 AM
Is it wrong of me to want to be on the other side of this deal? Where can I get me some of these bonds?

Also, all politics are local. Everyone biatches about the federal government while their own neighbors are taking money out of your pockets. Get farking involved. Or whine to the federal government about it so they can get involved and fix it for you.
 
2012-12-11 04:33:22 AM
Reminds me of what I saw in an interview with a retired FBI agent from years ago... He did a lot of work on organized crime. The reporter essentially said that the it just didn't seem like the old school organized crime was as big a deal these days and the FBI agent agreed.

"They figured out ways to make more money legally."
 
2012-12-11 04:51:52 AM
Meanwhile, mortgage rates are near all-time lows.
 
2012-12-11 05:33:50 AM

fusillade762: Who are they borrowing this money from, anyway?


fiver5: It's California, they can just raise taxes to get that money back.

Not really. That's part of their problem. Tax increases have to go to the voters or be approved by a congressional supermajority (if I'm not mistaken). Though the Democrats do have one of those in CA now...


HA, we vote high taxes on ourselves. The government knows it doesn't have to be accountable. Throw away a billion? Meh, we'll run an ad on the tv about how your child will end up as a drug using hooker if this "education spending bill" doesn't pass.
 
2012-12-11 05:46:41 AM
California suffers from a lot if problems: the first of which: too much democracy.

The legislators cannot do their jobs, because supermajority rules are in place for tax purposes. Prop 13, while protecting homeowners from loosing their houses due to tax reassessments- unfortunately did not keep up inflation.

And worse: you get something on the ballot- the state has to do it: even if no funding comes forth.

Jerry Brown, did use the ballot to get a tax hike in when the legislators refused to do it.
 
2012-12-11 06:20:55 AM

Darth_Lukecash: Jerry Brown, did use the ballot to get a tax hike in when the legislators refused to do it.

borg: Prop 13 protects middle class/retired/poorer home owners or people who inherit property If not for prop 13 property taxes here would be in six digits.


Yes and guess who it doesn't protect, poorer renters. Not to mention other states have programs that cap or postpone property tax increases on retired people, without a huge give away to corporation and the very wealthy. Both of whom are the actual beneficiaries of Prop 13.

Also, property tax tends to be around 2% per year, everywhere. So a six digit property tax bill implies a housing valuation of 5 million. Take Texas, the property tax rate in Texas is usually just over 2%, vs 1.25% in California. The other thing to remember is if you reduce property tax rates, that doesn't actually make housing more affordable because prices rise to compensate. So housing prices in California are probably 30% higher than they would be without Prop 13. And that also effects rents to.
 
2012-12-11 06:42:32 AM

simplicimus: ecmoRandomNumbers: simplicimus: ecmoRandomNumbers: Many of you who biatch about the stupidity of public schools seem to forget that the teachers are never in charge of education. It's always dumbasses YOU elect. I have never met a smart school board member. Ever.

If teachers were actually in charge, things might be a lot different.

In theory, an interesting proposal. But thanks to NCLB, teachers are limited to teaching to the test.

I know. It's why I work at Verizon instead of teaching now. Did that for 10 years. Education is screwed without a major overhaul. We will be developing nation status within a generation.

I didn't make it though my second semester of teachers ed. Classroom observation. In the 80's in NYC. Realized I didn't have the stomach for this. So, I bow to you for lasting 10 years.


Those who can, do. Those who can't, teach. Those who can't teach?

/ j/k cheap shot
 
2012-12-11 07:02:04 AM

fusillade762: fiver5: It's California, they can just raise taxes to get that money back.

Not really. That's part of their problem. Tax increases have to go to the voters or be approved by a congressional supermajority (if I'm not mistaken). Though the Democrats do have one of those in CA now...



one big problem is california retard liberal judges declared local communities deciding to spend more money on their communities is a violation of the equal protection clause, so even when communities want to raise local taxes to pay for their local school, they can't do it. so getting shiat don takes an act of state legislature (a supermajority as you said).
they got the liberal morons they asked for.
http://en.wikipedia.org/wiki/Serrano_v._Priest
 
2012-12-11 07:13:42 AM
Terrible, terrible article. Why aren't there any details of the terms of the bonds. They say the loan was incurred "a couple of years ago", but make no mention of when it will be due. No mention of what the interest rate or interest rate reset terms are.

How are we supposed to know how outraged to be? Boo NPR.
 
2012-12-11 07:20:15 AM
www.philhendrieshow.com
"You think MY people got screwed over? It's payback time, motherfarkers."
 
2012-12-11 07:20:48 AM
Better start organizing some bake sales
 
2012-12-11 07:45:13 AM
Its the state,
Tell the lender to f off we are giving the original amount of money back with a 10 percent cap of interest. Get all the courts to agree. Watch the lenders cry about not being fair.

//watch no one win..
//its all for the kids
 
2012-12-11 07:51:26 AM

ecmoRandomNumbers: simplicimus: ecmoRandomNumbers: Many of you who biatch about the stupidity of public schools seem to forget that the teachers are never in charge of education. It's always dumbasses YOU elect. I have never met a smart school board member. Ever.

If teachers were actually in charge, things might be a lot different.

In theory, an interesting proposal. But thanks to NCLB, teachers are limited to teaching to the test.

I know. It's why I work at Verizon instead of teaching now. Did that for 10 years. Education is screwed without a major overhaul. We will be developing nation status within a generation.


Same with my wife. The system is completely broken. And since we are all completely happy to keep electing the same band of do-nothings who promise to fix problems that are really our own responsibility to fix its not getting better anytime soon.
 
2012-12-11 07:51:34 AM
I know everyone is coming down hard on the school boards wasting so much money, but you have to understand how easy it is when it's not their money being spent.
 
2012-12-11 07:59:00 AM

Nhojwolfe: Its the state,
Tell the lender to f off we are giving the original amount of money back with a 10 percent cap of interest. Get all the courts to agree. Watch the lenders cry about not being fair.

//watch no one win..
//its all for the kids




http://en.wikipedia.org/wiki/Contract_Clause
The Contract Clause appears in the United States Constitution, Article I, section 10, clause 1. It states:

No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

The Contract Clause prohibits states from enacting any law that retroactively impairs contract rights. The Contract Clause applies only to state legislation, not court decisions.

The Framers of the Constitution added this clause in response to the fear that states would continue a practice that had been widespread under the Articles of Confederation-that of granting "private relief." Legislatures would pass bills relieving particular persons (predictably, influential persons) of their obligation to pay their debts. It was this phenomenon that also prompted the framers to make bankruptcy law the province of the federal government...

Modification of Government Contracts

In United States Trust Co. v. New Jersey 431 U.S. 1 (1977), the Supreme Court held that a higher level of scrutiny was needed for situations where laws modified the government's own contractual obligations. In this case, New Jersey had issued bonds to finance the World Trade Center and had contractually promised the bondholders that the collateral would not be used to finance money-losing rail operations. Later, New Jersey attempted to modify law to allow financing of railway operations, and the bondholders successfully sued to prevent this from happening.[21]
 
2012-12-11 08:04:03 AM
Nhojwolfe

Its the state,
Tell the lender to f off we are giving the original amount of money back with a 10 percent cap of interest. Get all the courts to agree. Watch the lenders cry about not being fair.

//watch no one win..
//its all for the kids


And then you never have the ability to float another bond issue or secure any other debt. Its that simple.
 
2012-12-11 08:06:09 AM
it was more of a Joke but I get your point. On the other hand when does the gov actually read
read the Constitution and this is a guy from a sovereign nation ,,:)

relcec: Nhojwolfe: Its the state,
Tell the lender to f off we are giving the original amount of money back with a 10 percent cap of interest. Get all the courts to agree. Watch the lenders cry about not being fair.

//watch no one win..
//its all for the kids



http://en.wikipedia.org/wiki/Contract_Clause
The Contract Clause appears in the United States Constitution, Article I, section 10, clause 1. It states:

No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

The Contract Clause prohibits states from enacting any law that retroactively impairs contract rights. The Contract Clause applies only to state legislation, not court decisions.

The Framers of the Constitution added this clause in response to the fear that states would continue a practice that had been widespread under the Articles of Confederation-that of granting "private relief." Legislatures would pass bills relieving particular persons (predictably, influential persons) of their obligation to pay their debts. It was this phenomenon that also prompted the framers to make bankruptcy law the province of the federal government...

Modification of Government Contracts

In United States Trust Co. v. New Jersey 431 U.S. 1 (1977), the Supreme Court held that a higher level of scrutiny was needed for situations where laws modified the government's own contractual obligations. In this case, New Jersey had issued bonds to finance the World Trade Center and had contractually promised the bondholders that the collateral would not be used to finance money-losing rail operations. Later, New Jersey attempted to modify law to allow financing of railway operations, and the bondholders successfully sued to prevent this from happening.[21]

 
2012-12-11 08:10:44 AM

Buffalo77: Nhojwolfe

Its the state,
Tell the lender to f off we are giving the original amount of money back with a 10 percent cap of interest. Get all the courts to agree. Watch the lenders cry about not being fair.

//watch no one win..
//its all for the kids

And then you never have the ability to float another bond issue or secure any other debt. Its that simple.


So they would have to learn to live off what money they have?
 
2012-12-11 08:12:28 AM

thomps: "We'd be foolish not to take advantage of getting $25 million" when the district had to spend just $2.5 million to get it, Ramsey says. "The only way we could do it was with a [capital appreciation bond]."
...
Ramsey says it was a good deal, because his district is getting a brand-new $25 million school. "You'd take that any day," he says. "Why would you leave $25 million on the table? You would never leave $25 million on the table."

god i hate people sometimes.


This is why I hate people who whine about owing money a lot of times, sure sometimes its due to circumstances out of their control but yes when its going to wind up costing more than the original loan was worth then you LEAVE the farking $25 million on the table!

That kind of government program logic is why we should cut funding other than raise our taxes to cover shiat like these idiots. They are not alone in spending money just to get another loan, its idiotic and wasteful.
 
2012-12-11 08:23:50 AM
And people are fleeing California in droves.

It doesn't make sense, though. California is a liberal paradise. Massive entitlements and high taxes. Surely the private sector couldn't have the schools any better than those bureaucrats.
 
2012-12-11 08:30:38 AM
White people problems.
 
2012-12-11 08:35:49 AM

SlothB77: And people are fleeing California in droves.


My god, the population fell by a quarter of a percent. Droves, I tell you. DROVES!!! They're queuing up to FLEE!

For every hundred miles of California's borders with other states, one person crosses every hour, and DOESN'T COME BACK! Calamity!!!!

/Yes, the numbers are real
//California shares 1022.9 miles of border with other US states (http://www.econ.umn.edu/~holmes/data/BorderData.html)
///from your article, 100,000 more people left California in 2011 than moved there
////365 days in 2011; that's 274 people per day
//Or one person per hour, for every hundred miles of border
//The sky is not falling
 
2012-12-11 08:41:55 AM

Father_Jack: another question? why is this even legal to do, on either level?

why do these loan products even exist at such usurious rates, and why are schoolboards allowed to make such terrible decisions?
where's the oversight in either regard?


F*ck poor people and f*ck education.

That's why payday loans with triple-digit APRs are legal, and why (public) school boards are allowed to make such mind-numbingly horrible financial decisions.
 
2012-12-11 08:43:08 AM
Californians have been moving to NC in large numbers, for whatever reasons, in the past two decades. I work with a bunch of them and generally consider them to be good people. However, I've noticed this: you can tell how old they are by the gaps in their educations.

If someone is in their 50s, they got a pretty good education in the '50s and '60s but the educational system seemed to start falling apart after this. If they are in their 40s, they have some amazing gaps in their general knowledge, to the point that several of my Cali friends have told me things like "I never had any Civil War history until I got to college." If they are in their 30s, the gaps start to widen, with huge chunks missing in subjects like literature and history, and math was apparently only taught to the basic level. Kids in the 20s can hardly write a coherent sentence.

The weird thing is that their time doesn't seem to have been filled with feel-good nonsense or PC crap, it just seems to have been wasted. One particularly close friend, age 50, actually took a year of community college before she started college here on the east coast because she knew that she was hopelessly unprepared for an east coast school. She took basic English lit, American and European history, and math (geometry and calculus) in order to pass her entrance exams to a four-year school.

So at least you can say that Californians KNOW they are getting shafted by their school system. Of course, this is a skewed sample of opinion because these people chose to leave the state, and for all I know the folks who remained think things are just peachey. But, boy, do my friends feel like they got short-changed. Every single one of them has mentioned it to me at one time or another. Sadly, they all want to move back because they miss their families, the climate, the culture, etc, but not a one thinks they can get a job. And none of them want to raise their children there unless they can afford private school.
 
2012-12-11 08:45:33 AM

Nhojwolfe: Its the state,
Tell the lender to f off we are giving the original amount of money back with a 10 percent cap of interest. Get all the courts to agree. Watch the lenders cry about not being fair.

//watch no one win..
//its all for the kids


Here's the problem, the school district entered into the contract willingly. The courts tend to back what is in writing, so the courts are actually more apt to back the lenders than the school district. Which is actually a good thing for two reasons. One, it should set an example as to why governing bodies shouldn't go to payday lender type places for loans. Instead, should do something smarter, like budget the money that they actually have. And second, if the courts did rule that contracts with governing bodies could become null and void or adjusted in the favor of the governing body, then any government contract becomes worthless. "Oh, that contract we gave your company to pay $100 million for you to do X. Well, you've done X, however, we got this precedent to not pay the contracts we willingly enter into, so instead of $100 million, here's a pack of Trident gum."
 
2012-12-11 08:47:00 AM

SlothB77: And people are fleeing California in droves.

It doesn't make sense, though. California is a liberal paradise. Massive entitlements and high taxes. Surely the private sector couldn't have the schools any better than those bureaucrats.


always good for a chuckle:
Link
 
2012-12-11 08:49:49 AM
No, the Dems who run California are right on this one.

None of this is real money. It just comes from the Eternal Endless Mountain of Taxes, which is eternal and endless, although granted it should be bigger, because otherwise white people are just going to buy stupid things. (Most likely shackles to oppress people with.)

Borrow another $100 million, I say. Who cares?
 
2012-12-11 08:54:13 AM

gweilo8888: My god, the population fell by a quarter of a percent. Droves, I tell you. DROVES!!! They're queuing up to FLEE!


Just wait until the year-end 2013 numbers come out.

This is why the right is against raising taxes. It isn't that we want to pad the pockets of the top 2%. It is that when you raise taxes, spending always go up. And bureaucrats spend more irresponsibly. People aren't going to stay in California and watch more than half the money they work long, hard hours to earn get confiscated by the state only to be pissed away on these horrendous loans when they could live in another state and keep a much larger percentage of their money.
 
2012-12-11 08:55:55 AM

SlothB77: This is why the right is against raising taxes. It isn't that we want to pad the pockets of the top 2%. It is that when you raise taxes, spending always go up. And bureaucrats spend more irresponsibly. People aren't going to stay in California and watch more than half the money they work long, hard hours to earn get confiscated by the state only to be pissed away on these horrendous loans when they could live in another state and keep a much larger percentage of their money.


You heard it here first, folks. Chicken Little Taxes has spoken.
 
2012-12-11 08:57:59 AM
Can somebody calculate the APR of these bonds? Because it obviously isn't 10,000% or some of the other numbers people have bandied about. I think some folks are forgetting the time value of money and the advantages of zero coupon bonds, etc. If it's a 30-year issuance with no payments in the interim, one would have to calculate the projected value of $1 billion in today's dollars, and then calculate an APR from there? I don't know. Somebody from another thread calculated around 11%, which is high, but I don't know how accurate that is. I can't find a good calculator on google :(.
 
2012-12-11 08:59:14 AM

aerojockey: Hmm. I originally read it as $34 million total repayment, but your reading is probably right (assuming the journalist described it right, which is always questionable). It might still be a decent deal--financing can often be three times the purchase price, whereas this is more like 2.5--but it's not a really good deal. So never mind what I said above.


what about 9 times the purchase price? Is that a decent deal?

Perhaps the best example of the CAB issue is suburban San Diego's Poway Unified School District, which borrowed a little more than $100 million. But "debt service will be almost $1 billion," Lockyer says. "So, over nine times amount of the borrowing. There are worse ones, but that's pretty bad."
 
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