The Glendora Unified School District responded to a recent Los Angeles Times report that claimed the district is one of 200 school districts in the state that will wind up paying more than five times the amount it borrowed through capital appreciation bonds used to finance construction projects.
A $7 million bond bought by GUSD in 2009 will end up costing the district nearly $50 million to pay back over 30 years, according to Times data.
The bonds will allow districts to postpone payments on them for decades, the Times reports.
The bonds are controversial because of the high interest districts wind up paying over the life of the bond – paid back through property tax funds derived from the community.
"Government finance experts consider bonds imprudent if the total cost is more than four times the money borrowed or the maturity period is greater than 25 years," the Times writes.
But Glendora Unified challenged even the existence of a $7 million capital appreciation bond borrowed by the district. The district pointed to two Measure G bonds – a $21 million bond passed in 2000 and a $41 million bond passed in 2005.
Glendora Unified Assistant Superintendent Marc Chaldu said in an e-mail the voter-approved bonds borrowed by the district in 2000 and 2005 were reasonable and “needed” for major modernization projects for the entire school district.
According to Chaldu, the debt repayment ratio for the 2005 $41 million bond is 2.78, less than the “reasonable” debt repayment ratio of four times the principle in the L.A. Times article.
“Modernizing our schools was necessary to maintain our facilities in the best way,” said Chaldu. “The district was very prudent in the spending of the funds, and after the completion of the major projects there are still funds left to complete the other priority facility projects related to the bond.”
Earlier in 2012, the district was able to refinance bond money from 2000 General Obligation Bonds, saving an additional $477,279 to voters. District officials said all of the savings will be realized in lower taxes to voters over a 10-year period. According to the district office, the district took advantage of low interest rates to refinance $3,625,000 of its school bond debt with an all-inclusive interest cost of 1.978 percent.
The 2000 Measure G bond received 77 percent voter-approval.
- Local Editor Nathan McIntire contributed to this report.