So you want a new Football Stadium

[not4u13]

There is a very interesting article worth discussion published in today's edition of the OCRegister. Here is a link.

http://www.ocregister.com/articles/bond ... llion.html

The gist of the article is that several school districts, including Placentia-Yorba, funded their building programs with Capital Appreciation Bonds that will require a payback at a rate of over 10x the amount borrowed. Compare that to a typical mortgage where the consumer will pay back at a rate of approximately 2x.

The process is complicated but the article is particularly harsh in its statements regarding the investment bank used and the district's actions.

What I find relevant to the discussions on this forum is all the talk about the great facilities some High Schools have and how so-and-so school should build a new stadium. At what cost?

I can certainly see the argument that better school facilities attract homebuyers to the community, driving property values up and therefore paying the increasing interest. In other words, it is a very complex investment with implications well beyond simple interest calculations.

Are these facilities upgrades extravagant or a necessary investment in the future of our children and youth sports in OC?

[Wabash]

Are these facilities upgrades extravagant or a necessary investment in the future of our children and youth sports in OC?

I believe they are necessary. I would like to believe there is a vehicle that won't require an almost usury rate of return to be paid for them.

[Old School]

What I like is all these great minds with their degrees...I have heard time after time how hard the education business is and they go and make these kinds of decisions. Basically if you want some money now we can do a deferred payment deal, at higher rates of course. How is this in the best interest of the community? One would think giving an authority the ability to place debt would have tighter limits..oops if Our president can pile the debt at 3 times the rate of any other president, then why can not our schools...The new American way..I forgot.

[Wabash]

What I like is all these great minds with their degrees...I have heard time after time how hard the education business is and they go and make these kinds of decisions. Basically if you want some money now we can do a deferred payment deal, at higher rates of course. How is this in the best interest of the community? One would think giving an authority the ability to place debt would have tighter limits..oops if Our president can pile the debt at 3 times the rate of any other president, then why can not our schools...The new American way..I forgot.

Ummmm.....we're not talking about US fiscal policy. The topic is the Placentia Yorba Linda School District and the debt they incurred.

But if it helps, spending bills come out of the House of Representatives. Which currently enjoys a conservative majority. No need to thank me for a basic Civics 101 refresher.

[HSFBFANMAN]

Funny Obama care came out of the senate...................................

[Wabash]

Funny Obama care came out of the senate...................................

We're discussing fiscal malfeasance in Yorba Linda.

Feel free to start a separate thread or search for one of the many threads regarding Obamacare.

[HSFBFANMAN]

We're discussing fiscal malfeasance in Yorba Linda.

Feel free to start a separate thread or search for one of the many threads regarding Obamacare.

We have fiscal malfeasance nation wide. That was my point. Yorba Linda has a very nice high school with great facilities and this is a matter for Yorba Linda residents to resolve. Vote the idiots out cut back and pay it off early.

[Wabash]

We have fiscal malfeasance nation wide. That was my point.

That may be the case. However this thread is about the bonds issued to build educational buildings in Yorba Linda.

Yorba Linda has a very nice high school with great facilities and this is a matter for Yorba Linda residents to resolve. Vote the idiots out cut back and pay it off early.

I'm sure there are many who agree with you.

[ringer]

This type of financing is irresponsible. Most of the board members who voted for it will be dead and gone when the huge bill comes for 30-year-old facilities coupled with the need for new facilities.

[John Q. Public]

They sound similar to the bonds that got San Bernardino into so much trouble.

"Executives from George K. Baum & Co. traveled all over California in recent years, offering to have the bank's political strategists help persuade voters to approve taxpayer-funded construction bonds."

Oh, those kooky bankers! And those kooky school board members.

[not4u13]

They sound similar to the bonds that got San Bernardino into so much trouble.

"Executives from George K. Baum & Co. traveled all over California in recent years, offering to have the bank's political strategists help persuade voters to approve taxpayer-funded construction bonds."

Oh, those kooky bankers! And those kooky school board members.

There are a lot of districts that used these bonds but few have spent as lavishly as Yorba-Placentia.

I know a lot of folks are a little envious of the modern sports facilities and classrooms, but now that we better understand the cost of those things, do they still look as attractive?

The problem with using regular bonds was outlined well in the full article. It was about the depreciating revenue from lower real estate prices. Districts had planned on bond payments being a relatively low percentage of the real estate value. As prices fell, that percentage started to creep up. The only way to fund the building of facilities was to ever the payments to a time where the board believed real estate prices would be much higher and the bond expense would be at a similar margine, even at the higher expense. This seems to ignore the fact that other costs are going to steadily increase, including facility mainttenence, what state will those modern facilities be in when payments start almost 40 years after they were built?

This is just crazy stuff!

[Old School]

Hum, I guess you missed the point.....politicians spend to make folks happy no matter what the ramifications are? Not surprised everyone does not get the mentality, seams to have become the American way. A first year Finance major could tell you this deal is not prudent, but I am not surprised the point was missed someone voted for these idiots.

[not4u13]

Hum, I guess you missed the point.....politicians spend to make folks happy no matter what the ramifications are? Not surprised everyone does not get the mentality, seams to have become the American way. A first year Finance major could tell you this deal is not prudent, but I am not surprised the point was missed someone voted for these idiots.

I don't think anyone missed the point. You generalized the topic and then applied it to the Federal government. When you look at the expanse of the issue as detailed in the article, there are a whole lot of districts up and down the state that were duped into this scheme by one particular institution. These guys at Baum were slick. They knew how to market themselves and to hook their victims (errr ... customers) into greater and greater dependance. They knew the crisis in CA schools was ripe for their scheme. They probably don't even think they did anything wrong, yet the OCR points out several flaws in that thinking.

This isn't just about irresponsible fiscal policy. It is about inexperienced local board members who were faced with enormous fiscal challenges, overcrowded classrooms, aging facilities, depreciating revenues, falling test scores, etc. They thought they had found a solution. One that was explained in a way that was designed to make sense to them. It was then pushed on the voters who were also scammed into believe that these were typical bond issues.

I would venture to bet that this thing ends up in the courts. Some heads will roll and perhaps some folks are going to lose out on their investments. More likely, the districts and taxpayers will be stuck paying for this mistake for generations.

[Wabash]

Hum, I guess you missed the point.....politicians spend to make folks happy no matter what the ramifications are? Not surprised everyone does not get the mentality, seams to have become the American way. A first year Finance major could tell you this deal is not prudent, but I am not surprised the point was missed someone voted for these idiots.

Damn. You should run for this Board. I'm sure they would love to have your expertise.

These Board positions are volunteer. So I can say with great authority the voters in that district received a level of expertise commensurate to the price they paid for it.

[Scarleg]

The school board in PYL is not volunteer. They are compensated well. The outgoing Dr. Smith made well over $200K per year. I have a hard time believing they didn't know what they were getting the district into when the YLHS and other district projects were planned.

[John Q. Public]

Just guessing on this but I get the feeling there were no financiers on the board and the instruments were too complex for them to fully understand. Couple that with a voting population that understood them less - if they even had the information available to them - and false confidence in property values and you have serious consequences.

[Wabash]

The school board in PYL is not volunteer. They are compensated well. The outgoing Dr. Smith made well over $200K per year. I have a hard time believing they didn't know what they were getting the district into when the YLHS and other district projects were planned.

Dr. Dennis Smith was the Superintendent. That is typically a paid position. The Board of Trustees are the fiduciaries elected by the residents in that district. They are either an all volunteer, or paid a very small stipend.

[Old School]

Wabash

There is not doubt I would do a better job than those idiots based on this decision alone, if you knew me personally you would agree. It would be frustrating trying to run an organization that the only way you could fire a teacher if they molested someone. Public employees in general have far to little accountability in part due to their collective bargaining agreements.
Did you know half of all union workers in the US, 7 out of 14 million work in the public sector, what does that tell? Americans have aloud their public servants a monopoly.
This tells me the only accountability we have is with the public sector is our vote and the majority of you folks vote for these idiots, look how many people did not realize at the start of the year there take home pay was going down.
I can tell you, I only vote for those that show they are conservative with my hard earned tax dollars...maybe others should take the time to learn too.

[Wabash]

Wabash

There is not doubt I would do a better job than those idiots based on this decision alone, if you knew me personally you would agree. It would be frustrating trying to run an organization that the only way you could fire a teacher if they molested someone. Public employees in general have far to little accountability in part due to their collective bargaining agreements.
Did you know half of all union workers in the US, 7 out of 14 million work in the public sector, what does that tell? Americans have aloud their public servants a monopoly.
This tells me the only accountability we have is with the public sector is our vote and the majority of you folks vote for these idiots, look how many people did not realize at the start of the year there take home pay was going down.
I can tell you, I only vote for those that show they are conservative with my hard earned tax dollars...maybe others should take the time to learn too.

The topic isn't the accountability of teachers. The discussion is about the accountability of elected fiduciaries who entered into financial instruments that no one in their immediate sphere completely understood.

[MDDad]

The discussion is about the accountability of elected fiduciaries who entered into financial instruments that no one in their immediate sphere completely understood.

It's problematic that there are no minimum education or business experience requirements to get elected or appointed to many of these positions of fiduciary responsibility. If one is willing to promise enough people enough baloney, and willing to badmouth one's opponents with enough righteousness, a relative illiterate can win a seat at these tables. Many of them are potential Bob Citrons, and it's only surprising that they aren't taken advantage of more often by savvy shysters and con artists.