... can let me know. Without coloring the commentary too much, the guy is a "lefty" and to me, looking to protect govt institutions. But I can't wrap my brain around his explanation of the following and that its not that bad at all, and that the original story is sensationalized to make the school district look bad. Maybe i"m wrong, but I'm hoping some of you experts can shine some light on this.



Here is the issue: Someone criticizing the waste noted here in this story:
School District Owes $1 Billion On $100 Million Loan : NPR
http://www.npr.org/2012/12/07/166745...0-million-loan

Then the persons response:
The story fails to mention the term. For the Contra Costa Times it metnions 2.5 million ballooning to $34 million, but it doesn't say at what point it costs $34 million. I found this: http://www.ibabuzz.com/onassignment/...hool-district/

Which seems to suggest the board actually borrowed a few times, but the worst of the deals was for "nearly $3 million" over "11.9 years" with a repayment cost of just $9.7 million. That works out to just under 11% interest, which is high, but considering the deferred payment terms, that's "bad but not horribly bad". $1 billion on $100 million is also not a bad deal if you have deferred payments for 25 years.

Honestly, this stuff makes a lot more sense to me than taking out a new loan each year while you are paying off an old one, and schools are investments that tend to take decades for their full economic benefit to be felt.

If there is a story here, it's that boards are accepting usurious rates or hiding the information about these bonds from a public that wants to know. The case that it is financial stupidity isn't well made. It feels like NPR went with sensationalism over breaking down the details.
West Contra Costa school district - On Assignment -
www.ibabuzz.com

continues..........

So I finally found something resembling data: http://www.contracostatimes.com/data...17123509729461

The lameness of the analysis is evident in the "Debt Ratio" column. The "Debt Ratio" isn't what's important. The interest rate is what is important. Would I take a loan for $1 million if it cast me $7 million to pay it back (that'd be a "Debt Ratio" of 7)? Hell yes if I have 40 years before I make a payment!

The first loan on the list is $13 million with a "Total Debt Service" of $136, which sounds bad, until you factor in that it matures over 35 years. Assuming they don't need to make a payment until the last day, that's about a 7% interest loan. Not a bad deal for all that cash flow.
Data Center: School capital appreciation bonds in California
www.contracostatimes.com