The Monrovia Unified School District will wind up paying five times the amount it borrowed through a capital appreciation bond used to finance construction projects, the Los Angeles Times reports.
A $3 million bond bought by MUSD in 2010 will end up costing the district more than $15 million to pay back over 24 years, according to Times data. Monrovia is one of about 200 districts statewide to purchase these bonds, which 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.
"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.
Superintendent Linda Wagner said in an email that the district considers its bond debt payback ratio as a whole to be "very reasonable." Overall, the disrict's payback ratio stands at less than 3 to 1.
Wagner said she agreed with the district's decision to purchase the capital appreciation bond.
"I believe it was a wise decision by the then-Board and Superintendent because it allowed the district to access its bond funds more quickly than if it hadn't used CABs and deliver projects to the community that improved student achievement," she wrote in an email.
