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UPDATE: Bond to Cost Monrovia Unified 5 Times the Amount Borrowed

The Monrovia Unified School District and other districts across the state took out capital appreciation bonds that will wind up costing several times more than the original amount borrowed.

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.

Tom Adams November 30, 2012 at 08:26 PM
Interesting quote from California Treasurer Bill Lockyer, "They are terrible deals," Lockyer said. "The school boards and staffs that approved of these bonds should be voted out of office and fired."
Dan Crandell December 01, 2012 at 01:36 AM
I heard a report on these "Capital Appreciation bond" a few days ago. OMG I didn't know MUSD was involved in these scams. Linda Wagner it's time to go.
david heimark December 01, 2012 at 06:45 AM
"...but what about the children?" Yeah, right.
sayitisntso December 01, 2012 at 06:49 AM
Would Superintendent Linda Wagner think a loan on her own home for three hundred thousand dollars with a twenty four year payback of 1.5 million dollars was reasonable? It's the same ratio that the school district paid! If she does then I will make that loan to her myself. Only with OPM (other peoples money) would she defend the absurd deals made by the district (Superintendent Linda Wagner) and its board. The problem with our schools in this state and country is the are managed by those who have no expertise in business management but think they know best. Take solace in the knowledge that if they didn't waste it there they would have wasted it somewhere else, so what difference does it really make, none at all, IMO.
Tom Adams December 01, 2012 at 04:29 PM
Dan, I think this was prior to Linda Wagner coming to Monrovia
Tom Adams December 01, 2012 at 04:31 PM
In reading the article closer it appears as though the district also did this in 2009. So, if the Times is correct, the district borrowed $6 Million and will repay $35 Million. It also appears that this is on top what what the voters approved.
Dan Crandell December 01, 2012 at 05:18 PM
@ Mr. Adams. A loan usually requires some kind of collateral ... What has the MUSD committed us too. After we settle that 200+ million dollar law suite will we have anything left? Where can we get educated honest people to oversee our community affairs? The hits just keeps coming. Tom where is all that "Roach Couch" business ? We paid a some serious money to them. I thought we would see a truck on every corner by now. Are they no longer interested or did they simply take our money and run?
Marg December 01, 2012 at 05:50 PM
This is positively heinous. What the heck kind of business sense does our school board have? NONE. Even the former Mayor would have known better than to pull a stunt like this. Can the deal be re-negotiated? And YES, the garbage with the "roach coaches" and the Gold Line follies have cost Monrovia some serious coin. And we have a college up on the corner ripping off unqualified kids, too. It's one bad tale after another. No one will want to live here when they find out how utterly stupid our local "so called business people" are.
Marg December 01, 2012 at 05:52 PM
That's right. Linda Wagner is apparently a fool. She's turned down chances for the schools to make some extra dough then we hear about this! They hire people from the Ivory Tower to run the educational system (and sadly the rest of the gov't seems to follow suit) and it's a stone cold disaster. Put some REAL business people in there and fix it, PLEASE.
Fred December 02, 2012 at 01:56 AM
I doubt MUSD is the only district in the state in this situation, but we as a state just voted and approved a tax increase to help pay for this foolishness.
Dan Crandell December 02, 2012 at 02:39 AM
@Fred ... That Prop 30 money is already spent. State had thugs breathing down his neck to repay Wall Street gambling adventures. Something to do with betting on future stock market rates. And we were told "do it for the kids". Boy are we stupid or what?
Fred December 02, 2012 at 03:12 AM
@Dan, exactly my point. It's this foolishness that got us to where we thought we needed Prop 30, and the press/media/lobbists neglected to show all sides of the Prop prior to the election and many people blindly voted to "save our schools". We Californians are too eager to throw money at our problems. There's really a management problem along with with a feeling at government and business that sees it as other people's money and spend like there will always be more, MUSD is just one example of many and that we are the "other" people needs to set in.
Tom Adams December 02, 2012 at 05:46 PM
Dan, I am unsure what the district did, you may want to ask on of the board members? As for the food trucks, they have been here and will continue to come.
Dan Crandell December 04, 2012 at 12:02 AM
@ Tom Adams ... Guess I'LL have to pay attention cause I have not not seen one truck. Must be down on Duarte Rd. Thanks Tom.
Ann R December 05, 2012 at 05:03 AM
two bonds Published: Nov. 28, 2012 LA Times MUSD 2010 Principal $3,016,250 Total Debt Service $20,593,049 25.6 years MUSD 2009 Principal $3,016,664 Total Debt Service $15,650,000 24.2 years

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