Paying $2 million for $200,000 (rounded numbers)

Following Hank Sim’s scoop on local school bond financing on the Lost Coast Outpost website Friday, the McKinleyville Union School District is getting a lot of attention on the blogs for borrowing $4.2 million, for which it will end up paying nearly $57 million over a period of 39.4 years. That means the district will pay 13.4 times more than it received for school improvements, assuming there’s not some way to refinance the whole scheme.

For some reason, the Northern Humboldt Union School District has flown under the blogosphere radar with regard to its bond financing. According to a searchable database at the LA Times, last year the NHUHSD got $195,223 in bond financing for school repairs and upgrades. The district will pay off its capital appreciation bonds over a period of 25.4 years, meaning it will pay $1,975,000 for less than $200,000. That’s 10.1 times more than the amount acquired for school repairs.

According to “government finance experts” cited by the LA Times, the ratio should be less than 4 with regard to how much the money ultimately cost the district.


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