A bill co-authored by state Sen. Ben Hueso aimed at curbing the use of controversial long-term capital appreciation bonds recently cleared the Senate Education Committee, bringing it one step closer to becoming law.
I spent much of last year writing about capital appreciation bonds, loans that saddle future generations with the responsibility for paying off money spent on school improvements today. Our story on the remarkable billion-dollar bond at the Poway Unified School District sparked national scrutiny of these instruments, eventually leading to the introduction of this legislation in January.
Along the way, State Treasurer Bill Lockyer has been outspoken in his opposition to capital appreciation bonds. He told us the officials in Poway who approved the district’s bond deal should be fired and said the Poway school board should be voted out of office.
Here’s a snippet from a post I wrote after talking with Lockyer last October:
Lockyer said there needs to be greater transparency around school bonds and greater constraints on the deals that can be done. He applauded the work of San Diego Treasurer and Tax Collector Dan McAllister and Assemblyman Ben Hueso, who are pushing legislation to significantly tighten the rules on school bonds.
“I think there’s a need for some reforms,” Lockyer said.
“One of the underwriters of one of these deals approached me at the Bond Buyer conference and said, ‘We’ve done some of these deals and I’ve taken a closer look at them, now that it’s become a matter of public debate, and I have the same revulsion that you do. I have the same belief that these are just really indefensible.'”
The bill, AB 182, passed overwhelmingly in the state Assembly and will now go to a second Senate Committee, the Governance and Finance Committee, where it is scheduled to be discussed on July 3.
From there, if it survives, the bill will proceed to the Senate floor for a vote.