San Diego Unified officials have pitched Proposition Z, a $2.8 billion bond on the November ballot, as a desperately needed cash infusion that will help pay for everything from leaky roof repairs to iPads. Now district officials say the bond will provide another crucial benefit: the ability to raise money without resorting to exotic loans.
In 2008, voters passed Proposition S, which approved the district borrowing $2.1 billion to improve and modernize schools and to invest in new technology for classrooms. But now district officials say the only way they can actually get their hands on that money is to take out controversial expensive long-term loans.
Those exotic loans, called capital appreciation bonds, have become politically toxic since a Voice of San Diego article outlined a $105 million bond at the Poway Unified School District that will cost taxpayers $1 billion to pay off. The loans are unpopular with the public because they push the cost of today’s borrowing onto future generations, and because districts end up paying back many times what they initially borrowed.