$1 Billion School Bond Scam in Poway
Poway Unified School District (San Diego County) borrowed $105 million from investors last year to complete a decade-long renovation of its schools. According to the Voice of San Diego, PUSD promised voters in 2008 that it would get the money without raising taxes. Without the increases, it could not afford to purchase a bond and pay it off over 20-30 years, as school districts normally would do. Instead, they took out a capital appreciation bond, which allows it to make no payments for 20 years, accruing interest all the while, resulting in a net cost to taxpayers of more than $981 million over the next 40 years, nearly 10 times what they borrowed. (In a normal school bond, a school typically pays two to three times what they borrowed).
In addition to the substantially higher costs, capital appreciation bonds are also extremely