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California School Districts on the Hook for $16 Billion Worth of Balloon-Payment Loans

Written by Gary North on December 11, 2012

Up and down the nearly bankrupt state of California are school districts that have borrowed hundreds of millions of dollars. They are now in the hole ten to one.

They sold bonds. These bonds are not payable by amortization. Interest builds. Then, one fine day, the districts will have to come up with the money — ten times what they borrowed.

There is no money to pay. There are no reserves.

The dummies who loaned the money will get stiffed.

The school districts’ credit ratings will collapse.

The teachers’ pensions funds will get raided. Count on it. Retired teachers are expendable.

It is an inevitable train wreck. It will be a thrill to watch.

Watch online education soar.

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5 thoughts on “California School Districts on the Hook for $16 Billion Worth of Balloon-Payment Loans

  1. raid the retirement fund, chop wages, increase class size, fire teachers and admin staff, cut down on benefits now that would be a good start. But, this is California so there will be another shakedown of the dumb arse taxpayer to keep the teachers in the lifestyle they think they deserve being the bottom of the academic barrel.

  2. I live in one of the school districts that have issued such bonds. Even crazier that the bond itself, at least some of the money from the long term bond will be used for equipment that will not last nearly the life of the bond. It has been estimated that each iPad bought with the bond money will ultimately cost $4000 each, and those iPads will likely be inoperative or obsolete well before the bond is due to be repaid. Absolute stupidity.

  3. What are they trying to tell us, that the "golden" state is in trouble? Hard to believe that with a democrat co0ntrolled state that it could possibly be anything than nirvana or paradice lol, lots of sarcasm intended

  4. Texas Chris says:

    I wold just get the state (and the feds) out of schooling kids. Call it bankruptcy, write off the debts, the pensions, sell the schools to the highest bidder, and pass a law that no state funding will go to education.

  5. siquijrisland says:

    So if these people do not understand having to repay loans how can they teach anything to anybody?