Looks like our neighbors to the north got ticked-off enough to stand up and block school officials from borrowing funds. Check out the story in today's Daily Herald.

Could this happen here?

Palatine taxpayers push vote to block spending

I read about that Palatine school district and their attempt to sell bonds and it left me, a "numbers" guy, hopelessly confused.

First, how can a school district just sell bonds without a referendum?

Second, although a big hunk of the money borrowed from selling bonds was earmarked for capital projects [typical of ALL bond sales by schools], another big chunk of the money - about $10 or $11 million was targeted for the school district's cash reserves or general fund or something that just smelled bad.

How can they even do that? Skim off $10 million dollars for ongoing day-to-day operations, as-needed?

Finally, the real stunner about this Palatine "bond issue" was the school district was looking to borrow $27 million but put future taxpayers on the hook for $51 million?

That's $24 million in juice.

Who sells these bonds? PayDay Bonds R Us?

Aha! Maybe this answers my questions?

quote:

Lukich said he's most disappointed that District 15 won't be able to capitalize on Build America Bonds, or loans for capital projects in which the federal government rebates 35 percent of the interest.

So SCHOOL DISTRICTS can jump on this Stimulus-Backed, 35% Federally-rebated Build America Bond gravy train?

Oh Lordy, YANK THAT! NOW!

quote:

Could this happen here?

No!

"First, how can a school district just sell bonds without a referendum?"

It's unclear whether District 15 can start over with a different proposal, or if it's legally obligated to move forward with the referendum. School board attorney Mike Loizzi didn't return a call seeking comment.

This is EXACTLY why I am more focused on the issuers of these Build America Bonds than the investors.

School districts hopping on to these BaBs? It's a damm good thing that the whole thing ends on 12/31/2010.

Anytime the mouthpieces can't or won't answer, you know things are dicey.

Illinois or at least its citizens will be paying for years for the fiscal mismanagement by its leaders.

The U.S. will pay as well. Mostly in terms of higher taxes, higher interest and lower growth and higher unemployment.

Each of the last three recoveries have ended with unemployment higher than when they started. This will be no exception.

We are becoming more like Europe. And just like in Europe we will have to pay for more and more people to stay out of work.