Tuesday, August 21, 2012
Will Carless, reporter Voice of San Diego
Dan McAllister, San Diego County Treasurer Tax Collector
The Poway Unified School District board and superintendent spent almost two hours Monday evening making their case for the controversial bond deal that has catapulted their district into national headlines and divided a community more used to admiration for its local schools than outrage at its methods.
The officials’ explanation for issuing $105 million in bonds that will cost taxpayers almost $1 billion to repay over the next 40 years clearly won them some support from the more than 100 people gathered at the meeting. But for several of the dozen or so people who lined up to address the board, the speeches fell well short of the mea culpa they were clearly expecting.
“I’m appalled at your 2011 fiscal irresponsibility,” said resident Sharon Swildens, who called on the board to resign. “You’ve stuck us with it and you seem to be happy with it, which I cannot understand. Not one of you has apologized for it.”
On the whole, however, the atmosphere at Monday’s meeting was one of quiet, civil discourse, and the enduring impression from it was of a community reeling from both the import of last year’s deal and the spotlight that has been shone upon it.
What several people asked the board were practical questions: What can we do now? Can this deal be undone, and what can we do to help?
The short answer to all those questions would appear to be: Nothing.
The district cannot refinance the deal, and the officials made no indication there’s any other way they can wriggle out of the loan that will saddle future generations of Powegians with more than $870 million in interest, which will be paid back starting in 20 years.
Superintendent John Collins and the board instead focused their attention on explaining why they made the deal in the first place.
Over more than 45 minutes, Collins methodically laid out the district’s reasoning. He acknowledged that the bonds sold last year were expensive, but argued that taken as a whole, the district’s larger construction campaign, a $376 million financing package borrowed over the last 10 years, isn’t such a bad deal.
Because the district issued earlier bonds at much cheaper rates, its overall borrowing costs amount to about four times the principal amount borrowed, Collins said. The board shouldn’t just be judged by one expensive portion of the bond but by all the deals it’s made, he said.
And, most of all, he said, the public should rid itself of any impression that it wasn’t told the truth.
“Whether you agree or disagree with the process or the decisions made, that’s your right,” Collins said. “To suggest, imply or accuse that anyone associated with this issue in any way deliberately deceived or misled the public is not only inaccurate, it is wrong in every sense of the word.”
Collins’ presentation was buttressed by long, data-laden explanations from two board members.
Board member Todd Gutschow said he and his colleagues could not possibly have known in 2008 when they began planning the borrowing that costs would rise so much over the next few years.
“There were no hidden plans,” he said.
And board member Marc Davis, himself a financial consultant, blamed the unprecedented financial crisis that ramped up in 2008 for forcing the district into making a deal that might have been much worse if they hadn’t pounced on an opportunity.
Davis’ message was clear: The 2011 loan may have been expensive, but it was the best he and his colleagues could do in a tight fiscal environment where school districts and other municipalities were squeezed into making whatever deal they could.
At least one audience member took issue with that (and we’ll also be looking into the claim).
Resident Vance Schroeder, who said he manages more than $300 million in personal investments, said he found, with a quick search, bonds at much lower rates than Poway’s.
And Schroeder questioned why Poway had locked itself into the deal, failing to negotiate a loan that was “callable” and could be refinanced.
“This year alone, I’ve bought about $100 million worth of bonds for my clients, and there isn’t a single bond, including school district bonds I’ve bought, that weren’t callable,” Schroeder said.
Monday’s meeting may have answered some of the questions buzzing around this suburban community, which was thrust into the national spotlight two weeks ago after a Voice of San Diego story explaining its loans. But several of the residents who voiced their concern with Poway’s deal were less interested in hyperbole or blame and instead simply urged the community to look forwards.
Dick Lyles, a 30-year Poway resident, called on Poway to put aside its differences and work together to come up with a solution.
“I don’t remember an issue that has animated passion throughout our community in the past 25 years as much as this one has,” Lyles said. “Spreading hate and dissention and polarization is not problem-solving. Let’s problem-solve.”
Will Carless is an investigative reporter at Voice of San Diego currently focused on local education. You can reach him at email@example.com or 619.550.5670.