Finance in Politics
October 13th, 2014
This is an evolving blog and for now is just a place to hold interesting information.
State Controller v State Treasurer, what is the difference?
The Los Angeles Times puts is succinctly: ” the controller functions as a kind of chief accountant and paymaster for the state — managing cash flow and paying bills — the treasurer is more of a financial counselor for California and promoter of the state’s fiscal health to Wall Street. The treasurer also issues wonky but important pronouncements on the state’s debt load and exhorts the Legislature to spend less.
Should San Mateo County pass Measure H in 2014?
This is a highly desirable upgrade for our Community Colleges. There is a lot of money in Silicon Valley and we need schools that are as up to date as our industries but what does this mean for our citizens? The average increase to property tax bills is a median of about $52/per property at about $8 per $100K of assessed valuation.
Here is our County Debt Service overall for 2009-2013 with a current balance of almost $48M with Aa1/AAA Moody’s & Standard & Poors ratings. All the obligations have been paid on-time and within budget.
The district refinanced current General Obligation bond obligations of $564.1 M in Aug 2014 with lower interest bonds at a savings of $.30/$100K valuation. Current bonds are not scheduled to be paid off until 2038.
“The 2012-2013 San Mateo County Civil Grand Jury investigated the use by school districts within the County of controversial debt-financing instruments Capital Appreciation Bonds (CABs). CABs create a disconnect between when borrowed money is spent and when (and by whom) it is paid back. The taxpayers who approve these loans are presenting the tab to their children and grandchildren. ”
.Bond Types: The bond types are:
- General Obligation Bonds – this is a general term for bonds backed by the credit and”taxing power” of the issuing jurisdiction rather than the revenue from a specific project.
- Current Interest Bonds (CIBs) – these bonds have a steady, every-six-months schedule of principal and interest that begins when the bond is funded.
- Capital Appreciation Bonds (CABs) – as explained above, these bonds are not due until the end of the bond term, and interest on the bond continues to accrue and compound throughout the life of the bond.General Obligation (GO) bond issues are eitherCIBs, CABs, or a combination of the two.Proposition 39 Limits:2 Prior to 2000, voter approval of local bond measures required a 2/3- supermajority vote. In 2000, voters approved Proposition 39 (Prop 39), which provided an option for approval of a local education bond based on a 55% vote rather than a 2/3 vote so long as certain limitations on3 bonded indebtedness and tax rates were followed. Examples of Prop 39 requirements include :
|
Districts |
Limit on Bonded Indebtedness |
Limit on Tax Rate per Assessed Valuation |
|
Elementary and High School |
1.25% |
$30/$100,000 |
|
Unified School |
2.50% |
$60/$100,000 |
|
Community College |
2.50%
|
$25/$100,000
|
Education Code Bonds vs. Government Code Bonds:4 Pursuant to the Education Code, school districts can issue bonds without the involvement of the County, with bond maturity dates up to 25 years and an interest rate as much as 8%. Under the Government Code, the bonds must be issued by the County Board of Supervisors and may have maturity dates of 40 years with an interest cap of 12%.”
A Grand Jury dinged the Community College District in 2011 for not be open about funds from a previous bond measure.
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