No CABs for Ramona

By Maureen Robertson

As they campaign for approval of a $66 million school bond on the Nov. 6 ballot, Ramona Unified School District leaders want voters to know they are not contemplating a bond program like the one that has drawn national attention to Poway Unified School District.

In an effort to assure voters that they don’t plan to use capital appreciation bonds (CABs) to finance the proposed school bond, trustees met Tuesday morning to add a paragraph to the district’s business regulations that states CABs should only be pursued if three conditions exist:

1. If it can be demonstrated that their use will result in less debt service than other bond structures or financial alternatives;
2. If the citizens’ bond oversight committee, which will be established if voters approve Proposition R, reviews them; and
3. Defensible assumptions for growth in assessed value are used to develop any proposed financial method.

At issue in Poway Unified is a $105 million CAB that will cost taxpayers a reported $1 billion to repay.

David Ostermann, assistant superintendent of administrative services for the Ramona district, explained during the 10-minute special meeting that, unlike a typical home loan where the borrower pays principal and interest every month, with a CAB, the borrower doesn’t pay principal or interest for a specific time—20 years in Poway’s case. Even though there are no payments for 20 years, interest is accruing, “so that interest bill gets bigger and bigger and bigger.”

Ostermann projects a 2 to 1 debt ratio for Ramona’s proposed bond, noting that the debt ratio for Poway’s is 10 to 1.

San Dieguito Union School District approved a similar resolution last Thursday, Superintendent Robert Graeff told trustees. The San Diego County Taxpayers Association, which Graeff said has endorsed Proposition R, suggested the language used in the resolution, he reported to trustees.

In a 3-0 vote, with trustees Dan Lopez and Rodger Dohm absent, the board approved the resolution.

“We’d like to assure you and the community that if, in fact, the voters approve our bond program in November, it will not look in any way, shape, or form like the program currently at the source of a major controversy in Poway Unified School District,” said Graeff.