Legal News

Bond sales cost Californians over $1 billion

By Richard Binder

In 2006, the Compton Unified School District refinanced $50.8 million in taxpayer- approved bonds, with an eye to save the district money.  Officials took out $6.5 million in cash, which they said would be used for school construction and repairs.  But rundown facilities throughout the district have not been fixed and an audit failed to track how the money was spent.  In the meantime, total debt owed by taxpayers until 2022, instead of being reduced, has gone up by 15 percent.

About 200 school districts have done similar refinancing deals throughout California, and all have been condemned by Attorney General Jerry Brown as unconstitutional. The constitution bans school districts from taking on additional debt in a refinancing of taxpayer-approved bonds without a public vote.

According to public records, the deals were dominated by UBS AG and Piper Jaffray Cos., which collected fees up to four times the U.S. average for bond sales.

Full story at Bloomberg.com.

Full post as published by Legal Pad | LA on August 26, 2009 (boomark / email).