Letters + Opinion » Mailbox

Ah, Hell, Numbers




A few articles appeared in local newspapers/blogs this past week regarding the sale of bonds by school districts ("The Big Borrow," Dec. 6). I want to report the facts as they relate to Southern Humboldt Unified School District. The numbers represented in the article in the North Coast Journal regarding Southern Humboldt are not in accord with the facts.

SHUSD bond sales have been excellent for the district. The industry acceptable ratio for bond sales -- the rate at which a district pays back the bond -- is 4:1. The rate for the first sale of bonds for SHUSD, in 2009, was 1:.63. So for every dollar borrowed, we paid back 63 cents in interest. This was the best bond sales in the state in 2009.
On the second sale of $5 million in 2011, the ratio was 2.27:1, also well below the acceptable rate. The average ratio for the two sales is 1:1.29, a great principal to interest ratio. SHUSD has not deferred the repayment schedule and there are no balloon payments.
The numbers for SHUSD stated in the NCJ are taken out of context. To pick a year at random and to use that example to represent the ratio of bond sale to interest is a misuse of those numbers. It's similar to taking the first year of your home mortgage, which is almost totally payment toward interest, not principal, and saying that your home loan is "bad." The complete term of the loan or bond has to be taken into consideration.
Upon doing the research to find out the actual facts, I can assure you that SHUSD has done an excellent job managing the bond sales for our community.

Catherine Scott, superintendent

Southern Humboldt Unified School District



Ms. Peyton Dahlberg's article "The Big Borrow" reveals a critical issue regarding school bonds: That educators and school board trustees do not have the expertise to evaluate post-election bond financing plans.

Immediately after the June 5, 2012, election, Trinidad Union School District began work on a bond financing plan which would honor the economic interests of the community which had supported our school in the election.  School officials conferred with a bond attorney as well as the Humboldt County auditor and treasurer for assistance.

Prior to the closing of the bond in early December, the district conferred with County Treasurer John Bartholomew on a continual basis. All financial document drafts were copied to the treasurer for his comment, and he also communicated directly with district financial advisers and the bond underwriter. The district was responsible for all decisions related to bond financing, but proceeded in as informed a manner as possible.

Discovering that "debt service" relative to the original amount of the bond varied between 2:1 and 10:1, the goal for Trinidad School was to develop a financing plan which would be at the lower end of that range. The final bond structure for Trinidad School does have a very low percentage of capital appreciation bonds, but it was our understanding that this was necessary to attract bond investors. Our final debt service ratio is 2.52:1, or near the very bottom of the range (or $5,559,000 over 35 years on the $2,200,000 bond).

The district made every effort to be extremely diligent in protecting taxpayer interests, while obtaining funding to make important deferred maintenance upgrades and/or new construction. The result of the bond will be improved school quality for students and higher property values for constituents, together with significant taxpayer protection.

Geoff Proust, superintendent

Trinidad Union School District


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