The Arcadia Unified School District's use of capital appreciation bonds and the cost of these bonds to taxpayers has recently come into the spotlight.
Like federal government savings bonds, CABs accrue interest over a lengthy period of maturation. The Los Angeles Times featured AUSD in an article focusing on this issue, which Patch picked up.
Here, Arcadia's Superintendent of Business Christina Aragon responds to Patch and The Times' article, which she says has several inaccuracies.
The LA Times article did misrepresent the District's issuance of its Measure I Series A Bonds. The following is the response previously prepared that answers the questions raised and corrects the misrepresentations in the article.
Arcadia Unified School District has always taken its obligation to taxpayers seriously and while AUSD did utilize Capital Appreciation Bonds (CABs), it did so in a prudent manner. On February 21, 2007, the District issued $162,000,423.45 of Series A, General Obligation Bonds using both Current Interest Bonds (CIBs) and Capital Appreciation Bonds (CABs).
The LA Times incorrectly identifies the total debt ratio for our Series A issuance at approximately 4. The actual ratio based on the total issuance of Series A is a repayment ratio of 3.07 for AUSD which is below the County's guideline of 4:1. The calculation for the total average life of the Series A bond issuance is 26.4 years and within the appropriate range. This structure was reviewed and approved by the LA County Treasurer’s Office who is considered an expert in the field by the LA Times article.
Assistant Superintendent, Business Services
Arcadia Unified School District
Editor's Note: Christina Aragon posted this response in the comments section of the original Patch article, but we chose to move her response here to ensure as many people as possible would see it.