It’s hard not to be shocked when evaluating the long-term costs of Measure V, a $50 million ballot initiative approved by voters in 2009 to support Walnut Grove School, Patterson High’s Ag-Auto building and a host of other smaller projects.
District officials expect to pay back more than seven times the amount of the $16.1 million in capital appreciation bonds that already have been issued for Measure V projects, totaling nearly $120 million.
Steve Menge, Patterson Joint Unified School District's assistant superintendent of administrative services, has compared the school bonds to a car loan, saying that people tend to be far more interested in their monthly payment than they are in the overall cost. That may be true, but even the greatest spendthrifts might think twice if they knew that in the long run they would dole out as much on their vehicle as they would for a house.
Superintendent Phil Alfano and Menge both have contended that voters knew what they were getting into when they approved Measure V in 2009.
Certainly, school board trustees were aware that the district would pay many times more than the amount for which the bonds were issued, and they were willing to make that sacrifice because of the public demand for a school on the east side of town. But when it comes to regular members of the public, there appears to be a lot of confusion about how capital appreciation bonds work.
It’s true that not too many residents have complained to the district about the added expenses. And at first glance, the bond initiative seems to be a great investment, resulting in a beautiful campus with a sterling reputation on the east side of town. It also was a presumed necessity at a time when the 3,400-home Villages of Patterson project in east Patterson still appeared to be a reality.
But the question remains: will this still seem like a good deal 20 or 30 years from now?
Californians have learned a lot about the perils of creative financing in recent years. Future generations will continue making payments on these school projects even as the needs of the district change in future years.
School district officials likely felt they had no choice but to use capital appreciation bonds. After all, growth pressures were stronger in Patterson than anywhere else in the county, necessitating a new campus, and local residents were only willing to pay a limited amount for a bond measure. But if the district is faced with building similar projects in future years, they really should consider other means of financing.
While Walnut Grove was clearly a wonderful investment, capital appreciation bonds — generally speaking — are not.