Recent articles in the L.A. Times have exposed alarming financial abuses resulting from the passage of Capital Appreciation Bonds (CABs) by some school districts. Please note, Burbank Unified's name is not on the L.A. Times list.
CABs with payback ratios of 6 to 1, 10 to 1 and even 20 to 1 paybacks have been uncovered, scandalously burdening taxpayers. (A 20-to-1 ratio CAB costs $20 paid for every dollar borrowed.) The projected payback ratio of the Burbank Unified School District bond is projected to be 2.5 to 1 over the 25-year life of the bond. This is entirely reasonable and meets all the requirements of pending Sacramento legislation placing restrictions on bond financing.
If passed, Measure S bonds would authorize the Burbank Unified School District to issue general obligation bonds up to $110 million. There are no plans to issue Capital Appreciation Bonds. The type of bonds and interest rates will be determined at an open and public Burbank school board meeting. These interest rates at bond issuance will not change; none of the bonds will have a variable or adjustable interest rate.