Poway Unified School District officials may have illegally upped costs in the now-infamous billion-dollar bond deal by “artificially inflating interest costs” to pull out $31 million in cash upfront, according to a new report by Voice of San Diego.
The report springs from the controversy around a 2011 bond deal that was supposed to be for $105 million but is likely to end up costing taxpayers nearly $1 billion to repay because of an extended re-payment term that hasn’t even begun.
[See: Poway Unified Officials Defend Billion-Dollar Bond as Public Fires Back ]
By inflating interest rates, the district was able to borrow $31 million more than voters authorized, costing taxpayers an extra $219 million to repay, according to the report. School districts have typically used this tactic to cover ancillary costs like attorneys’ fees, but Poway Unified borrowed much more than the $1.7 million needed to issue the bonds and used the rest to pay the interest on other loans, according to VOSD.
While a San Diego Superior Court judge approved the bond, California Attorney General Kamala Harris’ office said that the district was “not authorized by law” to use the upfront cash as it did.
See the full report, including the district's response, here.