SACRAMENTO—State Superintendent of Public Instruction Tom Torlakson and State Treasurer Bill Lockyer today issued the following letter to local educational agencies regarding capital appreciation bonds:
Dear County and District Superintendents:
CAPITAL APPRECIATION BONDS
We understand many districts face a critical need to build or modernize facilities for their children, and we recognize that falling property tax assessments, revenue losses, and statutory debt service limits have all combined to reduce districts’ debt financing options. As a result, some districts have turned to capital appreciation bonds (CABs), which have forced taxpayers to pay more than 10 times the principal to retire the bonds.