SALINAS, Calif. -- Risky bonds are causing some major debt for over 200 school districts statewide. Turns out the state says a Central Coast school may be carrying one of the worst debt yet.
According to the LA Times, through these bonds, school districts on the Central Coast have borrowed millions.
In the report, it shows 20 schools to be exact covering Monterey, Santa Cruz and San Benito Counties have borrowed $150 million.
Hartnell Community College bought the bond in 2009 for $35 million. School districts typically resort to these type of loans because they don't have to pay it off right away. But here's the catch, by the time schools do have to pay it off, add interest, that $35 million is now a whopping $400 million.
Over $3 billion have been borrowed across the state and one big chunk of that is sitting with Hartnell Community College.
In just under 25 years California State Treasurer Bill Lockyer said property owners who live within Hartnell's district will be paying off an enormous debt.
"In your area the worst one I see is where Hartnell borrowed $35 million and will have to pay $400 million that's 11 times the amount," said Lockyer.
Lockyer said decades down the line property tax rates will increase substantially in order to pay off the bond.
"It just means a whole lot of debt is getting added onto their local school districts," said Lockyer.
The question Central Coast News had was, what did Hartnell do with the $35 million? And do tax payers in their district know about this potential tax hike?
We called Hartnell President and were sent to their bonds representative. We are still waiting to hear back.
However, this is a problem property owners around the state are going to have to deal with. A total $16 billion will be owed in 25 years statewide.
