The best way to live better is to avoid paying interest.
Only for one month in the last 8 years have I carried a balance on my credit card. I bought a new car when I qualified for a zero interest loan. I purchased a camera from Best Buy on a price match with 18 months zero interest. The only thing I have that I pay interest on is the 15-year mortgage on my house at 2.9 percent.
Keeping my fingers crossed, I have savings that I regularly set aside money into on the assumption sooner or later I will need to have a major repair or replace a costly appliance.
If something major-major comes up I also have a credit line but my goal is to avoid that at all costs.
I get the dilemma many voters in the Ripon Unified School District are facing. The school board has identified pressing deferred maintenance, health and security work, and modernization needs.
A $38.5 million bond — assuming they are sold for 5.5 percent interest — would end up costing $78.6 million when the $40.1 million worth of interest is taken into account.
It is no different in terms of cost if you took out a $400,000 mortgage to buy a home at 5.5 percent interest. By the time you pay it off in 30 years you will have spent $817,000 and paid $17,000 more in interest than in principal.
The big difference in Tuesday’s election is Measure I isn’t buying a school per se although there are some components such as career tech classrooms at Ripon High that will be new space and not replacing portable classrooms,
It has brought up a legitimate question. Why is the district financing deferred maintenance for 30 years? The short answer is there is no other way to pay for it except for a tax override which would require a significantly higher assessment to do the work.
How did things got to this point?
The answer is simple and complex at the same time. It’s a matter of not having high enough taxes, spending too much money on other things (85 percent of a school district’s, budget typically goes to salaries, benefits, and retirement costs), or a combination thereof. K-12 schools are also competing with other state general fund items such as entitlement programs through social services, higher education, prisons, the court system, and more.
At the same time look at what we are spending money on. Developers of River Islands at Lathrop are writing a check for $100 million to build a high school for 1,800 students. The developers are certainly putting up way more than California law requires of new growth. They have made it clear that they won’t spend more than $100 million. Anything beyond that, voters would have to authorize an assessment against property which includes the owners of homes. It is amazing how quickly reality sets in when you realize the true costs of not just needs but wants. They decided they can do without a football program to eliminate a $15 million stadium and a joint use swimming pool costing in excess of $8 million is a more financially viable option than the high school having its own.
Then there is the issue of how long the work is being financed. Most of us have to take out a loan of some type whether it is an equity loan or such to do major work whether it is a reroof, remodel, room addition, or replacing heating and air conditioning and such. The terms tend to be for 7 to 15 years and not 30 years.
Tuesday’s ballot also included two state bond measures with a face value of over $10 billion that will end up costing more than $21 billion when all is said and down. Rarely does anyone advertise the real cost of a big expenditure which happens to include interest payments, although you could toss in opportunity costs, whether they are politicians, advocates, car salesmen or home builders. As for consumers/taxpayers we don’t want to know or hear the ultimate price. We just care what it costs us a month and whether we can get it now.
The entire State of California is built on a 30-year mortgage, if you well, although mega projects like dams often carry 50-year debt. That doesn’t make it right or desirable but it did make it possible.
It goes without saying that most of the items the district wants to address are needs to protect an existing investment of tax dollars. To replace everything Ripon Unified has in terms of schools would easily be in excess of $300 million to replicate from the ground up.
Could the district have done things different even though Sacramento dictates a lot of what has to be done? Yes. But the only way they would have had the money needed to do what’s on their list is to have less teachers, larger class sizes, pay teachers and others less, and perhaps cut out programs such as football.
It should also be noted no one stepped up to challenge the school board incumbents who may have had different answers to the problems.
The decision Ripon Unified voters have to make Tuesday isn’t easy.
The only absolutely right vote on Tuesday is to vote, period.
This column is the opinion of executive editor, Dennis Wyatt, and does not necessarily represent the opinion of The Bulletin or Morris Newspaper Corp. of CA. He can be contacted at firstname.lastname@example.org or 209.249.3519.