The Poway school district borrowed $105 million over 40 years by selling an unusual bond that will end up costing taxpayers nearly $1 billion before it is paid off.
Also catching attention was the state takeover, on Sept. 14, of the Inglewood Unified School District, which had asked the state for an emergency loan.
It was the ninth school district to request an emergency loan and state takeover since 1990, according to the California Department of Education.
FUSD would be facing a similar fate if it did not approve its capital appreciation bonds, district and county schools officials said.
When the FUSD worked out the details of its payback of bond anticipation notes it issued in 2009, it enabled the San Bernardino County Superintendent of School's office to approve the district's budgets for the current fiscal year and the next two years, said Christine McGrew, chief communications officer for the county schools.
That means that "they will meet their financial obligations for the current year and the next two years," McGrew said.
Statewide, school districts are scrambling to find alternative financing to finish construction projects started on bond sales years before.
"With falling property values, school districts find themselves unable to issue general obligation bonds to finish a project," said Ron Bennett, president and CEO of Sacramento-based School Services of California.
Additionally the state has left the schools with little financial support, he said.
"The state has dumped capital funding into the laps of school districts at a time when their operating budgets are in trouble," said Bennett, who runs a school business consulting service.
"That leaves schools scrambling for ways to finish projects," he said.
That's what happened at Fontana Unified in 2009. It needed more money to finish the construction of Jurupa Hills High School, Citrus High School and other properties, Alex Alvarez, the district's associate superintendent of business services, said.
Those projects were started with some of the $275 million bond issue authorized by the voters in 2006. But when it came time to sell more of those bonds - in 2009 - assessed property values had fallen too much for that to happen.
The district had already exceeded the $60 school bond limit per $100,000, due to the fall in real estate values.
As per Proposition 39, it works like this: if a home is worth $400,000, it can absorb $240 worth of bond debt payments annually. If the same house is worth $100,000, it can only carry $60 a school bond payment, Alvarez said.
"Every negative aspect of today's situation emanates from 2009," San Bernardino County Treasurer Larry Walker said.
Issuance of the short-term "bridge loan" instruments, the bond anticipation notes "was woefully mishandled."
The loan unrealistically assumed that property values would increase so that funds from the 2006 voter approved bond issue could be tapped.No thought was given to how the notes would be repayed in three years, he said.
Walker notes in his letter, that the major participants in the 2009 decision, including the former chief business officer, are now gone from the district.
But Frank Scialdone, a former Fontana mayor and police chief and longtime observer of the FUSD, said "the board did what it thought was the right thing with the information it had at the time. They were trying to finish schools that were in the middle of construction .... who would have thought the economy would take such a downturn."
Reach Jim via email, call him at 909-386-3855, or find him on Twitter @JSteinbergsRoad.